What can employees claim when a company goes into liquidation?
When a business can’t reduce staffing costs and faces insolvency, liquidation may be the only remaining option. For employees, though, this spells questions about entitlements – Umbrella.UK Insolvency is here to clarify what’s covered.
How employees can claim during liquidation
Employees made redundant through liquidation have several statutory entitlements, typically managed via the Redundancy Payments Service (RPS):
- Redundancy Pay: You can claim one week’s pay for each full year of service up to a limit of 20 years of continuous employment; if you’re over 41, that increases to one and a half weeks per year. The maximum payout is capped at30 weeks, with the weekly amount from April 2025 currently capped at £719.
- Pay in Lieu of Notice: Where notice is due but not served, employees may claim up to 12 weeks’ pay, often estimated at one week per year of service.
- Holiday Pay: A claim may be made for up to six weeks of accrued, unused holiday.
- Arrears of Wages: Unpaid wages, including amounts beyond four months before liquidation, are claimable; again, subject to the £719. weekly cap.
Understanding claim caps & government support
All claim categories generally carry a maximum weekly cap of £719. . If actual earnings exceeded this, the excess becomes a residual claim in the insolvency proceedings.
Crucially, the RPS (Redundancy Payments Service) often covers redundancy and other pay-related obligations when a company is insolvent or liquidated.
As Tom Fox, Head of Insolvency at Umbrella.UK Insolvency puts it:
“When liquidation becomes unavoidable, employees should know that statutory protections exist, redundancy, notice, wages and holiday pay are all safeguardable via government-backed mechanisms.”
At-a-glance claims table
| Type of Claim | What You Can Claim | Cap / Notes |
| Redundancy Pay | 1 week per year (1.5 weeks if over 41) | Max30 weeks; £719/week |
| Pay in Lieu of Notice | Up to 12 weeks (often prorated to years worked) | £719/week maximum |
| Holiday Pay | Up to 6 weeks of accrued holiday pay | £719/week maximum |
| Arrears of Wages | Up to 8 weeks (or as per individual case) | £719/week; excess = residual claim |
Mini Case Study: Robertson Fabrications Ltd
Background – Robertson Fabrications Ltd, a family-run metalwork firm in Manchester, entered liquidation in in 2024 after financial stress made downsizing unaffordable.
Employees & Service
- Emma: 22 years’ service, aged 65
- Tom: 5 years’ service, aged 38
Claim Calculations
- Emma
- Redundancy: 22 × 1.5 = 33 weeks → capped at 30 weeks = £21,570
- Notice: 5 years → 5 weeks = £3,595 (subject to tax)
- Holiday: 6 weeks = £4,314 (subject to tax)
- Total = £29,479 (subject to cap limits)
- Tom
- Redundancy: 5 × 1 = 5 weeks = £3,595
- Notice: 5 weeks = £3,595 (subject to tax)
- Holiday: 6 weeks = £4,314 (subject to tax)
- Total = £11,504
Outcome
Both employees lodged claims with the RPS. Payments were made within a few weeks after verification by the insolvency practitioner. Any amount above the cap was treated as an residual claim in the liquidation.
Final Thoughts from Umbrella.UK Insolvency
Liquidation doesn’t strip employee rights. Statutory provisions, bolstered by the RPS, ensure fair access to redundancy, notice, wages, and holiday pay. While caps apply and over-cap amounts become residual claims, employees remain protected.
Need help navigating claims during liquidation? Contact Umbrella.UK Insolvency today and request a free initial consultation, and we’ll guide you through every statutory step with clarity and care.
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