Business closures – your rights as an employee

Hackney Citizens Advice has produced some tips for people who have been made redundant. Photograph: Citizens Advice Bureau

Since the beginning of the New Year, we’ve seen a big jump in enquiries about redundancies.  Lots of people have been affected by the closure of small businesses, leading to redundancies often with little or no information.

Many don’t know that unpaid wages and redundancy pay can be claimed from the government’s National Insurance Fund in the event that the employer is insolvent and unable to pay.

One man told us how he discovered that he had lost his job when he turned up to work in early January, only to find the shop where he worked had closed down.  He had worked at the shop for almost five years, and was owed wages, notice pay and redundancy pay.

If you find yourself in this situation, here are some tips on action you can take to recover money owed to you by your employer:

If your employer has gone out of business and is insolvent, and an administrator or liquidator has been appointed, they should give you form RP1.  If not, then contact them for the form at their registered office.  With the completed form, the liquidator can claim redundancy pay owed from the National Insurance Fund.

Check what you are owed – depending on how long you’ve worked for the employer this could include contractual redundancy pay, statutory redundancy pay, unpaid wages, unpaid holiday pay and notice pay.  You may be able to claim some of these payments from the National Insurance Fund.  You can get help and advice on checking what you are owed from an experienced adviser, such as at a Citizens Advice Bureau.

You can claim for all your outstanding pay from the insolvency practitioner.  There is no guarantee that the full amount you are owed will be paid as this depends on whether enough funds are raised from the sale of the employer’s assets.

As full payment cannot be guaranteed, there are special arrangements for employees to claim the basic minimum of debts owed to them from the National Insurance Fund. There is a limit of £400 a week (£430 a week from 1 February 2012) on the amount you can claim for your weekly pay.

If you don’t know who the liquidator is or if no liquidator has been appointed, you can call the Redundancy Payments Office Helpline on 0845 145 0004 for advice on what to do.

If your employer has stopped trading but is not insolvent, write to your employer to claim any money owed, including statutory redundancy pay.  If your employer doesn’t make the payment, you can make a claim to an employment tribunal but you must do this within six months of the date your employment ends.

 For further advice on employment and redundancy go to the Citizens Advice Bureau advice guide or by visit Hackney Citizens Advice Bureau at 300 Mare Street, London E8 1HE. Tel: 020 8525 6350