How do employees make redundancy claims in liquidation?

The Redundancy Payments Service (RPS) will be informed by the liquidator of the redundancies, this will be either prior to or soon after the liquidation. The liquidator will then be provided a case reference by the RPS, this typically happens within 2 weeks. This reference is then forwarded to the employees by the liquidator, alongside an information sheet. Employees can then use this RPS reference number to complete the redundancy claim form online, this takes around half an hour to complete.

Can you tell me how much I can claim for?

Your RPS entitlement is dependent on 2 factors – age and time working for the business. Generally, you are entitled to a claim for redundancy pay, unpaid wages, notice pay, holiday pay (if applicable) and unpaid pension contributions.

How long does it take to receive the money from my liquidation claim?

This is dependent on how quickly the RPS are currently processing claims, they aim to sort them within 3-6 weeks from when the claim was received. This means that hopefully, your claim will be paid within 8 weeks of the liquidation.

Will I receive all the money I am claiming?

Sadly, you may not receive the full amount that is owed to you. Due to the National Insurance fund, there is a limit on how much will be paid out to you. From 6th April 2020, the maximum amount is £538 per week, increasing annually.

If you earn over £538 per week, the RPS will pay £538 per week, then the remaining balance owed will be claimed in the liquidation proceedings

For example, if you are owed 5 weeks’ wages and earn £600 per week:

TOTAL CLAIM:     £600 x 5 weeks = £3,000

RPS Limit:            £538 x 5 weeks = £2,690

Therefore, you will receive £2,690 (prior to tax and NI), the remaining £310 owed will be claimed back from the liquidation. As your employer has gone into liquidation, it’s unlikely that the liquidator will realise enough funds to pay all creditors in full. This means, that if you are owed more money than the RPS is able to pay it is unlikely that you will receive all the money that is owed to you.

What if I work variable hours?

In this situation, a weeks pay is calculated by taking an average amount of hours worked each week for the 12 weeks prior to your redundancy.

Can I claim for unpaid business expenses in liquidation from the national insurance fund?

If you have expenses you were planning to claim back from your employer (eg petrol) sadly the RPS will not pay this. Your expenses will be an unsecured claim, the expense will be handled the same way as claims made by other creditors

I was a director of the liquidated company. Can I make a redundancy claim?

As long as you were an employee of the company you are entitled to make a claim as any other employee. However, as a director, it’s likely you will be required to provide evidence of your employee status such as a contract, receiving pay under PAYE scheme.