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Employment Agency Inspectorate: compliance and enforcement
In this guide:
- Employment agencies and employment businesses: record keeping
- Employment agencies and employment businesses: keeping work-seekers' records
- Employment agencies and businesses: keeping hiring company records
- Keeping records for multiple employment agencies
- How long to store employment agency and business records
- Employment Agency Inspectorate: compliance and enforcement
- Employment agencies: penalties for non-compliance
- Employment Agency Inspectorate: prosecutions
Employment agencies and employment businesses: keeping work-seekers' records
Guidance on the types of records employment agencies and employment businesses need to keep in relation to work-seekers.
There are certain records you must keep when running an employment agency or business about applications from work-seekers.
However, you are not required to keep the details of a work-seeker if you take no action to find them work. For example, if you receive a high volume of speculative CVs, which are not used, records need not be retained on each work-seeker whose CV is not used.
Records data you must keep
You must keep the following records on work-seekers you find, or attempt to find, work for:
- the date their application was received
- their name, address, and, if under 22 years old, their date of birth as well
- any terms which apply, or will apply, between the agency or employment business and the work-seeker
- any document recording variation to the terms between the employment agency or business
- details of their training, experience, qualifications, and any authorisation to undertake particular work (and copies of any documents provided to you relating to this)
- details of any requirements specified by the work-seeker in relation to taking up employment
- names of hirers to whom the work-seeker is introduced or supplied
- details of any resulting engagement and the date from which it takes effect
- a copy of any contract between the work-seeker and a hirer that you entered into on the work-seekers behalf
- the date any applications are withdrawn or contracts are terminated
- details of enquires about the work-seeker and the position concerned - with copies of all relevant documents and dates they were received or sent
Charging fees and records you must keep
If you are permitted to charge fees to work-seekers (ie agencies in the entertainment sector), you should also keep records of either:
- the dates of requests for fees from the work-seeker and receipts of fees or payments, with copy statements or invoices, numbers, and amounts, or
- statements of dates and amounts of sums deducted from the money you received on the work-seekers behalf when you operated a 'client account' to hold the work-seekers money
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Employment agencies and businesses: keeping hiring company records
Records that must be kept by employment agencies or employment businesses in contact with companies hiring new staff.
There are certain records you must keep when running an employment agency or business about any companies hiring staff who contact you with job vacancies.
Records you must keep when dealing with companies hiring staff
- The date their application is received.
- The hiring company's name and address, and the location of employment they are offering if different.
- Details of the job role or roles the hirer seeks to fill.
- Duration or likely duration of the job role.
- Experience, training, ability, qualifications, and authorisation are required either by the hiring company, by law, or by any professional body.
- The terms offered in respect of the job role or roles the hirer seeks to fill.
- Any other conditions attached to the job role or roles the hirer seeks to fill.
- Copy of the terms between the employment agency or business and the hiring company, and any document recording any variation on these terms.
- Names of job-seekers introduced to or supplied to the hiring company.
- Details of inquiries about the hiring company and the position the hirer seeks to fill, with copies of all relevant documents and dates of their receipt.
- Details of each resulting engagement and the date from which it takes effect.
- Dates of requests by the employment agency or business for fees or other payment from the hiring company and of receipt of such fees or other payments, and copies of statements or invoices.
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Keeping records for multiple employment agencies
The records that must be kept when dealing with more than one employment agency or employment business.
There are certain records you must keep when running an employment agency or business when more than one employment agency or employment business is involved with the work-seeker or hirer.
Records you must keep: multiple employment agencies
- names of any other agencies or employment businesses whose services the agency or employment business uses
- details of enquiries about that agency or employment business's suitability, with copies of all relevant documents and dates the enquiries were made and the answers received
- date and copy of any agreement with the other agency
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How long to store employment agency and business records
The length of time employment agency and employment business records must be kept for.
All the records relating to either work-seekers, hirers or situations where more than one employment agency or business is involved must be kept for at least one year after their creation.
Records relating to applications from hirers and work-seekers must be retained for at least one year following the date that the agency or employment business last provided its services to that work-seeker or hirer.
If you run a modelling or entertainment agency, client account records must be kept for a minimum of six years. For further information see entertainment and modelling agencies.
You can keep records at the premises where you trade or elsewhere. You must make sure they are readily accessible and can be delivered to the trading premises to which they relate - ie the premises at which the work-seeker/hirer is registered or employed, or premises you carry out the business with any other employment agency or employment business.
If a request for records is made by an Employment Agency Inspectorate inspector they must be delivered no later than the end of the second business day following the day the request for them is made. For example, if a request for records is made on a Monday, you must be able to deliver them by the end of Wednesday.
Records can be kept in electronic form provided they are capable of being reproduced in a legible form.
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Employment Agency Inspectorate: compliance and enforcement
The role of the Employment Agency Inspectorate in ensuring employment agencies and businesses comply with the law.
The Department for the Economy's Employment Agency Inspectorate (EAI) is responsible for regulating the conduct of employment agencies and employment businesses in Northern Ireland.
The EAI's main way to check that employment agencies and businesses are complying with the law is by sending inspectors to visit the agency or business and carry out an inspection.
EAI inspectors investigate complaints, follow up allegations of misconduct, and undertake targeted checks of employment agencies and businesses.
All EAI inspectors carry official identification. They are able to enter domestic or commercial premises that they have reason to believe are used, or have been used, for the purposes of an employment agency or business. They have powers to inspect those premises and any records or documents necessary to ensure compliance with The Employment (Miscellaneous Provisions) (Northern Ireland) Order 1981 (as amended) and The Conduct of Employment Agencies and Employment Businesses Regulations (Northern Ireland) 2005 (as amended).
Inspectors may require proof to decide whether employment agencies and businesses are complying with their legal obligations. They can specifically request documents and financial records to ensure compliance while they are on the premises. Inspectors may also copy documents, or remove documents for the purposes of copying them or request in writing any record, document, or information be provided to them at a time and place of their choice so avoiding the need to revisit the premises.
For the definitions of an employment business and an employment agency, see employment agencies and employment businesses.
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Employment agencies: penalties for non-compliance
Action that can be taken by the Employment Agency Inspectorate when an employment agency does not comply with its legal duties.
Employment Agency Inspectorate (EAI) inspectors will inform the employment agency or business of instances of non-compliance and explain what their legal requirements are.
If an employment agency or business is not complying with their legal obligations they will be sent an infringement letter detailing the issues which require their attention in order to achieve compliance, and the steps needed to correct them. You will be required to provide evidence that you have addressed the non-compliance issues accordingly. There may be a follow-up inspection by the EAI to ensure that remedial action has been taken.
See EAI legislation and enforcement.
Penalties for serious non-compliance issues
If the matter is particularly serious or the employment agency or business does not take corrective action, the EAI will consider recommending a prosecution and/or making an application for a Prohibition Order in an Industrial tribunal.
Certain breaches of the legislation are criminal offences that can be tried in the Magistrates' Court, where the maximum fine is £5,000 for each offence, or in the Crown Court where the fine is unlimited.
The EAI can make an application to an Industrial Tribunal for a Prohibition Order on account of a person's misconduct or unsuitability. The maximum ban is ten years.
See the EAI enforcement policy.
If you have a question about an EAI inspection or any other related topic, you can call the Employment Agency Inspectorate Helpline on Tel 028 9025 7796 or email eai@economy-ni.gov.uk. They will take note of the points you raise, seek further advice if necessary, and advise appropriately.
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Employment Agency Inspectorate: prosecutions
Steps taken when employment businesses or agencies are prosecuted by the Employment Agency Inspectorate.
The Employment Agency Inspectorate (EAI) can refer cases for prosecution where a person breaches the requirements of the 1981 Order or Conduct Regulations while running an employment agency or employment business.
This can include anyone who:
- breaches the ban on charging fees to workers
- fails to comply with any of the conduct regulations
- makes, causes to be made, or knowingly allows false entries to be made in any record or document that has to be kept under the 1981 Order or Conduct Regulations
- doesn't comply with a prohibition order without a reasonable excuse
In addition, any person who obstructs an officer in carrying out their duty will be guilty of an offence and liable to a fine not exceeding £1,000.
Prohibition orders
A prohibition order may either:
- prevent a person from running an employment agency or business or any version of these specified in the order
- impose conditions under which they may be allowed to run an employment agency or business
Read further guidance on the Employment Agency Inspectorate.
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Whistleblowing: Right of complaint to an industrial tribunal
In this guide:
- Dismissing employees
- Types of employee dismissal
- Fair dismissal
- Unfair dismissal
- Unfair dismissal: employee eligibility
- Dismissals on capability grounds
- Dismissal due to illness
- Dismissals relating to industrial action
- Dismissals on conduct grounds
- Whistleblowing and dismissal
- Whistleblowing: Qualifying disclosures
- Whistleblowing: Exceptionally serious failures
- Whistleblowing: Right of complaint to an industrial tribunal
Types of employee dismissal
The different types of staff dismissal and unfair dismissal claims.
There are several types of staff dismissal:
- fair dismissal
- unfair dismissal
- constructive dismissal
- wrongful dismissal
Fair and unfair dismissal
A dismissal is fair or unfair depending on your reason or reasons for dismissal and whether you act reasonably during the dismissal process. Industrial tribunals/arbitrators follow previous legal decisions in deciding what is reasonable. What is unfair dismissal and what is fair dismissal?
Constructive dismissal
Constructive dismissal occurs where an employee resigns because you have substantially breached their employment contract, for example:
- cutting wages without agreement
- unlawfully demoting them
- allowing colleagues to subject them to harassment, bullying, victimisation, humiliation or discrimination
- unfairly increasing their workload
- changing the location of their workplace without contractual authority
- making them work in dangerous conditions
The breach of contract can result from either a single serious event or the last in a series of less serious events.
An individual may claim constructive unfair dismissal. A constructive dismissal is not necessarily an unfair one but it's hard for an employer to show that an action in breach of the contract was, in fact, fair.
Wrongful dismissal
Wrongful dismissal is where a contractual term is broken in the dismissal process, for example, dismissing an employee without giving them proper notice.
For further information see the Employers' Handbook Section 18: Disciplinary issues and dismissal (PDF, 95K).
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Fair dismissal
You must have a valid reason for dismissing an employee - understand the reasons that constitute a fair dismissal.
To dismiss an employee fairly, you must first have a fair reason for doing so. Potential reasons for fair dismissal include:
- conduct
- capability
- redundancy
- a statutory requirement which could prevent the employment continuing, such as a driver losing their driving licence
- some other substantial reason - any other potentially fair reasons fall into this category
An example of 'some other substantial reason' would be the dismissal of an employee who was taken on as a temporary replacement for an employee on maternity leave. For such a dismissal to be fair, you must have told the replacement employee at the beginning of their employment that the job was only temporary.
In order for any dismissal to be fair, you must also act reasonably and fairly during the dismissal procedure.
Acting reasonably
There is no statutory definition of 'reasonableness'. Reasonableness will be judged taking into account the employer's size and resources and will also consider whether the employer:
- raised and dealt with the issue promptly and consistently throughout the process
- genuinely believed that the reason for dismissal was a potentially fair one
- had reasonable grounds for that belief
- carried out proper and reasonable investigations where appropriate
- followed statutory dismissal and disciplinary procedures
- informed the employee in writing why they were being considered for dismissal and listened to their views
- allowed the employee to be accompanied at disciplinary/dismissal hearings and appeals
- gave the employee the chance to appeal against the decision to dismiss
Reasonableness may also depend on whether the employee could be expected to understand the consequences of their behaviour.
Dismissal and disciplinary procedures
You must set out your dismissal and disciplinary rules and procedures in writing. Sample dismissal procedures (DOC, 14K).
There is a minimum statutory procedure that must be followed when you decide to dismiss an employee. Failure to follow this procedure may result in a finding of automatic unfair dismissal.
If you fail to follow the statutory procedure, where it applies, and the issue is subsequently heard by a tribunal, any compensation awarded to the employee could be increased by between 10% and 50%.
