When a company becomes insolvent and cannot pay wages, the position for employees is usually unpleasant but not hopeless: they are dismissed, and a state fund covers much of what they are owed. This page explains the mechanics — who tells you what, how you claim, what is capped, and the deadline that catches people out. It is general information about the framework, not advice about any individual’s employment.
When the employer becomes insolvent, an insolvency practitioner or the official receiver is appointed to take control of the company’s affairs. That officeholder must tell employees how their job is affected and what to do next. Practically, most employees of a failing company end up dismissed by reason of redundancy as the insolvency shuts the business down.
The officeholder gives each affected employee an RP1 form and a CN (case-reference) number. You quote that number when you apply to the government for the money owed to you. Keep it safe.
The employee applies to the government for the statutory amounts the company owes them. These are paid from the National Insurance Fund, administered by the Insolvency Service. A claim can cover:
Do this promptly. An RP1 claim must be made within 6 months of the job ending — this is the deadline people miss.
You qualify for statutory redundancy pay once you have 2 or more years’ service. The amount is based on your age and length of service, and on a capped weekly pay figure:
Service counts a maximum of 20 years. Even with that, the weekly figure used is capped, so the total statutory figure cannot exceed a fixed maximum. The figures change each April and are set out on GOV.UK, updated from April; check the current cap before relying on a number.
For the period from 6 April 2026, the weekly figure is capped at £751, which puts the maximum statutory redundancy pay at £22,530 (that figure is for a 41-plus employee with 20 years’ service). The cap can also bite for shorter service: a £2,000-a-week earner still gets redundancy calculated on £751 a week.
Each of the other claim elements is both limited in weeks and capped on weekly value. The exact figures move each April, so always check the current GOV.UK rates before quoting them to anyone. As a guide, a claim covers:
For the period from 6 April 2026, the weekly cap used across these protected elements — wages, holiday and notice — is the same £751. There is no separate lower cap for notice; the weeks cap varies (up to 12 for notice, 8 for wages, 6 for holiday) but the weekly value is capped at £751 across the board. Something owed beyond the cap is only recoverable as a creditor in the insolvency, not from the fund.
There is a separate obligation that matters if you are advising staff: the employer must consult about the redundancies and alternatives. Where 20 or more employees at one establishment are dismissed by reason of redundancy within a 90-day period, a collective-consultation duty applies, and the details — including the exact statutory wording and the penalties for missing it — are set out in the Trade Union and Labour Relations (Consolidation) Act 1992, s.188. Where consultation is not carried out, employees can apply to an employment tribunal, including for a protective award.
Missing pension contributions are a separate issue, and the route runs through the insolvency practitioner or official receiver on the estate: if contributions that should have been paid are missing, ask them about the mechanism for recovering or pursuing them. It is specialist ground — the officeholder handling the estate, not this guide, is the right person to raise it with.
Am I entitled to redundancy pay if my employer becomes insolvent?
Yes, in principle, if you have 2 or more years’ continuous service. Entitlement is based on age and length of service, capped in weekly value. The payment is met from the National Insurance Fund when the employer cannot pay it.
How do I claim money owed by my insolvent employer?
The insolvency practitioner or official receiver gives you an RP1 form and a CN (case-reference) number. You apply to the government — paid from the National Insurance Fund — within 6 months of the job ending, quoting that number. Keep it safe.
Are wages and holiday pay fully covered?
No. The fund covers limited amounts — typically capped at a set number of weeks (8 for wages, 6 for holiday pay, up to 12 weeks of notice) with a weekly cap. Anything above that is only a claim in the insolvency itself, not a full recovery.
What is the 6-month deadline?
An RP1 claim must be made within 6 months of the job ending. It is the deadline people most often miss — claim as soon as you can rather than delaying.