When an employer suddenly goes out of business, it can leave workers in shock and uncertainty- especially if wages are still unpaid. But employees in the UK do have rights and routes to recover the money they are owed.
If a company becomes insolvent, an appointed insolvency practitioner takes control. They are responsible for managing the company’s remaining money and assets, and for paying creditors where possible. Employees are classed as “preferential creditors,” meaning they are near the top of the list for repayment.
What to do if your employer goes out of business
Anyone who has lost their job without being paid should first contact the insolvency practitioner to register as a creditor. You can usually find their details in the formal notice of insolvency or on the government’s Insolvency Register.
The Redundancy Payments Service (RPS), run by the Insolvency Service, steps in when a business cannot pay what it owes to staff. Through this scheme, you can claim statutory redundancy pay, unpaid wages, holiday pay, and payment in lieu of notice—up to certain legal limits. Applications are made online at GOV.UK once you have your case reference from the insolvency practitioner.
If your employer has simply vanished—stopped trading, left the premises, or disappeared without closing the company properly—you may need to take further steps. Start by checking the company’s registered status on Companies House. If it is still active, you can make a formal claim for unpaid wages through an employment tribunal within three months of your last working day. If the company later becomes insolvent, you can then apply through the RPS.
How Citizens Advice North Herts can help you
Citizens Advice and ACAS can help you understand deadlines and guide you through the practical steps. It’s important to keep copies of your contract, payslips, and any messages about the business closure, as these support your claim.
Losing money because your employer has gone under can be stressful, but support is available. Acting quickly and using the government’s systems gives you the best chance of getting the pay you’re owed.