You should follow the good practice advice set out in the Labour Relations Agency (LRA) Code of Practice on Discipline and Grievance.
Additional advice, including sample procedures, can be found in the LRA guidance on advice on handling discipline and grievances at work.
Though tribunals/arbitrators do not have to take this booklet into account, it provides more detail and guidance which may be helpful.
Summary dismissals
Summary dismissal is the dismissal of an employee without notice or pay in lieu of notice - this occurs when they have committed an act of gross misconduct.
You should investigate the circumstances of the misconduct before dismissing the employee.
However, if you feel that you have no choice but to dismiss an employee, you must still follow statutory procedures.
Staff probationary periods
If you decide to dismiss an employee during their probationary period, you must follow at least the statutory dismissal and disciplinary procedure.
Third-party pressure to dismiss an employee
If a customer or client threatens to withdraw their business unless you dismiss one of your employees, only an industrial tribunal/arbitrator can determine whether or not such a dismissal is fair. Such dismissals are normally categorised as 'some other substantial reason'.
You cannot however take into account pressure exerted by a trade union by the calling or threatening of industrial action.
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Unfair dismissal
Reasons that automatically constitute the unfair dismissal of an employee.
Even if you think you have dismissed an employee fairly, they could decide to bring an unfair dismissal claim because they believe that:
- the reason you gave for the dismissal wasn't the real one
- you dismissed them for an unfair reason - see unfair dismissal
- you acted unreasonably, eg by failing to give the employee plenty of warning in the run-up to taking the decision to dismiss them
How to fairly dismiss an employee fairly
If you think you may have to dismiss an employee, make sure that you:
- Have a fair reason for dismissal.
- Follow - at the very least - the statutory dismissal procedure. If you unreasonably fail to follow the statutory dismissal procedure and the issue is heard at tribunal, any compensation awarded to the employee could be increased by between 10% and 50%.
- Follow any contractual disciplinary/dismissal procedure you may have, as well as the guidance outlined in the Labour Relations Agency (LRA) Code of Practice on Disciplinary and Grievance Procedures. Your contractual procedure should comply with the code.
See fair dismissal.
Penalties for unfair dismissals
If an employee has been unfairly dismissed, the employer may be ordered to reinstate or reengage the employee. This however is an exceptional outcome.
Invariably, a tribunal or arbitrator will award compensation, made up of a basic award that depends on the employee's age, gross weekly pay, length of service, and a compensatory award.
They can also make an additional award if you fail to follow an order to reinstate or re-engage the employee.
Apart from in health and safety and whistleblowing cases, there is a limit on the amount which can be awarded for unfair dismissal. For the latest limits on awards, see our table of current tribunal and arbitration compensation limits.
The Labour Relations Agency Arbitration Scheme
The Labour Relations Agency (LRA) Arbitration Scheme provides an alternative to having a case heard by a tribunal to resolve an employment-related dispute (for example, claims of unfair dismissal, breach of contract or discrimination, etc).
The scheme is quicker, confidential, non-legalistic, less formal, and more cost-effective than a tribunal hearing.
Under the scheme, an arbitrator's decision is binding as a matter of law and has the same effect as a tribunal.
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Unfair dismissal: employee eligibility
Employer consequences if you dismiss someone unfairly.
Employees can usually only claim unfair dismissal if they have worked for you for at least one year.
There are a number of reasons for dismissal that are automatically unfair. Most of these do not require the employee to have a minimum of one year's service, ie the employee will be able to claim unfair dismissal from day one of employment.
Who cannot complain to a tribunal about unfair dismissal?
The right to complain to a tribunal about unfair dismissal is also not available to:
- Self-employed people.
- Those who are not employees, eg, casual workers, independent contractors or freelance agents.
- Members of the armed forces.
- Employees who have reached a settlement with their employer via Labour Relations Agency (LRA) conciliation.
- Individuals working under an illegal contract, eg, a barman who is under the age of 18 years old or employees in receipt of untaxed monies.
- Employees covered by a dismissal procedure agreement that has been exempted from the unfair dismissal provisions by legislation. This is a rarely exercised legal provision.
- Employees taking part in unofficial industrial action (unless the dismissal is for certain specified reasons, eg, taking family leave or making a protected disclosure). For more information, see the page in this guide on dismissals relating to industrial action.
- The police (although police staff may make unfair dismissal claims where the dismissal relates to health and safety or the making of a protected disclosure).
- Those employed as a master - or as a member of the crew - of a fishing vessel where the individual is paid only by a share in the profits or gross earnings of the vessel.
- Employees who have reached a settlement with their employer via a 'compromise agreement'. This is an agreement reached, with the benefit of a relevant independent advisor who has professional indemnity insurance, in which the employee waives their right to make a complaint in relation to the dispute to which the settlement relates. This means that the agreement must specify the legal basis for the dispute - it cannot state that it covers all the possible employment-related claims.
Exemption from the unfair dismissal provisions
The parties to a dismissal-procedures agreement can apply jointly to the Department for the Economy to substitute provisions of the unfair dismissal legislation. Such substitution may be allowed if all the following points are satisfied:
- every trade union which is a party to the agreement is independent
- the agreement has a procedure to be followed if an employee claims to have been unfairly dismissed
- the procedure is non-discriminatory and available to all relevant employees
- the procedure gives employees a similar level of protection to that provided by the legislation
- the agreement includes provision either for arbitration in every case or allows arbitration in cases where a decision can't be reached or where a decision raises a question of law
- the agreement clearly defines which employees it applies to
Lay-offs and short-time working
You may temporarily lay off an employee or put them on short-time working, eg because of a downturn in work. This does not necessarily amount to a redundancy dismissal. You can only do this if the terms of their contract of employment allow it or by agreement with the employee. See Employers' Handbook Section 23: Lay-off and short time working (PDF, 33K).
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Dismissals on capability grounds
How to dismiss an employee fairly when they are incapable of doing their job properly or commit some form of misconduct.
Sometimes an employee is incapable of doing their job to the required standard. This may be because they don't have the right skills or aptitude for the job.
They may also be capable of doing their job, but unwilling or reluctant to do it properly. In these particular circumstances, you would deal with the issue as one of misconduct and follow your company disciplinary procedures and the statutory dismissal and disciplinary procedures (if they apply). Otherwise capability is a separate dismissal category to misconduct. See dismissals on conduct grounds.
In most cases involving capability, you can help an employee improve by taking informal action, eg by offering training/mentoring or another suitable job (you would only redeploy to another suitable job if this is something that they agree to at this stage).
Capability dismissals: lack of skills/aptitude
To ensure that any resulting capability dismissal is fair when formal action is taken - you should:
- Inform the employee in writing of the performance issues that exist and invite them to a meeting to discuss these issues.
- Following the meeting, give an employee who is found to be performing unsatisfactorily a written note, as a summary and explanation ideally, setting out the performance problems identified at the meeting, the improvement that is required, a reasonable timescale for achieving this improvement, a review date and any identified measures of support you will provide to assist them to meet the required standards.
- Inform your employee that the note represents the first stage of a formal procedure and that failure to improve could lead to a final written warning and, ultimately, dismissal. You should keep a copy of the note and use it as the basis for monitoring and reviewing performance over the specified timescale - see manage staff performance. You should also inform the employee that they may appeal at any stage of the formal process.
- If there is a failure to improve in the timescale outlined, repeat the above procedure and issue a final written warning.
- If again there is a failure to improve within the timescale set out in the final written warning, this may result in dismissal.
- Finally, you should note that some exceptional acts of incapability can merit summary dismissal.
- Throughout the formal process, employees have the right to be accompanied to all meetings and appeal meetings and to appeal to a more senior manager - ideally one not involved in the initial meetings. To read more on the right to be accompanied, read the LRA Code of Practice on Disciplinary and Grievance Procedures.
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Dismissal due to illness
How to handle dismissing an employee due to long-term ill health.
Dismissal due to capability may also include instances where the employer dismisses because the employee is no longer capable of doing the job they were employed to do, because of illness.
Occasionally, an employee may have to leave your employment because of long-term ill health. Sometimes the employee will simply choose to resign. However, you might eventually have to consider dismissing them.
In order for a dismissal to be potentially fair, you must ensure that you regularly communicate and consult with the employee, take appropriate medical advice, consider the effects of the absence on the business, consider alternatives to dismissal and, if appropriate, take account of any reasonable adjustments as required under disability discrimination legislation. See employ and support people with disabilities.
Finally, before dismissing an employee, you must also ensure you comply with the statutory dismissal procedures.
Prior to dismissal due to illness
Before dismissing an employee, you should consider as many ways as possible to help them back to work - dismissal is a last resort and could be unfair if not handled properly. It is also very important that you determine whether or not they are disabled under the Disability Discrimination Act 1995.
You can consider getting a medical report from their GP (with their written permission) or an occupational health assessment. Remember to ask the questions that are relevant to the job, as this will enable you to get the information you need to make an informed decision. The employee has the right to see the GP report before you and may choose not to disclose some information.
If their continued employment is no longer feasible because there are no reasonable adjustments that can be made, it may be fair for you to dismiss them.
During any dismissal procedure, you should treat all employees with sensitivity. You should also act fairly and reasonably. Your dismissal procedure must follow the statutory dismissal requirements.
If you unreasonably fail to follow the statutory dismissal procedures when dismissing and the employee is successful in unfair dismissal proceedings, any compensation awarded by the tribunal or arbitrator could be increased by between 10% and 50%.
If the employee who is subject to the procedure is disabled, you will also have to consider making any possible reasonable adjustments to allow for their needs; you have to address disability discrimination laws, so this is important.
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Dismissals relating to industrial action
How to ensure that you dismiss an employee fairly for reasons relating to industrial action.
It is automatically unfair to dismiss workers for taking part in official industrial action:
- In the 12-week period from the day the industrial action starts.
- That lasts longer than 12 weeks - but only if you haven't taken reasonable steps to resolve the dispute. Only an industrial tribunal/arbitrator can decide whether or not you've taken the necessary steps to resolve the dispute.
Subject to some exceptions (see below), an employee dismissed while taking part in unofficial industrial action can't generally claim unfair dismissal.
For the difference between official and unofficial industrial action, see our guide on industrial disputes.
If you 'lock-out' employees taking industrial action, the days of the lock-out are not included in the calculation of the 12-week protected period. A lock-out is where you prevent employees from getting to their workplace, eg, by locking the doors to the premises.
Apart from this, subject to some exceptions (see below), an industrial tribunal/arbitrator can't hear a complaint of unfair dismissal from an employee dismissed while taking part in official industrial action as long as you have:
- dismissed all those who were taking part in the action on the same date that you dismissed the person complaining of unfair dismissal
- not offered re-engagement to any dismissed employee within three months of the dismissal date, without making the person complaining of unfair dismissal a similar offer
Exceptions
The exceptions are that a tribunal/arbitrator can hear a complaint of unfair dismissal from an employee dismissed while taking part in industrial action - either official or unofficial - if the main reason:
- was that the employee took certain specified types of action on health and safety grounds
- related to maternity/paternity/adoption/parental/shared parental/parental bereavement leave, pregnancy, or time off for a dependant
- was that the employee exercised their rights under the Working Time Regulations (Northern Ireland) 2016
- related to the right to request flexible working arrangements
- was that the employee had been summoned or took time off work for jury service
- was that the employee took certain specified types of action as an employee representative or as a candidate to become one, or took part in the election of such a representative
An industrial tribunal/arbitrator can also hear a complaint of unfair dismissal from an employee dismissed while participating in unofficial industrial action if the reason or main reason for the dismissal was that the employee made a protected disclosure.
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Dismissals on conduct grounds
How to dismiss employees involved in incidents of misconduct.
If you find that an employee has been involved in an incident of misconduct, the action you take depends on how serious it is. For example:
- If the misconduct relates to a minor issue, the penalty for a first offence would normally be a verbal warning. This would be followed by a written warning if the offence is repeated within a specified timescale. Further occurrences would result in a final written warning and ultimately dismissal if repeated again.
