What If My Employer Goes Bust During Redundancy?

What Happens to Your Redundancy Payment?

If your employer goes into liquidation, receivership, or bankruptcy before paying your redundancy, your statutory redundancy payment is protected by the Social Insurance Fund. You can claim directly from the Department of Social Protection using Form RP77 (insolvency claims).

However, ex-gratia payments (voluntary redundancy amounts above the statutory minimum) are not protected. These become unsecured debts in the insolvency, ranking behind secured creditors. In practice, most ex-gratia redundancy payments are lost when employers go bust.

Statutory redundancy calculation remains the same: (Weekly gross pay × years of service) × 2, capped at €600 per week. The Social Insurance Fund pays this amount even if the employer has no assets.

Claiming From the Social Insurance Fund

To claim statutory redundancy from the Social Insurance Fund when your employer is insolvent, follow these steps:

• Step 1: Obtain Form RP77 from www.gov.ie/redundancy or any Intreo Centre
• Step 2: Complete Part A (employee details, employment dates, redundancy date)
• Step 3: Have the insolvency practitioner (liquidator/receiver) complete Part B
• Step 4: Submit the completed form to Redundancy Payments Section, Department of Social Protection
• Step 5: Include supporting documents: payslips, P45, contract, redundancy letter

Processing typically takes 8-12 weeks. The Department may request additional evidence or clarification. Payment is made via bank transfer once the claim is approved.

Role of the Insolvency Practitioner

When a company enters liquidation, a liquidator (or receiver in receivership cases) is appointed to wind up the business. The insolvency practitioner's role in redundancy claims includes:

• Confirming employment dates and redundancy status
• Completing Part B of Form RP77 verifying your claim
• Determining priority of claims against available assets
• Distributing assets to creditors according to legal priority

You should contact the insolvency practitioner as soon as liquidation is announced to register your claim. Their contact details are typically published in the Companies Registration Office (CRO) notices or The Irish Times legal notices.

If the insolvency practitioner does not respond or refuses to complete Part B of RP77, contact the Department of Social Protection Redundancy Payments Section directly. They can process claims without the practitioner's signature in exceptional circumstances.

Unpaid Wages, Notice Pay, and Holiday Pay

In addition to redundancy payments, employees in insolvency situations may be owed:

• Unpaid wages: Up to 8 weeks' gross pay (capped at €600/week) claimable from Department of Social Protection
• Holiday pay: Accrued but untaken annual leave, capped at €600/week for insolvency claims
• Notice pay: Minimum statutory notice if employer did not provide proper notice period
• Pension contributions: Unpaid employer pension contributions (complex; seek specialist advice)

These claims are pursued using Form RP50 submitted to the insolvency practitioner, who will assess available assets and distribute payments according to legal priority. Because assets are often insufficient, many creditors receive only partial payment or nothing at all.

Timeline: When Will You Receive Payment?

The timeline for receiving redundancy and other entitlements in insolvency cases varies significantly:

• Statutory redundancy (RP77): 8-12 weeks from submitting complete documentation to Department of Social Protection
• Unpaid wages (preferential claim): 6-18 months depending on asset realisation by insolvency practitioner
• Ex-gratia redundancy (unsecured): 12-36 months, often resulting in zero or minimal recovery
• Pension contributions: Variable; requires intervention by Pensions Authority in some cases

Statutory redundancy via the Social Insurance Fund is by far the fastest route to payment. Other claims depend entirely on the liquidator selling company assets and distributing proceeds — a process that can take years.

Fraudulent Trading and Directors' Liability

If your employer continued trading while insolvent, knowing they could not pay debts (including redundancy), directors may be personally liable for fraudulent or reckless trading under the Companies Act 2014.

The liquidator investigates director conduct and can pursue personal liability claims on behalf of creditors. While this rarely benefits individual employees directly, it may increase overall asset recovery in the insolvency.

If you suspect fraudulent trading (e.g., employer announced redundancies weeks before liquidation without warning, or took customer deposits knowing insolvency was imminent), report this to the liquidator and the Office of the Director of Corporate Enforcement (ODCE).

Get Expert Advice on Insolvency Redundancy Claims

Navigating redundancy during employer insolvency involves complex interactions between employment law, insolvency law, and social welfare entitlements. Richard O'Shea Solicitor at Mary Molloy Solicitors provides specialist advice on:

• Completing Form RP77 for statutory redundancy claims
• Registering preferential claims for unpaid wages and holiday pay
• Liaising with insolvency practitioners to expedite claim processing
• Pursuing ex-gratia redundancy claims as unsecured creditor
• Advising on pension contribution recovery in insolvency

Contact Mary Molloy Solicitors at 01 5827148 or richardoshea@marymolloysolicitors.com. Offices in Dublin 7 (Ormond Quay) and Kilkenny (Rose Inn Street).

Employer Insolvent During Redundancy?

Get expert advice from Richard O'Shea Solicitor at Mary Molloy Solicitors on protecting your redundancy and wage entitlements.