Your employer is insolvent if they cannot pay their debts.
Your rights will depend on the type of insolvency and whether the insolvency happened before or after your TUPE transfer.
If your employer is insolvent and the organisation is being rescued and transferred or taken over by a new owner, your rights will be protected under TUPE.
If the organisation is closing down, you will not be protected under TUPE.
An insolvency practitioner will be appointed to deal with the situation.
When the organisation is taken over – 'non-terminal insolvency'
If your old employer’s organisation is sold as a going concern and stays in business, you will automatically transfer to the new employer with your existing terms and conditions. This includes your original start date, wages and holiday pay.
Your new employer or the insolvency practitioner could make changes to your employment terms and conditions, if this helps to protect your job by keeping the business going. But they would need to do this in discussion with your employee representatives.
Claiming for money owed if you transferred before the insolvency
If you were transferred before your old employer became insolvent, your new employer is responsible for any money you’re owed, for example wages and holiday pay.
You cannot claim for compensation from the government’s Redundancy Payment Service (part of the Insolvency Service).
Claiming for money owed if you transferred after the insolvency
If you were transferred to your new employer after your old employer became insolvent, you can claim some or all of the money they owe you from the Redundancy Payment Service. This includes:
- wages
- holiday pay
- commission
- bonuses
You will need to get a case reference number from your old employer’s insolvency practitioner, before applying.
Find out how to apply to the Redundancy Payment Service on GOV.UK.
When the organisation is closed down – 'terminal insolvency'
You will not transfer to a new employer if your current employer:
- goes into ‘liquidation’ and closes down the organisation
- becomes bankrupt
Instead, you should be made redundant.
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