- If the misconduct relates to a more serious issue, the employer may issue a final written warning for a first offence followed by dismissal for any further repeat of the offence within a specified time scale.
- The Labour Relations Agency (LRA) Code of Practice applies the statutory procedures to the issue of warnings as a matter of good practice.
- If the misconduct is of a very serious nature, the employer may dismiss for a first offence.
- No disciplinary action should be taken until there has been a thorough investigation into the alleged misconduct.
- Details of the alleged misconduct should be set out in writing and given to the employee prior to any hearing taking place.
- The employee must be offered the right to appeal against any decision taken within the formal procedure
- Throughout the formal process, employees have the right to be accompanied to all meetings and appeal meetings and to appeal to a more senior manager - ideally one not involved in the initial meetings
- The LRA Code of Practice on Disciplinary and Grievance Procedures recommends that verbal warnings remain on file for a six-month period and written warnings for a 12-month period.
Discipline and dismissal have a statutory procedure which must be followed and if it is not, where it applies, this may result in a finding of automatic unfair dismissal.
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Whistleblowing and dismissal
Protection from dismissal or detrimental treatment for workers who disclose a suspected relevant failure at work.
Workers who suspect wrongdoing and 'blow the whistle' to disclose these concerns to their employer are protected from dismissal or other negative consequences - as long as certain criteria are met. This law intends to help businesses quickly identify and resolve such problems.
The term 'workers' refers to those who work under:
- a contract of employment, eg, employees
- some other contract to perform work personally, eg, casual workers
It does not cover the genuinely self-employed.
The whistleblowing law also covers NHS practitioners, such as:
- GPs
- certain dentists
- pharmacists
- opticians
It also covers:
- agency workers
- certain categories of trainee
- those who contract to provide services to the Department of Health
- those who contract to provide services to a business via their own limited company - even if introduced via an employment agency or employment business
- student nurses and student midwives who undertake work experience as part of a course of education or training approved by, or under arrangements with, the Nursing and Midwifery Council (NMC)
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Whistleblowing: Qualifying disclosures
The types of disclosure that are eligible for protection from dismissal.
The types of disclosure that are eligible for protection are known as 'qualifying disclosures'.
These are where the worker reasonably believes that the disclosure is being made in the public interest and at least one 'relevant failure' is currently happening, took place in the past, or is likely to happen in the future.
Relevant failures can be:
- a criminal offence
- a miscarriage of justice
- damage to the environment
- the breach of a legal obligation
- a danger to the health or safety of any individual
- the deliberate covering up of information tending to show any of these matters
The same protection applies even if the qualifying disclosure concerns a relevant failure overseas or where the applicable law is not that of the UK.
Disclosures that can be characterised as being of a personal rather than public interest, will not be protected.
The belief does not need to be correct. The worker only needs to show that they held the belief and that it was a reasonable belief in the circumstances at the time they made the disclosure.
The disclosure is not a qualifying disclosure if:
- by making the disclosure, the worker has committed an offence, eg under the Official Secrets Act 1989
- the information should be protected from disclosure because of legal professional privilege, eg the disclosure has been made by a legal adviser (or their secretary) who has acquired the information in the course of providing legal advice
Qualifying disclosures made internally
A worker is protected if they make a qualifying disclosure to either:
- their employer - either directly or by using a procedure authorised by the employer for that purpose
- to another person who the worker reasonably believes to be solely or mainly responsible for the relevant failure
Ideally, you should have a whistleblowing policy that includes a procedure to follow if a worker wishes to make a qualifying disclosure.
Qualifying disclosures made externally
A worker is protected if they make a qualifying disclosure to an appropriate 'prescribed person'. These are certain statutory bodies - or people within them - who have the authority to receive disclosures relevant to the role of that particular body. Breaches in health and safety law, for example, can be brought to the attention of the Health and Safety Executive for Northern Ireland or the appropriate local council.
Public Interest Disclosure guidance.
For the disclosure to be protected, the worker must:
- reasonably believe the information and any allegation it contains are substantially true and are in the public interest to disclose
- reasonably believe they are making the disclosure to the relevant person or body
A qualifying disclosure is also a protected disclosure if it is made:
- to a government minister or a Northern Ireland Department Permanent Secretary by someone working in a government-appointed organisation - this could be directly or via departmental officials and in the public interest to disclose
- to a legal adviser in the course of obtaining legal advice - there are no further conditions attached
Other circumstances where an external disclosure is protected
A qualifying disclosure continues to be a protected disclosure if the conditions below are met.
Firstly, the worker must:
- not act for personal gain
- reasonably believe the information - and any allegation contained in it - is substantially true
In addition, one or more of the following conditions must be met:
- the worker must have previously disclosed the same information to their employer or to a prescribed person
- the worker reasonably believed they would be subjected to a detriment by their employer if the disclosure was made to the employer or a prescribed person
- in the absence of an appropriate prescribed person, the worker reasonably believed that disclosure to the employer would result in the destruction or concealment of information about the wrongdoing
Finally, it must be reasonable for the worker to make the disclosure. An industrial tribunal/arbitrator will decide whether the worker acted reasonably in all the circumstances, particularly taking into account:
- the seriousness of the relevant failure
- whether the relevant failure is continuing or likely to occur again
- whether the worker followed any internal procedures approved by the employer
- what action has, or might reasonably be expected to have, been taken where a previous disclosure was made to the employer or a prescribed person
- whether the disclosure breaches the employer's duty of confidentiality to others
- the identity of the person to whom the disclosure was made
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Whistleblowing: Exceptionally serious failures
How workers are protected when reporting an exceptionally serious failure in the workplace.
If the relevant failure is exceptionally serious, any qualifying disclosure made externally will be protected if the worker:
- does not act for personal gain
- reasonably believes the information disclosed, and any allegation contained in it, are substantially true
Also, it must be reasonable for the worker to make the disclosure in view of all the circumstances - with particular regard to the identity of the person to whom the disclosure is made.
Only an industrial tribunal/arbitrator can decide whether or not the relevant failure is exceptionally serious. This will be a matter of fact and not simply a matter of the worker reasonably believing it to be exceptionally serious.
Raising a grievance and making protected disclosures
Employees do not necessarily have to raise a grievance in order to make a protected disclosure.
For more information about grievance procedures, see our guide on handling grievances.
There may be good reasons why a worker wishes their identity to remain confidential. The law does not compel an organisation to protect the confidentiality of a whistleblower. However, it is considered best practice to maintain that confidentiality, unless required by law to disclose it.
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Whistleblowing: Right of complaint to an industrial tribunal
If an employee is dismissed for making a protected disclosure, they may bring a claim to an employment tribunal.
An employee may bring a claim for unfair dismissal if they are dismissed for making a protected disclosure. A tribunal/arbitrator will find any such dismissal to be automatically unfair.
An employee or other worker who believes they have been subjected to a detriment for making a protected disclosure can bring a complaint of detrimental treatment.
A worker subjected to a detriment by a co-worker in the course of that co-worker's employment with the employer, on the grounds that the worker made a protected disclosure, may be able to take a case to an Industrial Tribunal against both the co-worker and their employer.
A detriment can be either an act or a deliberate decision not to act by the employer. Whether an employee or other worker has suffered a detriment will be decided by the tribunal/arbitrator.
Examples of detrimental treatment include:
- threats of dismissal
- withholding a pay rise
- discrimination in promotion, transfer, or training opportunities
- failure to confer a benefit on a person who failed to accept an unlawful inducement that would have been conferred on them had they accepted the offer
Workers who are not employees cannot claim unfair dismissal. However, their dismissal could amount to a detriment and therefore they could still bring a detrimental treatment claim.
Remedies
Where a tribunal or arbitrator finds that an employee's complaint of unfair dismissal is justified, they will order either:
- reinstatement/re-employment
- the payment of compensation
Where an employee or other worker complains they have been subjected to a detriment and the tribunal or arbitrator finds the complaint well-founded, they will make a declaration to that effect and may order the payment of compensation.
An industrial tribunal will have the discretion to reduce a compensatory award by up to 25% in the event that it finds the disclosure has not been made in good faith.
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Whistleblowing and dismissal
In this guide:
- Dismissing employees
- Types of employee dismissal
- Fair dismissal
- Unfair dismissal
- Unfair dismissal: employee eligibility
- Dismissals on capability grounds
- Dismissal due to illness
- Dismissals relating to industrial action
- Dismissals on conduct grounds
- Whistleblowing and dismissal
- Whistleblowing: Qualifying disclosures
- Whistleblowing: Exceptionally serious failures
- Whistleblowing: Right of complaint to an industrial tribunal
Types of employee dismissal
The different types of staff dismissal and unfair dismissal claims.
There are several types of staff dismissal:
- fair dismissal
- unfair dismissal
- constructive dismissal
- wrongful dismissal
Fair and unfair dismissal
A dismissal is fair or unfair depending on your reason or reasons for dismissal and whether you act reasonably during the dismissal process. Industrial tribunals/arbitrators follow previous legal decisions in deciding what is reasonable. What is unfair dismissal and what is fair dismissal?
Constructive dismissal
Constructive dismissal occurs where an employee resigns because you have substantially breached their employment contract, for example:
- cutting wages without agreement
- unlawfully demoting them
- allowing colleagues to subject them to harassment, bullying, victimisation, humiliation or discrimination
- unfairly increasing their workload
- changing the location of their workplace without contractual authority
- making them work in dangerous conditions
The breach of contract can result from either a single serious event or the last in a series of less serious events.
An individual may claim constructive unfair dismissal. A constructive dismissal is not necessarily an unfair one but it's hard for an employer to show that an action in breach of the contract was, in fact, fair.
Wrongful dismissal
Wrongful dismissal is where a contractual term is broken in the dismissal process, for example, dismissing an employee without giving them proper notice.
For further information see the Employers' Handbook Section 18: Disciplinary issues and dismissal (PDF, 95K).
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Fair dismissal
You must have a valid reason for dismissing an employee - understand the reasons that constitute a fair dismissal.
To dismiss an employee fairly, you must first have a fair reason for doing so. Potential reasons for fair dismissal include:
- conduct
- capability
- redundancy
- a statutory requirement which could prevent the employment continuing, such as a driver losing their driving licence
- some other substantial reason - any other potentially fair reasons fall into this category
An example of 'some other substantial reason' would be the dismissal of an employee who was taken on as a temporary replacement for an employee on maternity leave. For such a dismissal to be fair, you must have told the replacement employee at the beginning of their employment that the job was only temporary.
In order for any dismissal to be fair, you must also act reasonably and fairly during the dismissal procedure.
Acting reasonably
There is no statutory definition of 'reasonableness'. Reasonableness will be judged taking into account the employer's size and resources and will also consider whether the employer:
- raised and dealt with the issue promptly and consistently throughout the process
- genuinely believed that the reason for dismissal was a potentially fair one
- had reasonable grounds for that belief
- carried out proper and reasonable investigations where appropriate
- followed statutory dismissal and disciplinary procedures
- informed the employee in writing why they were being considered for dismissal and listened to their views
- allowed the employee to be accompanied at disciplinary/dismissal hearings and appeals
- gave the employee the chance to appeal against the decision to dismiss
Reasonableness may also depend on whether the employee could be expected to understand the consequences of their behaviour.
Dismissal and disciplinary procedures
You must set out your dismissal and disciplinary rules and procedures in writing. Sample dismissal procedures (DOC, 14K).
There is a minimum statutory procedure that must be followed when you decide to dismiss an employee. Failure to follow this procedure may result in a finding of automatic unfair dismissal.
If you fail to follow the statutory procedure, where it applies, and the issue is subsequently heard by a tribunal, any compensation awarded to the employee could be increased by between 10% and 50%.
You should follow the good practice advice set out in the Labour Relations Agency (LRA) Code of Practice on Discipline and Grievance.
Additional advice, including sample procedures, can be found in the LRA guidance on advice on handling discipline and grievances at work.
