When a business enters an insolvency process, it can be a very stressful time for the employees as they face the possibility of redundancy. Here, we aim to guide you through the redundancy process and help you understand the rights you have.
We have compiled a list of quick response questions to help answer some of the more common queries we get from employees
If your employer is legally insolvent, you are entitled to claim any monies owed from The Redundancy Payment Services (“RPS”) by completing an RP1 form. This form can be obtained from the appointed Insolvency Practitioner or online.
If you are being made redundant and have two or more years continuous service with the Company, you are entitled to a Redundancy Payment.
You will receive statutory redundancy entitlements from the Redundancy Payments Service. If your employer offered a more generous redundancy package than the statutory minimum you may be entitled to make an additional claim as an unsecured creditor. The amount you actually receive will vary from case to case and you should discuss your claim with the appointed Insolvency Practitioner or their representative.
The statutory payment is calculated using a formula which takes into account your age, length of service (in whole years) and weekly pay (subject to a maximum).
The redundancy pay calculator provides a guide as to how much statutory redundancy pay you might be entitled to.
You are entitled to claim statutory payment in lieu of notice, i.e. one week’s notice for each completed year of service, up to a maximum of 12 weeks. During your notice period, unless you find new work immediately, you should register as unemployed and claim any benefits to which you are entitled. Please note that this claim is for compensation for not receiving the proper statutory notice, therefore your claim may be reduced by any new earnings or benefits received during your “notice period”.
Pay in lieu of notice is subject to income tax and national insurance deductions.
You are entitled to holiday pay you are owed for any holidays not taken. Holiday pay is calculated on a pro-rated basis, less any already taken according to Company records. The maximum amount of holiday pay that will be paid is 6 weeks. If you are owed more holidays than the maximum pay-out, you would become an unsecured creditor of the Company. You are entitled to make a claim against the Company for the remainder of your holiday balance by completing a Proof of Debt form. If you believe this is the case, a form can be found below, along with a guide to help you complete.
Holiday pay is subject to income tax and national insurance deductions.
You are entitled to claim up to a maximum of eight weeks unpaid wages and this can include overtime. Arrears of Wages are subject to income tax and national insurance deductions.
Statutory Redundancy payments are not subject to tax. Most other payments including Pay in lieu of notice, unpaid holiday entitlement and any other pay or salary entitlements will be subject to tax in the normal manner.
To assist with completing and supporting the information provided on the form, the following information should be included:
Once you have completed your RP1 form it, along with the required supporting documentation should be forwarded to the Insolvency Practitioner who will submit the claim to the RPS on your behalf.
Claims for redundancy and other payments are processed and paid separately, meaning you could receive up to four separate payments. Before receiving a payment you will be advised in writing which claim is about to be paid, how much will be paid and when the payment will be made.
Please note that any claims payable by the RPS are likely to take a minimum of between six to eight weeks to process from when your claim is received.
The information contained within these guides has been prepared based on our knowledge and understanding at the date published. Nothing on this site constitutes advice and should not be relied on as such. Rachel Fowler Advisory Limited offers no warranty or liability whatsoever to any party in respect of the content.