Former employee recovers wrongful dismissal award from National Insurance Fund after employer insolvency

When an employer goes bust after a tribunal win

This case shows what happens when an employee wins a tribunal claim but the employer becomes insolvent before paying. The former employee had already succeeded in an unfair dismissal claim against Sheffield & Ford (Builders) Ltd, a family business. The tribunal awarded him a basic award, compensatory award, and damages for breach of contract, including wrongful dismissal. But before he could be paid, the company entered administration.

Claiming from the National Insurance Fund

The employee then made a claim against the Secretary of State for Business, Energy and Industrial Strategy under Part XII of the Employment Rights Act 1996. This part of the law allows employees to recover certain debts from the National Insurance Fund when their employer is insolvent. The employee sought payment of the outstanding wrongful dismissal award, arguing it was a debt under section 184(1)(b) of the Act.

The Secretary of State initially argued that deductions should be made, for example for failure to mitigate loss. But the tribunal rejected this, noting that the employer's insolvency had already been established and the employee was entitled to the full amount of the wrongful dismissal award. The tribunal ordered payment of £4,357.81.

Why this matters

This case is a reminder that even if your employer goes out of business, you may still be able to recover tribunal awards from the National Insurance Fund. The process involves making a claim to the Redundancy Payments Office, but it can be done without a solicitor. The key is to act promptly and provide the tribunal with evidence of the employer's insolvency and the original award.