Though tribunals/arbitrators do not have to take this booklet into account, it provides more detail and guidance which may be helpful.
Summary dismissals
Summary dismissal is the dismissal of an employee without notice or pay in lieu of notice - this occurs when they have committed an act of gross misconduct.
You should investigate the circumstances of the misconduct before dismissing the employee.
However, if you feel that you have no choice but to dismiss an employee, you must still follow statutory procedures.
Staff probationary periods
If you decide to dismiss an employee during their probationary period, you must follow at least the statutory dismissal and disciplinary procedure.
Third-party pressure to dismiss an employee
If a customer or client threatens to withdraw their business unless you dismiss one of your employees, only an industrial tribunal/arbitrator can determine whether or not such a dismissal is fair. Such dismissals are normally categorised as 'some other substantial reason'.
You cannot however take into account pressure exerted by a trade union by the calling or threatening of industrial action.
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Unfair dismissal
Reasons that automatically constitute the unfair dismissal of an employee.
Even if you think you have dismissed an employee fairly, they could decide to bring an unfair dismissal claim because they believe that:
- the reason you gave for the dismissal wasn't the real one
- you dismissed them for an unfair reason - see unfair dismissal
- you acted unreasonably, eg by failing to give the employee plenty of warning in the run-up to taking the decision to dismiss them
How to fairly dismiss an employee fairly
If you think you may have to dismiss an employee, make sure that you:
- Have a fair reason for dismissal.
- Follow - at the very least - the statutory dismissal procedure. If you unreasonably fail to follow the statutory dismissal procedure and the issue is heard at tribunal, any compensation awarded to the employee could be increased by between 10% and 50%.
- Follow any contractual disciplinary/dismissal procedure you may have, as well as the guidance outlined in the Labour Relations Agency (LRA) Code of Practice on Disciplinary and Grievance Procedures. Your contractual procedure should comply with the code.
See fair dismissal.
Penalties for unfair dismissals
If an employee has been unfairly dismissed, the employer may be ordered to reinstate or reengage the employee. This however is an exceptional outcome.
Invariably, a tribunal or arbitrator will award compensation, made up of a basic award that depends on the employee's age, gross weekly pay, length of service, and a compensatory award.
They can also make an additional award if you fail to follow an order to reinstate or re-engage the employee.
Apart from in health and safety and whistleblowing cases, there is a limit on the amount which can be awarded for unfair dismissal. For the latest limits on awards, see our table of current tribunal and arbitration compensation limits.
The Labour Relations Agency Arbitration Scheme
The Labour Relations Agency (LRA) Arbitration Scheme provides an alternative to having a case heard by a tribunal to resolve an employment-related dispute (for example, claims of unfair dismissal, breach of contract or discrimination, etc).
The scheme is quicker, confidential, non-legalistic, less formal, and more cost-effective than a tribunal hearing.
Under the scheme, an arbitrator's decision is binding as a matter of law and has the same effect as a tribunal.
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Unfair dismissal: employee eligibility
Employer consequences if you dismiss someone unfairly.
Employees can usually only claim unfair dismissal if they have worked for you for at least one year.
There are a number of reasons for dismissal that are automatically unfair. Most of these do not require the employee to have a minimum of one year's service, ie the employee will be able to claim unfair dismissal from day one of employment.
Who cannot complain to a tribunal about unfair dismissal?
The right to complain to a tribunal about unfair dismissal is also not available to:
- Self-employed people.
- Those who are not employees, eg, casual workers, independent contractors or freelance agents.
- Members of the armed forces.
- Employees who have reached a settlement with their employer via Labour Relations Agency (LRA) conciliation.
- Individuals working under an illegal contract, eg, a barman who is under the age of 18 years old or employees in receipt of untaxed monies.
- Employees covered by a dismissal procedure agreement that has been exempted from the unfair dismissal provisions by legislation. This is a rarely exercised legal provision.
- Employees taking part in unofficial industrial action (unless the dismissal is for certain specified reasons, eg, taking family leave or making a protected disclosure). For more information, see the page in this guide on dismissals relating to industrial action.
- The police (although police staff may make unfair dismissal claims where the dismissal relates to health and safety or the making of a protected disclosure).
- Those employed as a master - or as a member of the crew - of a fishing vessel where the individual is paid only by a share in the profits or gross earnings of the vessel.
- Employees who have reached a settlement with their employer via a 'compromise agreement'. This is an agreement reached, with the benefit of a relevant independent advisor who has professional indemnity insurance, in which the employee waives their right to make a complaint in relation to the dispute to which the settlement relates. This means that the agreement must specify the legal basis for the dispute - it cannot state that it covers all the possible employment-related claims.
Exemption from the unfair dismissal provisions
The parties to a dismissal-procedures agreement can apply jointly to the Department for the Economy to substitute provisions of the unfair dismissal legislation. Such substitution may be allowed if all the following points are satisfied:
- every trade union which is a party to the agreement is independent
- the agreement has a procedure to be followed if an employee claims to have been unfairly dismissed
- the procedure is non-discriminatory and available to all relevant employees
- the procedure gives employees a similar level of protection to that provided by the legislation
- the agreement includes provision either for arbitration in every case or allows arbitration in cases where a decision can't be reached or where a decision raises a question of law
- the agreement clearly defines which employees it applies to
Lay-offs and short-time working
You may temporarily lay off an employee or put them on short-time working, eg because of a downturn in work. This does not necessarily amount to a redundancy dismissal. You can only do this if the terms of their contract of employment allow it or by agreement with the employee. See Employers' Handbook Section 23: Lay-off and short time working (PDF, 33K).
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Dismissals on capability grounds
How to dismiss an employee fairly when they are incapable of doing their job properly or commit some form of misconduct.
Sometimes an employee is incapable of doing their job to the required standard. This may be because they don't have the right skills or aptitude for the job.
They may also be capable of doing their job, but unwilling or reluctant to do it properly. In these particular circumstances, you would deal with the issue as one of misconduct and follow your company disciplinary procedures and the statutory dismissal and disciplinary procedures (if they apply). Otherwise capability is a separate dismissal category to misconduct. See dismissals on conduct grounds.
In most cases involving capability, you can help an employee improve by taking informal action, eg by offering training/mentoring or another suitable job (you would only redeploy to another suitable job if this is something that they agree to at this stage).
Capability dismissals: lack of skills/aptitude
To ensure that any resulting capability dismissal is fair when formal action is taken - you should:
- Inform the employee in writing of the performance issues that exist and invite them to a meeting to discuss these issues.
- Following the meeting, give an employee who is found to be performing unsatisfactorily a written note, as a summary and explanation ideally, setting out the performance problems identified at the meeting, the improvement that is required, a reasonable timescale for achieving this improvement, a review date and any identified measures of support you will provide to assist them to meet the required standards.
- Inform your employee that the note represents the first stage of a formal procedure and that failure to improve could lead to a final written warning and, ultimately, dismissal. You should keep a copy of the note and use it as the basis for monitoring and reviewing performance over the specified timescale - see manage staff performance. You should also inform the employee that they may appeal at any stage of the formal process.
- If there is a failure to improve in the timescale outlined, repeat the above procedure and issue a final written warning.
- If again there is a failure to improve within the timescale set out in the final written warning, this may result in dismissal.
- Finally, you should note that some exceptional acts of incapability can merit summary dismissal.
- Throughout the formal process, employees have the right to be accompanied to all meetings and appeal meetings and to appeal to a more senior manager - ideally one not involved in the initial meetings. To read more on the right to be accompanied, read the LRA Code of Practice on Disciplinary and Grievance Procedures.
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Dismissal due to illness
How to handle dismissing an employee due to long-term ill health.
Dismissal due to capability may also include instances where the employer dismisses because the employee is no longer capable of doing the job they were employed to do, because of illness.
Occasionally, an employee may have to leave your employment because of long-term ill health. Sometimes the employee will simply choose to resign. However, you might eventually have to consider dismissing them.
In order for a dismissal to be potentially fair, you must ensure that you regularly communicate and consult with the employee, take appropriate medical advice, consider the effects of the absence on the business, consider alternatives to dismissal and, if appropriate, take account of any reasonable adjustments as required under disability discrimination legislation. See employ and support people with disabilities.
Finally, before dismissing an employee, you must also ensure you comply with the statutory dismissal procedures.
Prior to dismissal due to illness
Before dismissing an employee, you should consider as many ways as possible to help them back to work - dismissal is a last resort and could be unfair if not handled properly. It is also very important that you determine whether or not they are disabled under the Disability Discrimination Act 1995.
You can consider getting a medical report from their GP (with their written permission) or an occupational health assessment. Remember to ask the questions that are relevant to the job, as this will enable you to get the information you need to make an informed decision. The employee has the right to see the GP report before you and may choose not to disclose some information.
If their continued employment is no longer feasible because there are no reasonable adjustments that can be made, it may be fair for you to dismiss them.
During any dismissal procedure, you should treat all employees with sensitivity. You should also act fairly and reasonably. Your dismissal procedure must follow the statutory dismissal requirements.
If you unreasonably fail to follow the statutory dismissal procedures when dismissing and the employee is successful in unfair dismissal proceedings, any compensation awarded by the tribunal or arbitrator could be increased by between 10% and 50%.
If the employee who is subject to the procedure is disabled, you will also have to consider making any possible reasonable adjustments to allow for their needs; you have to address disability discrimination laws, so this is important.
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Dismissals relating to industrial action
How to ensure that you dismiss an employee fairly for reasons relating to industrial action.
It is automatically unfair to dismiss workers for taking part in official industrial action:
- In the 12-week period from the day the industrial action starts.
- That lasts longer than 12 weeks - but only if you haven't taken reasonable steps to resolve the dispute. Only an industrial tribunal/arbitrator can decide whether or not you've taken the necessary steps to resolve the dispute.
Subject to some exceptions (see below), an employee dismissed while taking part in unofficial industrial action can't generally claim unfair dismissal.
For the difference between official and unofficial industrial action, see our guide on industrial disputes.
If you 'lock-out' employees taking industrial action, the days of the lock-out are not included in the calculation of the 12-week protected period. A lock-out is where you prevent employees from getting to their workplace, eg, by locking the doors to the premises.
Apart from this, subject to some exceptions (see below), an industrial tribunal/arbitrator can't hear a complaint of unfair dismissal from an employee dismissed while taking part in official industrial action as long as you have:
- dismissed all those who were taking part in the action on the same date that you dismissed the person complaining of unfair dismissal
- not offered re-engagement to any dismissed employee within three months of the dismissal date, without making the person complaining of unfair dismissal a similar offer
Exceptions
The exceptions are that a tribunal/arbitrator can hear a complaint of unfair dismissal from an employee dismissed while taking part in industrial action - either official or unofficial - if the main reason:
- was that the employee took certain specified types of action on health and safety grounds
- related to maternity/paternity/adoption/parental/shared parental/parental bereavement leave, pregnancy, or time off for a dependant
- was that the employee exercised their rights under the Working Time Regulations (Northern Ireland) 2016
- related to the right to request flexible working arrangements
- was that the employee had been summoned or took time off work for jury service
- was that the employee took certain specified types of action as an employee representative or as a candidate to become one, or took part in the election of such a representative
An industrial tribunal/arbitrator can also hear a complaint of unfair dismissal from an employee dismissed while participating in unofficial industrial action if the reason or main reason for the dismissal was that the employee made a protected disclosure.
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Dismissals on conduct grounds
How to dismiss employees involved in incidents of misconduct.
If you find that an employee has been involved in an incident of misconduct, the action you take depends on how serious it is. For example:
- If the misconduct relates to a minor issue, the penalty for a first offence would normally be a verbal warning. This would be followed by a written warning if the offence is repeated within a specified timescale. Further occurrences would result in a final written warning and ultimately dismissal if repeated again.
- If the misconduct relates to a more serious issue, the employer may issue a final written warning for a first offence followed by dismissal for any further repeat of the offence within a specified time scale.
