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Employment Law Advice

Employment Law Advice

What Happens When Your Employer Is Insolvent?

If the company you work for hits hard financial times, is unable to pay its debts and is legally insolvent, you may be entitled to compensation for lost wages, redundancy and other lost entitlements.

You might also have a claim that your employment should transfer to any purchaser of the business assets.

A check through Companies House will tell you the legal state of a company, but it will be classed as legally insolvent if:

  • It is in administration and an administrator has been appointed.
  • An Official Receiver has been appointed.
  • The company is in liquidation.
  • A winding-up order has been made, or a resolution for voluntary winding-up has been passed.
  • A voluntary arrangement has been approved – under which creditors have entered into an agreement with the company under the supervision of an insolvency practitioner.
  • Possession of the company has been taken by the owners of a charge.

Employees may be able to make a claim for payment of unpaid wages, but office holders – such as company directors – may not qualify.

Lost wages can also include commission, holiday pay and overtime payments that you could have earned.

How we can help

Your rights will vary depending on the situation of the company you worked for, so if you have any concerns or worries, do speak to someone from the employment law team at Else Solicitors to see how we can help you.

An initial consultation is available free and without obligation.  To arrange your consultation or for more information, please contact Stephen Stewart on 01283 526200 or email

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