Background information

The Insolvency Service administers compulsory company liquidations and personal bankruptcies and deals with misconduct through investigation of companies and enforcement. It is also responsible for making redundancy payments.

The Insolvency Service is part of the UK Department for Business, Energy and Industrial Strategy (UK BEIS), formerly known as the Department for Business, Innovation and Skills (BIS).

It was established by the National Insurance Fund that guarantees the workers' claims. It is financed by contributions from employers, employees and the self-employed.

Content of measure

A public agency called the Insolvency Service advises workers who have lost their jobs as a result of the bankruptcy of their firms and have not received the full wage or salary owed to them. As part of the Insolvency Service, the Redundancy Payments Service (RPS) makes redundancy-related payments to employees whose insolvent employer cannot or will not pay.  However, there is a separate system for employees who do not receive their notice pay when their employer becomes insolvent.

Employees may claim wages, overtime, commission and holiday pay, as well as redundancy payment if they were continuously employed by the insolvent business for at least two years. Employees may claim a maximum of eight weeks’ unpaid wages as well as bonuses, remuneration for overtime work, sickness, pregnancy, and a maximum of six weeks’ holiday pay.

Payments are capped at the statutory rate of GBP 538 (€592 as of 13 June 2020) per week for each type of claim.

Employees have to submit their application online to the Insolvency Service where the claims are calculated and the amount directly transferred to the employees.

A company is considered insolvent in case of filing for insolvency, being put under administration or a voluntary agreement with creditors that has been accepted by law, as well as if the entrepreneur has died and the company is administered.

Use of measure

The Insolvency Service publishes annual reports, which include figures of the number of claims. In 2018-2019 the Insolvency Service processed 78,800 redundancy payment requests, and it took an average of 12.2 days for the agency to action the initial claim.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Public employment service	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Unknown

Sources

• 22 May 1996: UK Employment rights act 1996 (www.legislation.gov.uk)
• 23 July 2019: Insolvency Service, Annual report and accounts 2018 to 2019 (www.gov.uk)