By Ben Smith - 21 August 2020
Money makes the world go round…
One of the main questions HR practitioners may face from employees when the business faces the possibility of insolvency is ‘what happens to our pay?’.
One of the key sources of assistance for employees of insolvent businesses is the National Insurance Fund (the “NIF”). The NIF is a government-backed fund that pays for social security benefits as well as guaranteeing certain payments due to employees where the employer is insolvent and unable to pay. Employees will also have claims directly against the insolvent employer for sums owed to them, though these often rank low in the priority of debts. As a result, employees often have slim prospects of recovery directly against the insolvent employer, making the NIF a crucial alternative.
If an insolvent business is purchased, HR teams at the purchaser will also need to be aware of the NIF in order to support any incoming employees with their claims to the NIF. You can read our top tips for HR in an insolvent business purchase here.
HR practitioners can read our overview of the key things they need to know about insolvency here.
What can be recovered from the NIF?
The table below sets out the main types of employee debt that can be recovered from the NIF. The NIF is available regardless of the type of insolvency the business is going through.
If you or your organisation wish to seek advice regarding insolvencies, please get in touch with your usual GQ|Littler contact or email firstname.lastname@example.org.