Page last updated at 17:48 GMT, Friday, 28 November 2008

How to cope when your firm goes bust

By Martin Shankleman
Employment correspondent, BBC News

Closing down sale sign
Unemployment has been rising and more job losses are expected

The 260 workers employed at Budelpack cosmetics factory in Maesteg, south Wales turned up to work on Friday only to be told to leave immediately.

They received no notice, nor redundancy money.

Instead they were given a pack by the administrator which showed them how to claim redundancy money from the state.

The Budelpack factory, which supplies The Body Shop, had gone into administration on Wednesday.

GMB union organiser Mervyn Burnett said the treatment of the workers, some of whom had worked there for 30 years, was a "thundering disgrace".


So what are the options for an employee of a firm like Budelpack, which has become insolvent?

Workers who lose their jobs when their firm falls into administration are advised to contact two different government bodies - the Redundancy Payments Office and HM Revenue & Customs.

The Redundancy Payments Office, part of the Insolvency Service, handles claims from workers for unpaid wages, and redundancy money.

Specifically it deals with:

  • Redundancy pay
  • Wages - up to a maximum of eight weeks
  • Holiday pay - up to a maximum of six weeks
  • Notice pay - one weeks pay for each year of service, up to twelve weeks

All payments are subject to a maximum of 330 for a week's wage.

Other benefits

HMRC handles claims for other benefits not covered by the Redundancy Payments Office. These are:

  • Statutory sick pay
  • Maternity pay
  • Paternity pay
  • Adoption pay

The forms for such claims can be obtained from any job centre.

Holiday pay and wages are calculated from the date of insolvency.

Redundancy and notice pay are worked out from either the date the employer become insolvent, or when an employee loses their job, whichever is later.


Staff at MFI and Woolworths have been retained by the administrators at the moment, with no guarantee of job security.

In such circumstances, their right to a redundancy payment is not affected if either firm closes down later.

For general enquiries about insolvency, workers can call the Insolvency Service Helpline on 0845 602 9848 (9am to 5pm, Monday to Friday).

For queries about redundancy, call the Redundancy Payments Helpline on 0845 145 0004 (9am to 5pm, Monday to Friday).

If you want to make a claim because your employer has become insolvent, click below.

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