- The Labour Relations Agency (LRA) Code of Practice applies the statutory procedures to the issue of warnings as a matter of good practice.
- If the misconduct is of a very serious nature, the employer may dismiss for a first offence.
- No disciplinary action should be taken until there has been a thorough investigation into the alleged misconduct.
- Details of the alleged misconduct should be set out in writing and given to the employee prior to any hearing taking place.
- The employee must be offered the right to appeal against any decision taken within the formal procedure
- Throughout the formal process, employees have the right to be accompanied to all meetings and appeal meetings and to appeal to a more senior manager - ideally one not involved in the initial meetings
- The LRA Code of Practice on Disciplinary and Grievance Procedures recommends that verbal warnings remain on file for a six-month period and written warnings for a 12-month period.
Discipline and dismissal have a statutory procedure which must be followed and if it is not, where it applies, this may result in a finding of automatic unfair dismissal.
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Whistleblowing and dismissal
Protection from dismissal or detrimental treatment for workers who disclose a suspected relevant failure at work.
Workers who suspect wrongdoing and 'blow the whistle' to disclose these concerns to their employer are protected from dismissal or other negative consequences - as long as certain criteria are met. This law intends to help businesses quickly identify and resolve such problems.
The term 'workers' refers to those who work under:
- a contract of employment, eg, employees
- some other contract to perform work personally, eg, casual workers
It does not cover the genuinely self-employed.
The whistleblowing law also covers NHS practitioners, such as:
- GPs
- certain dentists
- pharmacists
- opticians
It also covers:
- agency workers
- certain categories of trainee
- those who contract to provide services to the Department of Health
- those who contract to provide services to a business via their own limited company - even if introduced via an employment agency or employment business
- student nurses and student midwives who undertake work experience as part of a course of education or training approved by, or under arrangements with, the Nursing and Midwifery Council (NMC)
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Whistleblowing: Qualifying disclosures
The types of disclosure that are eligible for protection from dismissal.
The types of disclosure that are eligible for protection are known as 'qualifying disclosures'.
These are where the worker reasonably believes that the disclosure is being made in the public interest and at least one 'relevant failure' is currently happening, took place in the past, or is likely to happen in the future.
Relevant failures can be:
- a criminal offence
- a miscarriage of justice
- damage to the environment
- the breach of a legal obligation
- a danger to the health or safety of any individual
- the deliberate covering up of information tending to show any of these matters
The same protection applies even if the qualifying disclosure concerns a relevant failure overseas or where the applicable law is not that of the UK.
Disclosures that can be characterised as being of a personal rather than public interest, will not be protected.
The belief does not need to be correct. The worker only needs to show that they held the belief and that it was a reasonable belief in the circumstances at the time they made the disclosure.
The disclosure is not a qualifying disclosure if:
- by making the disclosure, the worker has committed an offence, eg under the Official Secrets Act 1989
- the information should be protected from disclosure because of legal professional privilege, eg the disclosure has been made by a legal adviser (or their secretary) who has acquired the information in the course of providing legal advice
Qualifying disclosures made internally
A worker is protected if they make a qualifying disclosure to either:
- their employer - either directly or by using a procedure authorised by the employer for that purpose
- to another person who the worker reasonably believes to be solely or mainly responsible for the relevant failure
Ideally, you should have a whistleblowing policy that includes a procedure to follow if a worker wishes to make a qualifying disclosure.
Qualifying disclosures made externally
A worker is protected if they make a qualifying disclosure to an appropriate 'prescribed person'. These are certain statutory bodies - or people within them - who have the authority to receive disclosures relevant to the role of that particular body. Breaches in health and safety law, for example, can be brought to the attention of the Health and Safety Executive for Northern Ireland or the appropriate local council.
Public Interest Disclosure guidance.
For the disclosure to be protected, the worker must:
- reasonably believe the information and any allegation it contains are substantially true and are in the public interest to disclose
- reasonably believe they are making the disclosure to the relevant person or body
A qualifying disclosure is also a protected disclosure if it is made:
- to a government minister or a Northern Ireland Department Permanent Secretary by someone working in a government-appointed organisation - this could be directly or via departmental officials and in the public interest to disclose
- to a legal adviser in the course of obtaining legal advice - there are no further conditions attached
Other circumstances where an external disclosure is protected
A qualifying disclosure continues to be a protected disclosure if the conditions below are met.
Firstly, the worker must:
- not act for personal gain
- reasonably believe the information - and any allegation contained in it - is substantially true
In addition, one or more of the following conditions must be met:
- the worker must have previously disclosed the same information to their employer or to a prescribed person
- the worker reasonably believed they would be subjected to a detriment by their employer if the disclosure was made to the employer or a prescribed person
- in the absence of an appropriate prescribed person, the worker reasonably believed that disclosure to the employer would result in the destruction or concealment of information about the wrongdoing
Finally, it must be reasonable for the worker to make the disclosure. An industrial tribunal/arbitrator will decide whether the worker acted reasonably in all the circumstances, particularly taking into account:
- the seriousness of the relevant failure
- whether the relevant failure is continuing or likely to occur again
- whether the worker followed any internal procedures approved by the employer
- what action has, or might reasonably be expected to have, been taken where a previous disclosure was made to the employer or a prescribed person
- whether the disclosure breaches the employer's duty of confidentiality to others
- the identity of the person to whom the disclosure was made
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Whistleblowing: Exceptionally serious failures
How workers are protected when reporting an exceptionally serious failure in the workplace.
If the relevant failure is exceptionally serious, any qualifying disclosure made externally will be protected if the worker:
- does not act for personal gain
- reasonably believes the information disclosed, and any allegation contained in it, are substantially true
Also, it must be reasonable for the worker to make the disclosure in view of all the circumstances - with particular regard to the identity of the person to whom the disclosure is made.
Only an industrial tribunal/arbitrator can decide whether or not the relevant failure is exceptionally serious. This will be a matter of fact and not simply a matter of the worker reasonably believing it to be exceptionally serious.
Raising a grievance and making protected disclosures
Employees do not necessarily have to raise a grievance in order to make a protected disclosure.
For more information about grievance procedures, see our guide on handling grievances.
There may be good reasons why a worker wishes their identity to remain confidential. The law does not compel an organisation to protect the confidentiality of a whistleblower. However, it is considered best practice to maintain that confidentiality, unless required by law to disclose it.
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Whistleblowing: Right of complaint to an industrial tribunal
If an employee is dismissed for making a protected disclosure, they may bring a claim to an employment tribunal.
An employee may bring a claim for unfair dismissal if they are dismissed for making a protected disclosure. A tribunal/arbitrator will find any such dismissal to be automatically unfair.
An employee or other worker who believes they have been subjected to a detriment for making a protected disclosure can bring a complaint of detrimental treatment.
A worker subjected to a detriment by a co-worker in the course of that co-worker's employment with the employer, on the grounds that the worker made a protected disclosure, may be able to take a case to an Industrial Tribunal against both the co-worker and their employer.
A detriment can be either an act or a deliberate decision not to act by the employer. Whether an employee or other worker has suffered a detriment will be decided by the tribunal/arbitrator.
Examples of detrimental treatment include:
- threats of dismissal
- withholding a pay rise
- discrimination in promotion, transfer, or training opportunities
- failure to confer a benefit on a person who failed to accept an unlawful inducement that would have been conferred on them had they accepted the offer
Workers who are not employees cannot claim unfair dismissal. However, their dismissal could amount to a detriment and therefore they could still bring a detrimental treatment claim.
Remedies
Where a tribunal or arbitrator finds that an employee's complaint of unfair dismissal is justified, they will order either:
- reinstatement/re-employment
- the payment of compensation
Where an employee or other worker complains they have been subjected to a detriment and the tribunal or arbitrator finds the complaint well-founded, they will make a declaration to that effect and may order the payment of compensation.
An industrial tribunal will have the discretion to reduce a compensatory award by up to 25% in the event that it finds the disclosure has not been made in good faith.
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What happens after a winding-up order is made?
In this guide:
- Wind up a limited company that owes you money
- What is compulsory winding up?
- How do I wind up a company?
- Completing a winding-up petition
- Steps to serve a winding-up petition
- After serving a winding-up petition
- What happens at a winding-up hearing?
- What happens after a winding-up order is made?
- Support for winding up a company that owes you money
What is compulsory winding up?
The legal process of compulsory winding-up orders against insolvent companies through the courts.
In compulsory winding up, a creditor asks the High Court to wind up the affairs of an insolvent limited company. This legal process ends with the company's removal from the Companies House register - effectively ceasing to exist.
Once the order has been made the High Court appoints the Official Receiver (OR) as liquidator. The Official Receiver works for the Insolvency Service and finds out how and why an individual became bankrupt or a company went into compulsory liquidation.
The OR interviews the directors and informs the creditors of the liquidation. If the OR believes the company has enough assets for something to be paid to its creditors the OR will seek the appointment of an insolvency practitioner as liquidator - either by calling a creditors' meeting for the creditors to vote for the liquidator or by asking the Department for the Economy (DfE) to appoint one. If there are no assets the OR will remain liquidator.
Compulsory winding up involves the following:
- all the company's contracts - including employee contracts - are completed, transferred or ended
- the company ceases to do business
- outstanding legal disputes are settled
- all of the company's assets are sold
- any money owed to the company is collected
- any funds are distributed to creditors
- surplus funds - after the repayment of all debts - and share capital can be distributed to shareholders
For more information, see insolvency.
Sources of advice
If you are a creditor, it can be expensive to request a compulsory winding-up order, so you should get specialist legal and financial advice before petitioning the Court. Other sources of advice include:
- Citizens Advice Northern Ireland
- solicitors
- accountants
- authorised insolvency practitioners
- financial advisers
- debt advice centres
You will need to instruct a solicitor to handle the winding-up petition. A winding-up petition is heard in the High Court. The High Court may award costs against you if it considers that you have brought the petition inappropriately - eg the company disputes the debt between you.
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How do I wind up a company?
How to petition the High Court or a county court for a winding-up order against a company.
If you are owed money by a company that cannot or will not pay it back, you can apply to the Court for a winding-up order. As part of your petition, you will need to prove to the Court that the company cannot pay its debts.
It can be proved that a company cannot pay its debts if:
- a creditor owed over £750 serves the company with a 'statutory demand' - form 4.01 - which the company does not comply with within three weeks
- a creditor obtains judgment against the company and execution is unsatisfied (there are not enough assets or funds to clear the debt)
- the company cannot pay its debts when they are due
- the company's total debts exceed its total assets
Obtaining a judgment
A creditor obtains judgment against the company, it is lodged for enforcement with the Enforcement of Judgments Office and a certificate of unenforceability is issued under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981.
You must apply to the court if you want to issue a claim for judgment yourself.
Presenting your winding-up petition to the High Court
Winding-up petitions are presented in the Northern Ireland High Court in Belfast.
To contact the High Court, write to:
Northern Ireland High Court
Royal Courts of Justice
Chichester Street
BelfastAlternatively, you can contact the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812.
Find NI Court Service Court contact details and information.
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Completing a winding-up petition
How to complete a winding-up petition for a compulsory winding-up order against a company.
To apply for a compulsory winding-up order against a company, you must pay a deposit to the Department for the Economy (DfE) and you must complete a winding-up petition form 4.02 along with an affidavit (form 4.03) verifying matters giving rise to the petition.
Download winding-up petition form 4.02 (PDF, 97K).
Download affidavit form 4.03 (PDF, 80K).
Access DfE guidance on how to wind up a company that owes you money.
Companies House
You will need details of the company to complete the petition. You can search for company information using the WebCHeck service at Companies House. See find company information using Companies House services.
You can also get company details by calling the Companies House Contact Centre on Tel 0303 1234 500. You may, however, have to pay for some of the information you require.
