Redundancy—insolvency and the state guarantee fund
Redundancy—insolvency and the state guarantee fund

The following Employment guidance note provides comprehensive and up to date legal information covering:

  • Redundancy—insolvency and the state guarantee fund
  • Employer's refusal
  • Employer's insolvency
  • The amount—statutory redundancy payment
  • The amount—payment under a formal settlement agreement
  • The amount—payment under a collective agreement
  • Interest
  • Procedure for claiming
  • Time limit
  • Information
  • more

An employee may apply to the Department for Business, Energy and Industrial Strategy (BEIS) to pay the statutory redundancy payment out of the state guarantee fund (the National Insurance Fund) if he is unable to obtain the payment from his employer because:

  1. the employer refuses to pay (see Employer's refusal below), or

  2. the employer is insolvent (see Employer's insolvency below)

To obtain the payment, the employee needs to show that the employer is liable to pay him either:

  1. a statutory redundancy payment (see The amount—Statutory redundancy payment below)

  2. a payment under an ACAS-conciliated settlement or a formal settlement agreement (see The amount—payment under a formal settlement agreement below)

  3. a payment under an approved collective agreement (see The amount—payment under a collective agreement below)

Employer's refusal

If the employer is solvent but refuses to pay, the employee will need to show that he has taken 'all reasonable steps' to obtain payment, which:

  1. does not necessitate going to the length of suing his employer in a court of law, but

  2. may include taking his employer to an employment tribunal, particularly if the employer's liability is unclear or the amount is uncertain

Employer's insolvency

For these purposes, 'insolvent' means more than simply that the employer cannot pay his debts as they fall due.

An employer is insolvent as defined if:

  1. in the case of