This article applies to England, Wales and Scotland.
In brief: If a qualifying employer is insolvent, the Redundancy Payments Service can pay specified employment debts from the National Insurance Fund. For relevant calculations from 6 April 2026, weekly pay is capped at £751. Arrears of pay and a protective award are subject to a combined maximum of eight weeks.
Last updated: 29 July 2026
Who Makes the Payment
Part XII of the Employment Rights Act 1996 provides for specified payments from the National Insurance Fund. The Redundancy Payments Service administers applications.
An employer merely refusing or being unable to pay is not necessarily insolvent for the statutory scheme.
What May Be Covered
| Payment | Main limit |
|---|---|
| Statutory redundancy pay | Qualifying service; service capped at 20 years |
| Arrears of pay | Up to 8 weeks |
| Holiday pay | Up to 6 weeks |
| Notice worked but unpaid | Statutory notice, up to 12 weeks |
| Statutory loss-of-notice compensation | Up to 12 weeks |
| Protective award | Tribunal judgment required; Fund cap applies |
For redundancies on or after 6 April 2026, weekly pay is capped at £751. The resulting maximum statutory redundancy payment is £22,530.
The Combined Eight-Week Limit
Arrears and protective-award payments do not each provide a separate eight-week Fund entitlement. The Insolvency Service can pay a maximum of eight weeks in total across them and cannot pay both for the same period.
Protective Awards
A tribunal can award up to 180 days’ pay from 6 April 2026, but the Fund does not pay the full statutory maximum. The claimant or job role must be covered by the tribunal judgment.
What the Fund Does Not Normally Pay
The Fund does not generally meet ordinary unfair-dismissal compensatory awards or discrimination compensation. Outstanding sums may be provable in the insolvency, but their ranking depends on the type and amount of debt.
Is a Tribunal Judgment Needed?
Not for every RPS application. A protective award requires a tribunal judgment. Many wage, holiday, notice and redundancy applications do not, although disputed entitlement may require determination.
Tax and Benefits
The Insolvency Service applies tax and National Insurance according to payment type and current rules. Its guidance says most arrears and notice-worked payments are taxed at 20%, with NI at 8% above the relevant threshold. This does not mean every payment or every pound is deducted identically.
Frequently Asked Questions
Can I receive eight weeks of arrears plus eight weeks of protective award?
No. The guidance applies a combined eight-week maximum.
Does the Fund pay ordinary unfair-dismissal compensation?
Generally, no.
Does insolvency stop my tribunal deadline?
No. Do not assume the insolvency process extends the limitation period.
Sources
- Employment Rights Act 1996, Part XII — https://www.legislation.gov.uk/ukpga/1996/18
- Insolvency Service payment guidance — https://www.gov.uk/guidance/explaining-your-redundancy-payments
- Protective Award guidance — https://www.gov.uk/guidance/explaining-your-protective-award
- Employer insolvency rights — https://www.gov.uk/your-rights-if-your-employer-is-insolvent