Grounds for your winding-up petition
The petition will ask you to give your grounds for applying for a winding-up order, as well as other relevant information:
- where you have written a letter to the company to ask for your money, you should say what the debt was owed for, the amount you asked for in the letter and the date of the letter
- if you sent an invoice that was not paid, you should say what the debt was for, the amount you requested, and the date of the invoice
- if you are giving details of a certificate of unenforceability, you should include the date of the judgment, the High Court information and the case number
- if you sent a statutory demand for your money, you should give details of the amount you demanded, the date it was served on the registered office, and proof that at least three weeks have passed since it was served
Your grounds for petitioning should always include a statement that the company has not paid the debt, or an agreed proportion of it. You should also say if the company has been struck off, and give the date.
European Community Regulation on insolvency proceedings
In your winding-up petition, you must say whether or not the European Community (EC) Regulation on insolvency proceedings 2000 applies. There are three types of proceedings: 'main', 'secondary' and 'territorial':
- Main proceedings - can be opened only in a European Union member state where the debtor company has its 'centre of main interests'.
- Secondary proceedings - can be opened in a member state where the debtor company has an establishment. Secondary proceedings apply only to assets located in that state.
- Territorial proceedings - can be opened before main proceedings, but only by creditors of a company's establishment in the same country. These proceedings can also be used where main proceedings cannot be opened because the company has its main interests in a country with laws which disallow it.
Companies House provide information on cross-border insolvency proceedings.
If the company is registered in Northern Ireland and mainly carries out business in Northern Ireland, the EC Regulation will apply and the proceedings will be main proceedings. In other circumstances you should seek more legal advice.
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Steps to serve a winding-up petition
How to present a winding-up petition to the court and how to serve a winding-up petition on the debtor company.
When you have completed your winding-up petition you must present it to the Court. You do this by sending these documents:
- the original winding-up petition
- three copies of the petition - or four if the company has been dissolved
- the original affidavit
- receipt of deposit for £1165 paid to the Department for the Economy (DfE)
- a Court fee of £186
You will also be responsible for the costs involved in advertising the petition in the Belfast Gazette, using a process server for the service of a statutory demand and the petition and any costs for instructing a solicitor.
Download the DfE guidance on how to wind up a company that owes you money (PDF, 44KB).
If the Court is satisfied with your petition and the other documents, it will seal the petition and all copies, and send copies back to you. These will be marked or endorsed with the date and time they were filed, as well as the date and venue of the Court hearing.
Serving the petition on the debtor company
After the High Court has returned the sealed copies of the petition containing the date and time it was filed and the date and venue of the hearing, you must serve it on the company that owes you money. The petition must be served at the company's registered address - as shown on the public Register held by Companies House - either by you or by a process server company.
To find out more about process servers, see statutory demands.
You can serve a petition at the debtor company's registered office by handing it to:
- someone who acknowledges themselves as a director, officer or employee of the company
- a person authorised to accept service on the company's behalf
- a person who - in the server's opinion - is a director, officer or other employee of the company
If you or your agent cannot find a suitable person at the registered offices, the petition can be served by:
- placing it in a letter box
- placing it on a table, desk, chair, the floor or a radiator
- placing it on a receptionist's desk
After serving the petition
Immediately after service of the petition, the petitioner must file an affidavit at Court, verifying the service of the petition (Form 4.04/4.05).
The certificate of service must be sufficient to identify the petition served and must specify:
- the name and registered number of the company
- the address of the registered office of the company
- the name of the petitioner
- the Court in which the petition was filed and the Court reference number
- the date of the petition
- whether the copy served was a sealed copy
- the date on which service was effected
- the manner in which service was effected
If you cannot serve the petition by any of the methods listed above, you will need to apply to the High Court for permission to use another route, eg posting it to a director's last-known address. If you do this, you must attach a sealed copy of the order for substituted service to the certificate of service.
Where the company has been dissolved, you must serve the extra copy of the petition to the Crown Solicitor for Northern Ireland. This will enable you to apply for it to be restored to the Register.
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After serving a winding-up petition
What to do after you have served a winding-up petition on a debtor company.
After you have served a winding-up petition on a company that owes you money, you must complete forms to:
- provide the High Court with evidence that the petition has been served
- notify specified parties
- advertise the petition in the Belfast Gazette
- certify compliance with the winding-up petition procedures
Providing evidence of service (form 4.04/4.05)
Immediately after service of the petition, the petitioner must file an affidavit at the High Court, verifying the service of the petition (Form 4.04/4.05). For details of what this must show see steps to serve a winding-up petition.
Other people you should notify of a winding-up petition being served
Special arrangements apply if the company to which you have served a winding-up petition is:
- in voluntary liquidation
- in administrative receivership
- subject to an administration order or voluntary arrangement
If you discover that any of these arrangements are in place, you must send a copy of the petition on the next working day after service to the:
- liquidator
- administrative receiver
- administrator
- supervisor
For more information read company liquidation.
Advertising your petition (form 4.06)
Your petition must be advertised in the Belfast Gazette, at least seven working days after it was served and not later than seven working days before the winding-up hearing. The Gazette is monitored by banks and other financial institutions, which are obliged to freeze the accounts of companies listed, in case they worsen creditors' positions by disposing of assets before the hearing.
Find out how to advertise your petition on the Belfast Gazette.
Certificate of compliance (form 4.07)
At least five working days before the hearing, you must file a certificate of compliance with the court . This is a declaration that you have followed all the relevant procedures correctly, and must be accompanied by a copy of the full page of the Belfast Gazette containing the advert for your petition.
List of persons attending hearing
On the day before the winding-up hearing, you will need to send the Court a list of people who intend to appear. You can do this by completing form 4.10 'List of Persons Intending to Appear on the Hearing of the Petition'.
Withdrawing your petition
You can withdraw your petition if the company concerned pays their debt to you, or for another reason. However, once a petition has been issued, the winding-up hearing will still go ahead in the Court.
Contact the Court staff to find out the procedure for withdrawing your petition.
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What happens at a winding-up hearing?
Information on the court procedures at a winding-up hearing.
A winding-up hearing takes place if a Court decides to accept a winding-up petition from a creditor. If the Court finds that the company is unable to pay its debts or meet its liabilities, it can order it to go into compulsory liquidation.
All winding-up hearings take place in the High Court.
Hearings in the High Court
Your hearing will take place on the date marked - or endorsed - on the petition and copies returned to you by the Court.
For more information, see steps to serve a winding-up petition.
Hearings are presided over by the Master. You can appear in person or instruct a solicitor or barrister. Company creditors can be represented by one of their employees, if they choose, but must get the High Court's permission first.
The High Court will usually hear a large number of petitions on the same day as yours, and the time it begins may vary. You can confirm the time your hearing will begin by calling the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812, the day before it is due to take place.
On the day, try to arrive at the High Court at least half an hour before the proceedings begin to give yourself time to familiarise yourself with the building's layout. The Court's officials will tell you which room to go to and you should ensure you are there before your slot begins.
During the hearing, the High Court can then:
- make a winding-up order if your papers are in order
- dismiss the petition, eg if the company has paid its debt to you or you have come to an agreement
- adjourn the hearing if you have not been able to complete the documentation according to the Court's procedures or if you are still in negotiations with the company
- make an interim order
- make any other order it thinks fit
To find out more about the rules for completing your documentation, see completing a winding-up petition.
After considering the evidence, the High Court will decide whether or not to grant the order, and how costs should be awarded. If the order is granted, the registrar will appoint the Official Receiver to supervise the company's liquidation.
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What happens after a winding-up order is made?
What happens to a company after the court makes a winding-up order against it.
If the High Court makes an order to wind up a company it means that the company has gone into compulsory liquidation.
The High court will appoint the Official Receiver (OR) to act as liquidator for the company. The OR's duties are to:
- forward to the Registrar of Companies a copy of the order
- ensure that the winding-up order is advertised in the Belfast Gazette
- advertise the order in any other way if they feel it is appropriate to do so
- investigate the company's affairs to find out why it failed
The OR will also report to creditors on the company's assets and liabilities and tell them the likelihood of them being repaid any of their money. The OR also has a duty to investigate the causes of the failure of the company and the conduct of the directors. Where there are assets they may call a meeting of creditors, or ask the Department for Economy to appoint an insolvency practitioner (IP) to sell the assets and pay creditors.
Duties of company directors in liquidation proceedings
During a compulsory liquidation proceeding, the company's directors have the following duties:
- giving information about the company's affairs to the OR
- giving information about the company to any IP
- preserving the company's assets and handing them over to the OR or liquidator
The OR will interview the directors face to face. They will ask for information about the company's accounts, cashflow, assets and liabilities, and anything else affecting its ability to trade.
Directors can make a statement of truth about their conduct, which is admissible as evidence. The OR can also take into account statements of truth made by creditors, other company officials or employees, or third parties such as accountants.
The directors have a duty to ensure that the company's assets have not been disposed of. They must also give the OR or liquidator any management accounts, company books and records, insurance policies and bank statements relating to assets held.
For more information, see company liquidation.
Stays, rescissions and appeals
Even after an order has been made, the winding-up procedure can be stayed or rescinded, or the company can appeal against it. Applications for a permanent or temporary stay can be made by the liquidator, the OR or any creditor. If the High Court grants a permanent stay, the directors will usually regain control of the company.
The High Court can also rescind, or cancel, an order at the request of the OR, the liquidator or creditors. A rescission can be granted if it can be shown, for example, that the High Court did not have all the relevant facts when it was considering the order. Applications must be made within seven days of the order, unless the High Court gives permission otherwise.
The High Court's staff will tell you how to apply for a stay or rescission.
Period of liquidation
How long it takes to liquidate a company's assets will depend on its size and the complexity of its assets and liabilities. It can take some time for the liquidator to establish the facts concerning these, and to translate them into funds for release to creditors.
When the liquidation is complete following a final meeting, the liquidator will give notice to the High Court that winding up is complete and will be released from office. Three months from the date of the notice from the liquidator or OR, the company will be dissolved, unless a request for a deferral has been made. The company is then removed from the public Register at Companies House and ceases to exist.
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Support for winding up a company that owes you money
Sources of information on compulsory winding-up proceedings.
There are several organisations that can provide detailed information about winding up a company that owes you money.
The Insolvency Service
The Insolvency Service is a branch within the Department for the Economy (DfE) that is responsible for insolvency issues in Northern Ireland. This includes investigating the financial affairs of individuals who become bankrupt and failed companies in compulsory liquidation to find out how and why they became insolvent.
Where there is evidence of misconduct they may take action which can result in bankrupts receiving extended restrictions and directors being disqualified, both for periods of up to 15 years.
Read DfE's information about the Insolvency Service.
Institute of Directors
The Institute of Directors (IoD) is a membership organisation for business leaders. It has 20,000 members, as well as a large international network.
Read the IoD's factsheet on the duties and responsibilities of directors.
Companies House
Companies House is responsible for:
- incorporating and dissolving limited companies
- examining and keeping company information delivered under the Companies Act and other legislation
- making this information available to the public
Find and update company information by searching the Companies House register.
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Advantages and disadvantages of harmonising terms of employment
In this guide:
- Change an employee's terms of employment
- Checking the existing employment contract before making changes
- Consulting employees about changes to their terms of employment
- Failure to agree to employment contract changes
- Checklist: changing an employee's terms of employment
- Advantages and disadvantages of harmonising terms of employment
Checking the existing employment contract before making changes
How to check the details of an existing employment contract.
Before you think about altering any staff contracts, make sure you know exactly what is in the original. Every employee has a contract as soon as they start working for you, even if it has never been written down.
In addition, employees who work for you for a month or more must be given a written statement of main employment particulars within two months of joining. It is not itself a contract, but it can provide evidence of the contract's terms if there is a dispute. Read more on the written statement.
