What are your rights if your company goes into administration?

So as you may have heard in the news today, BHS has gone into administration meaning that ten thousand workers will be left with no job security. Losing your job can be an extremely stressful time, however it helps to know your rights if it happens to you.

Types of insolvency

BHS has gone into administration while they try and find a buyer. This means that they have asked an administrator to come in to keep the company going until they sell or close down.

A company could also go into liquidation. This means that it will be closed and asset s will be sold to pay the people it owes money to.

Receivership – like liquidation but it’s usually arranged by a single creditor that’s lent money securely (eg a bank), and the assets are sold to pay just that creditor.

There is also bankruptcy or a voluntary arrangement with creditors.

What are your rights?

If the company goes into administration then there’s a chance you could be asked to continue working in case the business could be saved. However, you could also be let go straight away. You should be given the months wages but in some cases there may not be enough money in the company to even do that.

What happens if the company owes you money? 

If the company owes you money then you can claim it back through the insolvency practitioner. The Government will pay you what you are owed or at least the majority of it. The money comes from the Government’s National Ie Fund.

The insolvency practitioner will send you claim forms.

What are you entitled to?

You will be able to claim for:

• redundancy
• up to 8 weeks’ wages, including a payment for a protective award for failing to consult collectively
• up to 6 weeks’ holiday pay
• statutory notice pay – 1 week after 1 month’s service, going up to 1 week per year of service (up to a maximum of 12 weeks)
• unpaid pension contributions (your pensions administrator does this for you)
• basic award for unfair dismissal

You can claim for statutory notice pay if:

• you’ve worked your statutory notice period but not been paid by your employer
• you were dismissed without notice
• you don’t work your full notice

For information about insolvency, call the Insolvency Service.