Insolvency of an employer

Please note: MIRS can facilitate a multi-agency approach in situations involving the insolvency or cessation of an employer. We can arrange for both a member of the MIRS team and a member of the Social Security Division to attend an employer’s premises to explain matters provide assistance to support both employees and employers during these difficult situations. Please contact us as soon as possible if this applies.

Where an employer has become insolvent or has ceased carrying on business in the Isle of Man, and as a consequence an employee’s employment has been terminated, the Treasury may pay certain debts out of the Manx National Insurance Fund, provided the debt falls into one of the categories listed below.

Conditions

Employer ceasing business

Where an employer has ceased trading, an employee must meet the following conditions in order to make a claim against the Manx National Insurance Fund:

The employer has ceased to carry on business in the Isle of Man
The employment of the employee has terminated
At the date of applying to Treasury, the employee was entitled to be paid a debt falling into one of the below categories; and
The employee has taken all reasonable steps (other than legal proceedings) to recover the debt from the employer, and the employer has refused or failed to pay all or any part of the debt

Employer becoming insolvent

Where an employer has become insolvent, an employee must meet the following conditions in order to make a claim against the Manx National Insurance Fund:

The employer has become 'insolvent'

If the employer is an individual this means they have become bankrupt, or have died and their estate is insolvent
If the employer is a company this means a winding up order has been made/resolution passed for voluntary winding up, a receiver/manager has been appointed or debenture holders have taken possession of company property (or any similar event to the aforementioned in another jurisdiction)

The employment of the employee has terminated; and
On the relevant date the employer was entitled to be paid a debt falling into one of the below categories

Debts that may be paid

In the event of an insolvency/cessation of trading, Treasury may pay some, but not all, debts , owed by an employer to an employee.

The debts that the Treasury may pay, where employment has terminated, are:

Arrears of pay for between 1 and 8 weeks
Pay during any period of statutory minimum notice
Up to 6 weeks’ holiday pay accrued in the preceding 12 months
An unpaid basic award of compensation for unfair dismissal
Arrears of payment for time off for:

Trade union duties
Looking for work
Antenatal care; or
carrying out duties as a pension scheme trustee; and

An unpaid statutory redundancy payment

All of the above debts are calculated in accordance with the maximum capped week’s pay of £540.

Forms

The process for an employee claiming payment from the Treasury out of the Manx National Insurance Fund is as follows:

Form IP1: This can be submitted as soon as it is clear that the employer cannot or will not pay monies in respect of wages and holiday pay only (including redundancy pay)
Form IP2: This form is only for a claim for statutory notice pay and cannot be submitted until the employee reaches the end of what would have been their statutory notice period

The time limit for applying to the Treasury for payment out of the Fund is within 12 months of the date of termination of employment.

For more information, please see the Social Security Division website.

Form IP1

PDF, 119.4 KB

Open (new tab)

Form IP2

PDF, 154.4 KB

Open (new tab)

Contact us

Manx Industrial Relations Service