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Insolvency of employer

Updating authors: Max Winthrop and Zuraida Curtis


  • Most, but not all, forms of insolvency will operate to terminate contracts of employment. Employees will be dismissed for reason of redundancy. (See Consequences of insolvency)
  • There are a number of different insolvency processes. They will each have slightly different employment implications. Expert advice must always be taken. (See Meaning of insolvency)
  • If an employer becomes bankrupt (individual or partnership) or goes into liquidation or administration (company), employees will become preferential creditors to some extent in relation to any unpaid wages. (See Rights of employees to outstanding wages from an insolvent employer)
  • The National Insurance Fund will meet the claims of employees who have not been paid outstanding wages and other sums by insolvent employers. (See Claims against the Secretary of State)