Thousands left in financial crisis when employers go bust
Let’s face it, there’s never a good time to lose your job.
If you’ve been made redundant, you’ll typically get redundancy and notice pay from your former employer - but what do you do when your employer is in dire straits and can’t pay you?
Who, if anyone, can you turn to for support? The good news is you don’t have to forget about the money you’re owed because there is a way to claim it.
The government can pay you
You may be surprised to learn that if your former employer has gone bust, you can apply to the Insolvency Service for the money you’re owed. Their redundancy payments service means you’ll get paid if you lost your job when your employer became insolvent.
It’s funded by national insurance contributions and claims are usually processed in around 10 days.
Some claims can be processed and paid even faster: 10,000 people were paid within 24 hours of being made redundant after Wilko went into administration last summer.
Overall, the Insolvency Service paid out more than £490m in redundancy payments last year to nearly 86,000 people who lost their jobs after their employer’s insolvency.
Payments you could get
Depending on your circumstances, the redundancy payment service can provide:
- redundancy pay
- holiday pay
- outstanding payments like unpaid wages
- overtime and commission
- money earned for working your notice period
They can also pay compensation awarded by an employment tribunal because your employer didn’t consult with employees before you were made redundant. This is called a protective award and is usually paid a few years later.
How to apply for your redundancy pay from the government
You can apply online via the government's website – it’ll take you about 25-45 minutes.
Further information about eligibility and how to apply (including what information you’ll need for your application) can be found in the government’s online factsheet.
Michelle Kight
Michelle is a qualified journalist who spent over seven years writing for her local online newspaper. Having grown up in some of the North West’s most deprived areas, she has a first-hand and empathetic understanding of what it means to face serious money worries. With a strong interest in mental health issues, she is a keen advocate of boosting the accessibility of financial wellness services.
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