EMCC European Monitoring Centre on Change

Insolvency Service

United Kingdom
Phase: Management
Тип:
  • Advice
  • Income support for workers
Last modified: 19 August, 2020
Име (на собств. език):

Insolvency Service

Име на английски:

Insolvency Service

Coverage/Eligibility

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 service provides recourse for workers who have lost their job due to insolvency of their employer and have not received the full wage or salary owed to them. Employees may claim wages, overtime pay, commission, holiday pay and redundancy payment that is owed to them by their employer.

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.

Main characteristics

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.

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).

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

Employees may claim wages, overtime, commission and holiday pay, as well as redundancy pay that is owed to them by their employer.

Employees can claim 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 £538 (€592 as at 13 June 2020) per week for each type of claim.

Claims must have accumulated up to the date that insolvency is filed for. If after payment of the insolvency income there are still unsatisfied claims from the employees, these are considered by the insolvency administrator in the insolvency procedure. Claims can only be made after redundancy or dismissal. 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. Employees have to submit their application online to the Insolvency Service where the claims are calculated and the amount directly transferred to the employees.

Funding

  • National funds
  • Employees
  • Companies

Involved actors

National government
Establishment of the fund.
Public employment services
Employees have to submit their application with the public employment service where the claims are calculated and the amount directly transferred to the employees.
Други
National Insurance Fund; Insolvency Service; Insolvency administrator.

Effectiveness

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. 

Strengths

The Insolvency Service provides support for workers who find themselves out of work through no fault of their own. This gives workers some protection against financial hardship and provides a route for recovery of unpaid wages/salary.

Weaknesses

No information available.

Examples

No information available.
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