Losing your job through redundancy is tough enough. But discovering the company has shut its doors and there’s no money left to pay your statutory redundancy pay, notice pay, or accrued holiday? That feels like a devastating double blow. Unfortunately, it happens, especially when businesses enter insolvency. Don’t panic – while the situation is serious, there are important steps you can take. Here’s your guide to navigating this challenging scenario in the UK.
Understanding the Situation: Insolvency is Key
When a company closes without funds, it usually means it’s insolvent – unable to pay its debts. This typically involves either:
- Administration: An administrator tries to rescue the company or sell its assets to pay creditors.
- Liquidation (Winding Up): A liquidator sells all assets to pay off debts before closing the company permanently (GOV.UK guidance).
Your Lifeline: The National Insurance Fund (NIF)
The crucial piece of good news is the National Insurance Fund (NIF). This government safety net exists precisely to protect employees when their insolvent employer cannot meet its statutory obligations (Source: GOV.UK).
What the NIF Can Cover:
- Statutory Redundancy Pay (SRP): Based on age, weekly pay (capped at £700/week as of April 2024), and length of service (max 20 years). Calculate your entitlement.
- Statutory Notice Pay: Payment for your statutory notice period (1 week per full year worked, max 12 weeks), capped at £700/week.
- Arrears of Wages: Up to 8 weeks of unpaid wages (capped).
- Accrued Holiday Pay: Up to 6 weeks of owed holiday pay.
- Unpaid Pension Contributions: Certain unpaid contributions may be claimable.
Important Note: The NIF pays statutory minimums only. Any contractual redundancy, notice, or benefits above this make you an “unsecured creditor” – you’ll likely only receive pennies on the pound, if anything (GOV.UK explanation).
Real-Life Example: Sarah’s Journey Through Insolvency Redundancy
Sarah’s Situation:
- 38-year-old Marketing Manager at a Tech Company
- Salary: £42,000/year (£807/week)
- Service: 5 years and 3 months
- Company entered liquidation October 2025 with no funds for redundancy payments
What Sarah Was Statutorily Owed:
- SRP: 5 years service (age 38) = 7.5 weeks × £700 cap = £5,250
- Notice Pay: 5 weeks × £700 = £3,500
- Unpaid Wages: 4.33 weeks × £700 ≈ £3,031
- Holiday Pay: 1.6 weeks × £700 = £1,120
- Total NIF Claim: ≈ £12,901
Contractual losses: Sarah’s employment contract promised 3 months’ notice and enhanced redundancy (2 weeks/year). This £10,000+ became an unsecured debt with little recovery hope.
Critical Action Plan: Claiming from the NIF
⚠️ Time Limit: 6 Months from Employment End Date! ⚠️ (Official deadline)
- Download RP1 Form Immediately: Get the Redundancy Payments Claim Form from GOV.UK or call 0330 331 0020
- Gather Evidence: Payslips, P45, contract, employment dates
- Identify the Insolvency Practitioner: Search the Insolvency Register
- Complete RP1 Accurately: Include all statutory calculations using £700/week cap
- Submit Within 6 Months: Mail to Redundancy Payments Service (keep copy!)
- Apply for Benefits Same Day: Universal Credit claims start immediately after job loss
Practical Next Steps
- Contact the Insolvency Practitioner: Confirm they’ve received your claim
- Access Emergency Support:
- Benefits Calculator: GOV.UK
- Citizens Advice: citizensadvice.org.uk
- Debt Charities: StepChange or National Debtline
- Protect Your Pension: Contact your provider about frozen funds
- Beware Fee-Charging Claims Firms: NIF claims are free to submit yourself
Key Insight: The National Insurance Fund exists precisely for this scenario – but you must claim within 6 months to access statutory protections.
Key Takeaways
- NIF covers statutory redundancy, notice, holiday pay, and wage arrears
- RP1 form submission deadline is non-negotiable: 6 months from termination
- Benefits claims should begin immediately after job loss
- Contractual entitlements beyond statutory minimums are rarely recoverable
- Free professional support is available through GOV.UK services and charities
Final Thought
While finding yourself redundant without payment due to business collapse is profoundly stressful, the National Insurance Fund provides a vital financial bridge. By acting swiftly to submit your RP1 claim, accessing immediate benefit support, and utilizing free advisory services, you can navigate this challenging transition. Your statutory rights remain protected even when employer funds disappear.
Disclaimer & Verification: This article reflects UK law as of July 2025. All facts are sourced from official government resources including GOV.UK’s insolvency guidance and redundancy rights. Consult Citizens Advice for personalized guidance. Financial caps are subject to annual review.