An employment contract typically includes various types of terms:
Express terms
These are terms explicitly agreed upon by both the employer and employee. They can be found in writing or verbally agreed upon. Examples include:
- Job title and description
- Pay rate
- Hours of work
- Holiday entitlement
- Notice periods
Implied terms
These are not written in the contract but are assumed to be part of it due to:
- Statutory rights (like minimum wage, working time regulations)
- Custom and practice within the workplace or industry
- Mutual trust and confidence between the employer and the employee
- The duty to provide a safe working environment
Incorporated terms
These might be included by reference from:
- Company handbooks or policies
- Terms that might be incorporated from collective bargaining agreements between recognised trade unions and employers
The Labour Relations Agency (LRA) provides guidance on these matters, including a webinar recording on Variation of Contract. This webinar focuses on what the terms of an employment contract are and the law around how and when an employer can vary these terms, emphasising the importance of consultation and agreement with employees to avoid breaches of contract or claims of constructive dismissal.
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Consulting employees about changes to their terms of employment
When and how to consult employees and their representatives.
Some contracts may contain terms that allow employers to make changes in working conditions. These should be reasonable, for example, performing additional tasks to reflect seasonal fluctuations in demand. Do not rely on such terms to make more fundamental changes because your employee may then claim the contract has been breached and may make various legal claims against you.
If you impose changes without an agreement, there will be a breach of contract. If the breach is a fundamental one eg a significant change in pay, an employee could resign and regard themselves as having been given no other choice but to do so. If they have more than one year of continuous employment with you, they can claim unfair constructive dismissal in an industrial tribunal. Damages for financial loss, for example, may also be sought in the civil courts if they have under a year of continuous service with you.
If you want to change terms or conditions in a collective agreement with a trade union that you formally recognise, you should always consult with the Trade Union to reach an agreement.
Consultation should be detailed and undertaken with a view to reaching an agreement, and you should fully explain the reasons for any changes.
ICE Regulations
The Information and Consultation of Employees (ICE) Regulations give employees in companies with 50 or more employees the right to request to be informed and consulted about significant developments in the workplace. If 10% or more of employees (subject to a minimum of 15 and a maximum of 2,500) make a valid request, businesses are required to negotiate a procedure for informing and consulting with employees.
TICE Regulations
The Transnational Information and Consultation of Employees (TICE) Regulations give employees in multinational companies the right to be represented on a European Works Council (EWC).
EWCs are designed to allow employees in different European Economic Area (EEA) states to be informed and consulted on transnational issues affecting the company. If your business has 1,000 or more employees and at least 150 employees in each of two or more EEA states, you may be subject to the legislation on transnational information and consultation.
Following the UK's withdrawal from the EU, the government has amended the TICE Regulations so that:
- No new requests to set up an EWC or Information and Consultation procedure can be made by people employed in the UK.
- Provisions relevant to the ongoing operation of existing EWCs will remain in force.
- Requests for information or to establish EWCs or Information and Consultation procedures made but not completed before the UK's withdrawal from the EU will be allowed to be completed.
See how to inform and consult your employees.
Consultation can take place on a one-to-one basis or in the form of group briefings. Whichever method you choose, you should provide an opportunity for employees to ask questions. Be prepared to answer these questions and ensure employees have the relevant information they need to prepare for the meeting. Always consider an individual's particular circumstances.
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Failure to agree to employment contract changes
What to do if you can't agree changes to employment contracts with employees.
Sometimes, despite negotiation, you may not be able to reach an agreement with an employee over changes to a contract.
But if you impose changes without agreement, there will be a breach of contract.
As noted in the previous page, if the breach of contract is a fundamental one - for instance, if it involves a significant change in pay or working hours - an employee could resign and regard themselves as having been given no other choice than to do so ('constructively dismissed'). If they have one year or more of continuous employment with you, they will be able to claim unfair constructive dismissal in an industrial tribunal.
If the breach of contract has caused them a measurable financial loss, employees can also sue for damages, either in industrial tribunals or in the ordinary courts.
Claims and awards
Industrial tribunal claims of unfair constructive dismissal must normally be made within three months of the employment ending, but civil court claims of breach of contract may be made up to six years from the date of the alleged incident.
Awards for damages in industrial tribunals are limited to £25,000 for breach of contract claims and, for unfair constructive dismissal, a compensatory award of £118,455 alongside a separate basic award (calculated on length of service, age, and weekly gross pay) capped at £22,470. These maximum amounts are reviewed annually. However, if the dismissal involves discrimination or whistleblowing, the compensation at an industrial tribunal can be unlimited, with no statutory cap.
There is no monetary limit for awards in the ordinary courts.
If employees are unable to seek damages because they have not suffered financial loss, the court may require the employer to abide by the original contract.
Contracts
You can consider terminating the original contract (dismissing the employee), provided you give the required notice. You should provide the minimum statutory notice period, or the notice specified in the employment contract, whichever is longer. See how to issue the correct periods of notice.
You can offer a new, revised contract to the dismissed employee. If the employee believes the dismissal was unfair, and they have one year or more of continuous employment with you, they may complain to an industrial tribunal. It would be up to the tribunal to decide whether the dismissal was fair or unfair.
The offer of a new contract could reduce the amount of a tribunal award because the employee's financial loss has been lessened by accepting the revised terms, or potentially, by rejecting the offer, they have not complied with their duty to lessen the loss. You should consider all other options and seek legal advice before deciding to impose a change without agreement or attempting to dismiss and re-engage. Changing a contract in this way can carry significant legal risks and can affect morale, productivity and employment relations in your organisation.
You may have to follow collective redundancy consultation procedures, even when no reduction of the workforce is planned, if you intend to impose new terms and conditions on 20 or more employees by terminating their existing contracts. Read more on the redundancy consultation process.
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Checklist: changing an employee's terms of employment
Find out the key steps to take and pitfalls to avoid when making changes to employment contracts.
You may want to change an employee's contract of employment for a number of reasons. Often, the nature of your business has changed, perhaps through expansion, a change in economic circumstances, or a reorganisation.
Things to consider when making changes to an employment contract
Make sure you:
- Familiarise yourself thoroughly with the details of any existing contracts before considering what alterations you want to make.
- Consult your staff about any changes you wish to introduce and include their trade union or other elected representatives. Simply imposing changes could mean a claim by employees for damages in a civil court, an industrial tribunal, or a constructive dismissal claim before an industrial tribunal.
- Discuss any changes with your staff in a thorough and detailed way, fully explaining the reasons for any planned alteration and taking into consideration the impact of the proposed changes in individual circumstances. Agreed changes should be confirmed in writing to the employee within one month.
- Try to negotiate a new contract if an agreement cannot be reached with an employee on changes.
- Document as much in writing as possible.
- Do not assume an employee's acceptance of changes imposed without agreement. An employee may accept the breach of contract, treat the breach as a termination of the contract, and bring a claim for constructive dismissal or continue working under protest, making it clear that the change is being treated as a breach of contract. An employee may complain to an industrial tribunal within three months of the change being imposed. The employee would have to resign and not wait too long before doing so; otherwise, it could be taken as an acceptance of the change.
Breach of contract cases can only be taken to the industrial tribunal if the employment has been terminated and the claim arises on termination of employment.
If the employee continues to work under protest, they may have to sue in a civil court unless the breach results in loss, which can be pursued through the Employment Rights (Northern Ireland) Order 1996 part 4 Protection of Wages as an unlawful deduction from wages claim. Such claims would be made to the Industrial Tribunal.
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Advantages and disadvantages of harmonising terms of employment
How reducing differences in pay and other terms and conditions of employment can benefit your business.
In order to reduce or eliminate differences between categories of employees, such as manual and non-manual workers, you should consider harmonising terms and conditions of employment across your business.
Harmonisation is more likely to lead to an improvement in terms and conditions rather than reducing them.
This will not only make your pay and benefits seem fairer to your staff but also help to ensure your pay and benefits system is not unlawfully discriminatory.
If you intend to use harmonisation to reduce any benefit or entitlement, it is important that this change is agreed before implementation and that the previous guidance on varying a contract of employment is followed.
What terms and conditions of employment can be harmonised?
There are different terms and conditions of employment where harmonisation can be used to benefit your business, such as:
- pensions
- overtime
- notice periods
- hours of work
- shift premiums
- canteen facilities
- sick pay schemes
- redundancy terms
- layoffs and short-time working
- holiday entitlements and holiday pay
- payment systems and methods of payment
- time-recording procedures, eg, clocking on and off
- fringe benefits, eg, health insurance, and company cars
Advantages of harmonisation
The benefits of harmonisation will vary from business to business, but may include:
- improved productivity
- more efficient administration
- improved recruitment and retention of employees
- better relationships between different grades of staff
Disadvantages of harmonisation
You may encounter certain problems when introducing harmonisation to your business, such as:
- increased wages bill and pension scheme contributions
- manager and employee resistance to changes to their status or working conditions, especially if they feel they won't personally benefit
- employee management problems if traditional controls are removed, such as clocking on and off
Harmonisation following the transfer of employees into your business
If you buy another business, the rights of any employees who transfer as part of the purchase are protected under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). Employees who transfer to your business do so with their pre-existing terms and conditions intact.
You must not change transferred employees' terms and conditions simply to harmonise them with those of your existing staff.
For more information, see responsibilities to employees if you buy or sell a business.
Introducing harmonisation
For harmonisation to succeed in your business, senior managers must be committed. Involve managers, employees, and - if applicable - workplace representatives both before you finalise any harmonisation programme and during its introduction.
Work out the costs and possible benefits of harmonisation and consider whether any of the costs will be offset by changes in working practices.
You will also need to:
- set a realistic timescale for the introduction of harmonisation
- carry out any necessary training
- monitor and maintain the changes
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Support for winding up a company that owes you money
In this guide:
- Wind up a limited company that owes you money
- What is compulsory winding up?
- How do I wind up a company?
- Completing a winding-up petition
- Steps to serve a winding-up petition
- After serving a winding-up petition
- What happens at a winding-up hearing?
- What happens after a winding-up order is made?
- Support for winding up a company that owes you money
What is compulsory winding up?
The legal process of compulsory winding-up orders against insolvent companies through the courts.
In compulsory winding up, a creditor asks the High Court to wind up the affairs of an insolvent limited company. This legal process ends with the company's removal from the Companies House register - effectively ceasing to exist.
Once the order has been made the High Court appoints the Official Receiver (OR) as liquidator. The Official Receiver works for the Insolvency Service and finds out how and why an individual became bankrupt or a company went into compulsory liquidation.
The OR interviews the directors and informs the creditors of the liquidation. If the OR believes the company has enough assets for something to be paid to its creditors the OR will seek the appointment of an insolvency practitioner as liquidator - either by calling a creditors' meeting for the creditors to vote for the liquidator or by asking the Department for the Economy (DfE) to appoint one. If there are no assets the OR will remain liquidator.
Compulsory winding up involves the following:
- all the company's contracts - including employee contracts - are completed, transferred or ended
- the company ceases to do business
- outstanding legal disputes are settled
- all of the company's assets are sold
- any money owed to the company is collected
- any funds are distributed to creditors
- surplus funds - after the repayment of all debts - and share capital can be distributed to shareholders
For more information, see insolvency.
Sources of advice
If you are a creditor, it can be expensive to request a compulsory winding-up order, so you should get specialist legal and financial advice before petitioning the Court. Other sources of advice include:
- Citizens Advice Northern Ireland
- solicitors
- accountants
- authorised insolvency practitioners
- financial advisers
- debt advice centres
You will need to instruct a solicitor to handle the winding-up petition. A winding-up petition is heard in the High Court. The High Court may award costs against you if it considers that you have brought the petition inappropriately - eg the company disputes the debt between you.
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How do I wind up a company?
How to petition the High Court or a county court for a winding-up order against a company.
If you are owed money by a company that cannot or will not pay it back, you can apply to the Court for a winding-up order. As part of your petition, you will need to prove to the Court that the company cannot pay its debts.
It can be proved that a company cannot pay its debts if:
- a creditor owed over £750 serves the company with a 'statutory demand' - form 4.01 - which the company does not comply with within three weeks
- a creditor obtains judgment against the company and execution is unsatisfied (there are not enough assets or funds to clear the debt)
- the company cannot pay its debts when they are due
- the company's total debts exceed its total assets
Obtaining a judgment
A creditor obtains judgment against the company, it is lodged for enforcement with the Enforcement of Judgments Office and a certificate of unenforceability is issued under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981.
