If your employer becomes insolvent, your accrued annual leave does not vanish. You can claim unpaid holiday pay from the government’s Redundancy Payments Service, which covers up to 6 weeks of holiday, subject to a statutory weekly cap of £751 as of 6 April 2026.
What you will not necessarily recover is everything you were owed. The caps bite, contractual extras are treated differently from statutory entitlement, and the balance becomes a creditor claim in the insolvency itself — which may pay little or nothing. This article sets out exactly where the line falls.
Key Takeaways
- The Redundancy Payments Service (part of the National Insurance Fund) pays out when an employer cannot — GOV.UK.
- Holiday pay is capped at 6 weeks; arrears of pay at 8 weeks; statutory notice pay at up to 12 weeks.
- All payments are subject to a £751 weekly maximum (for dismissals on or after 6 April 2026).
- Anything above the caps becomes a creditor claim against the insolvent business, with no guarantee of payment.
What “Insolvent” Means Here
The statutory scheme is triggered by a formal insolvency event, not by an employer simply running out of money. That includes liquidation, administration, receivership, a company voluntary arrangement, or bankruptcy where the employer is an individual.
An insolvency practitioner is appointed and issues you a case reference number (a “CN” number). You need it to claim. If your employer has closed the doors without any formal insolvency process, the scheme does not open and your route is an employment tribunal claim — a materially harder path.
What You Can Claim from the Redundancy Payments Service
Five separate heads of claim, each with its own limit:
| What you can claim | Limit |
|---|---|
| Holiday pay (accrued and untaken) | Up to 6 weeks |
| Arrears of pay (wages, overtime, commission) | Up to 8 weeks |
| Statutory notice pay | 1 week per year of service, up to 12 weeks |
| Statutory redundancy pay | Up to 20 years’ service, age-banded |
| Unpaid pension contributions | Certain contributions, claimed by pension trustee |
Every one of these is measured against a weekly pay cap of £751. If you earned £1,100 a week, the scheme values each of your weeks at £751 for calculation purposes.
Statutory redundancy pay is banded by age: half a week’s pay for each full year worked under 22, one week per year between 22 and 40, and one and a half weeks per year at 41 or older, capped at 20 years of service.
Worked Example: What Actually Gets Recovered
Miriam earned £1,000 a week, had 9 years’ service, and was owed 7.5 weeks of accrued annual leave when her employer went into administration in June 2026.
Holiday pay claim:
- Weeks owed: 7.5
- Cap: 6 weeks
- Scheme value: 6 × £751 = £4,506
- Miriam’s actual entitlement: 7.5 × £1,000 = £7,500
- Shortfall: £2,994 — becomes a creditor claim in the administration
Statutory redundancy pay:
- Under 22 for 2 years: 2 × 0.5 = 1 week
- Aged 22–40 for 5 years: 5 × 1 = 5 weeks
- Aged 41+ for 2 years: 2 × 1.5 = 3 weeks
- Total: 9 weeks, capped at £751/week = £6,759
Miriam’s guaranteed total from the Redundancy Payments Service: £11,265. Her actual entitlements across all heads were higher, but the caps and the 6-week holiday limit reduce the recoverable amount.
Contractual Holiday Above the Statutory Minimum
The Redundancy Payments Service covers statutory entitlement only — the 5.6 weeks under the Working Time Regulations. If your contract gives you more than 28 days, the excess is an unsecured creditor claim.
Example: if your contract provides 30 days of holiday and you are owed 8 weeks, the scheme pays 6 weeks (the statutory cap). The remaining 2 weeks are a debt owed by the insolvent company, rankable with other unsecured creditors. In most liquidations, unsecured creditors recover between 0p and 10p in the pound.
This is the gap most employees do not anticipate. The contractual excess is real money, but the insolvency makes it largely unrecoverable.
How to Claim
- Get the CN number from the insolvency practitioner or the Redundancy Payments Service directly.
- Complete form RPS1 — the Redundancy Payments Service claim form, available on GOV.UK.
- Submit within 6 months of the insolvency date. Late claims may be rejected.
- Provide supporting documents: payslips, contract, P45 or P60 if available.
- The Redundancy Payments Service processes claims and pays directly into your bank account.
If you are unsure whether a formal insolvency has been initiated, check the Insolvency Service’s case tracker or contact the Redundancy Payments Service helpline.
What Happens to Leave Already Taken
If you took annual leave before the insolvency and your employer paid you for it, that leave is spent — there is nothing to claim. The claim is only for untaken accrued leave that was owed to you at the date of insolvency.
If you were on leave at the date of insolvency and your employer had not yet paid you for it, that counts as untaken leave and is part of your claim.
What About Carry-Over?
If your employer’s insolvency prevented you from taking leave you were entitled to — for example, because the business closed before you could book it — you may have a carry-over claim. The Working Time Regulations allow carry-over where the employer failed to give you a reasonable opportunity to take leave.
In an insolvency, the argument is straightforward: you could not take leave because the business ceased to exist. The Redundancy Payments Service should accept claims for carry-over leave from the previous leave year, subject to the 6-week cap.
How Leave Balance Helps
Leave Balance tracks accrued and untaken leave in real time, so if the worst happens, you have a clear record of exactly what was owed. For employers, the system flags when annual leave balances are approaching levels that create material insolvency risk — helping finance teams understand the liability on the balance sheet.
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