Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what recent assessment his Department has made of the effect of insolvency company charges on the payment of outstanding salaries of employees who have been made redundant following company liquidation.

An insolvent company is unable to pay its creditors in full (including employees). The appointed Insolvency Practitioner will do their best to maximise the payments from realised assets, though it is unlikely that all creditors’ claims would be met in full.

It is for this reason that there are special arrangements for dismissed employees under the insolvency provisions of the Employment Rights Act 1996, which ensure that they receive a basic minimum of the debts owed by the employer from the National Insurance Fund. Former employees of an insolvent employer can, in certain circumstances, claim redundancy payments and other contractual amounts (subject to statutory limits) such as unpaid wages, notice pay and outstanding holiday pay from the National Insurance Fund.