You must apply to the court if you want to issue a claim for judgment yourself.
Presenting your winding-up petition to the High Court
Winding-up petitions are presented in the Northern Ireland High Court in Belfast.
To contact the High Court, write to:
Northern Ireland High Court
Royal Courts of Justice
Chichester Street
BelfastAlternatively, you can contact the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812.
Find NI Court Service Court contact details and information.
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Completing a winding-up petition
How to complete a winding-up petition for a compulsory winding-up order against a company.
To apply for a compulsory winding-up order against a company, you must pay a deposit to the Department for the Economy (DfE) and you must complete a winding-up petition form 4.02 along with an affidavit (form 4.03) verifying matters giving rise to the petition.
Download winding-up petition form 4.02 (PDF, 97K).
Download affidavit form 4.03 (PDF, 80K).
Access DfE guidance on how to wind up a company that owes you money.
Companies House
You will need details of the company to complete the petition. You can search for company information using the WebCHeck service at Companies House. See find company information using Companies House services.
You can also get company details by calling the Companies House Contact Centre on Tel 0303 1234 500. You may, however, have to pay for some of the information you require.
Grounds for your winding-up petition
The petition will ask you to give your grounds for applying for a winding-up order, as well as other relevant information:
- where you have written a letter to the company to ask for your money, you should say what the debt was owed for, the amount you asked for in the letter and the date of the letter
- if you sent an invoice that was not paid, you should say what the debt was for, the amount you requested, and the date of the invoice
- if you are giving details of a certificate of unenforceability, you should include the date of the judgment, the High Court information and the case number
- if you sent a statutory demand for your money, you should give details of the amount you demanded, the date it was served on the registered office, and proof that at least three weeks have passed since it was served
Your grounds for petitioning should always include a statement that the company has not paid the debt, or an agreed proportion of it. You should also say if the company has been struck off, and give the date.
European Community Regulation on insolvency proceedings
In your winding-up petition, you must say whether or not the European Community (EC) Regulation on insolvency proceedings 2000 applies. There are three types of proceedings: 'main', 'secondary' and 'territorial':
- Main proceedings - can be opened only in a European Union member state where the debtor company has its 'centre of main interests'.
- Secondary proceedings - can be opened in a member state where the debtor company has an establishment. Secondary proceedings apply only to assets located in that state.
- Territorial proceedings - can be opened before main proceedings, but only by creditors of a company's establishment in the same country. These proceedings can also be used where main proceedings cannot be opened because the company has its main interests in a country with laws which disallow it.
Companies House provide information on cross-border insolvency proceedings.
If the company is registered in Northern Ireland and mainly carries out business in Northern Ireland, the EC Regulation will apply and the proceedings will be main proceedings. In other circumstances you should seek more legal advice.
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Steps to serve a winding-up petition
How to present a winding-up petition to the court and how to serve a winding-up petition on the debtor company.
When you have completed your winding-up petition you must present it to the Court. You do this by sending these documents:
- the original winding-up petition
- three copies of the petition - or four if the company has been dissolved
- the original affidavit
- receipt of deposit for £1165 paid to the Department for the Economy (DfE)
- a Court fee of £186
You will also be responsible for the costs involved in advertising the petition in the Belfast Gazette, using a process server for the service of a statutory demand and the petition and any costs for instructing a solicitor.
Download the DfE guidance on how to wind up a company that owes you money (PDF, 44KB).
If the Court is satisfied with your petition and the other documents, it will seal the petition and all copies, and send copies back to you. These will be marked or endorsed with the date and time they were filed, as well as the date and venue of the Court hearing.
Serving the petition on the debtor company
After the High Court has returned the sealed copies of the petition containing the date and time it was filed and the date and venue of the hearing, you must serve it on the company that owes you money. The petition must be served at the company's registered address - as shown on the public Register held by Companies House - either by you or by a process server company.
To find out more about process servers, see statutory demands.
You can serve a petition at the debtor company's registered office by handing it to:
- someone who acknowledges themselves as a director, officer or employee of the company
- a person authorised to accept service on the company's behalf
- a person who - in the server's opinion - is a director, officer or other employee of the company
If you or your agent cannot find a suitable person at the registered offices, the petition can be served by:
- placing it in a letter box
- placing it on a table, desk, chair, the floor or a radiator
- placing it on a receptionist's desk
After serving the petition
Immediately after service of the petition, the petitioner must file an affidavit at Court, verifying the service of the petition (Form 4.04/4.05).
The certificate of service must be sufficient to identify the petition served and must specify:
- the name and registered number of the company
- the address of the registered office of the company
- the name of the petitioner
- the Court in which the petition was filed and the Court reference number
- the date of the petition
- whether the copy served was a sealed copy
- the date on which service was effected
- the manner in which service was effected
If you cannot serve the petition by any of the methods listed above, you will need to apply to the High Court for permission to use another route, eg posting it to a director's last-known address. If you do this, you must attach a sealed copy of the order for substituted service to the certificate of service.
Where the company has been dissolved, you must serve the extra copy of the petition to the Crown Solicitor for Northern Ireland. This will enable you to apply for it to be restored to the Register.
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After serving a winding-up petition
What to do after you have served a winding-up petition on a debtor company.
After you have served a winding-up petition on a company that owes you money, you must complete forms to:
- provide the High Court with evidence that the petition has been served
- notify specified parties
- advertise the petition in the Belfast Gazette
- certify compliance with the winding-up petition procedures
Providing evidence of service (form 4.04/4.05)
Immediately after service of the petition, the petitioner must file an affidavit at the High Court, verifying the service of the petition (Form 4.04/4.05). For details of what this must show see steps to serve a winding-up petition.
Other people you should notify of a winding-up petition being served
Special arrangements apply if the company to which you have served a winding-up petition is:
- in voluntary liquidation
- in administrative receivership
- subject to an administration order or voluntary arrangement
If you discover that any of these arrangements are in place, you must send a copy of the petition on the next working day after service to the:
- liquidator
- administrative receiver
- administrator
- supervisor
For more information read company liquidation.
Advertising your petition (form 4.06)
Your petition must be advertised in the Belfast Gazette, at least seven working days after it was served and not later than seven working days before the winding-up hearing. The Gazette is monitored by banks and other financial institutions, which are obliged to freeze the accounts of companies listed, in case they worsen creditors' positions by disposing of assets before the hearing.
Find out how to advertise your petition on the Belfast Gazette.
Certificate of compliance (form 4.07)
At least five working days before the hearing, you must file a certificate of compliance with the court . This is a declaration that you have followed all the relevant procedures correctly, and must be accompanied by a copy of the full page of the Belfast Gazette containing the advert for your petition.
List of persons attending hearing
On the day before the winding-up hearing, you will need to send the Court a list of people who intend to appear. You can do this by completing form 4.10 'List of Persons Intending to Appear on the Hearing of the Petition'.
Withdrawing your petition
You can withdraw your petition if the company concerned pays their debt to you, or for another reason. However, once a petition has been issued, the winding-up hearing will still go ahead in the Court.
Contact the Court staff to find out the procedure for withdrawing your petition.
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What happens at a winding-up hearing?
Information on the court procedures at a winding-up hearing.
A winding-up hearing takes place if a Court decides to accept a winding-up petition from a creditor. If the Court finds that the company is unable to pay its debts or meet its liabilities, it can order it to go into compulsory liquidation.
All winding-up hearings take place in the High Court.
Hearings in the High Court
Your hearing will take place on the date marked - or endorsed - on the petition and copies returned to you by the Court.
For more information, see steps to serve a winding-up petition.
Hearings are presided over by the Master. You can appear in person or instruct a solicitor or barrister. Company creditors can be represented by one of their employees, if they choose, but must get the High Court's permission first.
The High Court will usually hear a large number of petitions on the same day as yours, and the time it begins may vary. You can confirm the time your hearing will begin by calling the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812, the day before it is due to take place.
On the day, try to arrive at the High Court at least half an hour before the proceedings begin to give yourself time to familiarise yourself with the building's layout. The Court's officials will tell you which room to go to and you should ensure you are there before your slot begins.
During the hearing, the High Court can then:
- make a winding-up order if your papers are in order
- dismiss the petition, eg if the company has paid its debt to you or you have come to an agreement
- adjourn the hearing if you have not been able to complete the documentation according to the Court's procedures or if you are still in negotiations with the company
- make an interim order
- make any other order it thinks fit
To find out more about the rules for completing your documentation, see completing a winding-up petition.
After considering the evidence, the High Court will decide whether or not to grant the order, and how costs should be awarded. If the order is granted, the registrar will appoint the Official Receiver to supervise the company's liquidation.
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What happens after a winding-up order is made?
What happens to a company after the court makes a winding-up order against it.
If the High Court makes an order to wind up a company it means that the company has gone into compulsory liquidation.
The High court will appoint the Official Receiver (OR) to act as liquidator for the company. The OR's duties are to:
- forward to the Registrar of Companies a copy of the order
- ensure that the winding-up order is advertised in the Belfast Gazette
- advertise the order in any other way if they feel it is appropriate to do so
- investigate the company's affairs to find out why it failed
The OR will also report to creditors on the company's assets and liabilities and tell them the likelihood of them being repaid any of their money. The OR also has a duty to investigate the causes of the failure of the company and the conduct of the directors. Where there are assets they may call a meeting of creditors, or ask the Department for Economy to appoint an insolvency practitioner (IP) to sell the assets and pay creditors.
Duties of company directors in liquidation proceedings
During a compulsory liquidation proceeding, the company's directors have the following duties:
- giving information about the company's affairs to the OR
- giving information about the company to any IP
- preserving the company's assets and handing them over to the OR or liquidator
The OR will interview the directors face to face. They will ask for information about the company's accounts, cashflow, assets and liabilities, and anything else affecting its ability to trade.
Directors can make a statement of truth about their conduct, which is admissible as evidence. The OR can also take into account statements of truth made by creditors, other company officials or employees, or third parties such as accountants.
The directors have a duty to ensure that the company's assets have not been disposed of. They must also give the OR or liquidator any management accounts, company books and records, insurance policies and bank statements relating to assets held.
For more information, see company liquidation.
Stays, rescissions and appeals
Even after an order has been made, the winding-up procedure can be stayed or rescinded, or the company can appeal against it. Applications for a permanent or temporary stay can be made by the liquidator, the OR or any creditor. If the High Court grants a permanent stay, the directors will usually regain control of the company.
The High Court can also rescind, or cancel, an order at the request of the OR, the liquidator or creditors. A rescission can be granted if it can be shown, for example, that the High Court did not have all the relevant facts when it was considering the order. Applications must be made within seven days of the order, unless the High Court gives permission otherwise.
The High Court's staff will tell you how to apply for a stay or rescission.
Period of liquidation
How long it takes to liquidate a company's assets will depend on its size and the complexity of its assets and liabilities. It can take some time for the liquidator to establish the facts concerning these, and to translate them into funds for release to creditors.
When the liquidation is complete following a final meeting, the liquidator will give notice to the High Court that winding up is complete and will be released from office. Three months from the date of the notice from the liquidator or OR, the company will be dissolved, unless a request for a deferral has been made. The company is then removed from the public Register at Companies House and ceases to exist.
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Support for winding up a company that owes you money
Sources of information on compulsory winding-up proceedings.
There are several organisations that can provide detailed information about winding up a company that owes you money.
The Insolvency Service
The Insolvency Service is a branch within the Department for the Economy (DfE) that is responsible for insolvency issues in Northern Ireland. This includes investigating the financial affairs of individuals who become bankrupt and failed companies in compulsory liquidation to find out how and why they became insolvent.
Where there is evidence of misconduct they may take action which can result in bankrupts receiving extended restrictions and directors being disqualified, both for periods of up to 15 years.
Read DfE's information about the Insolvency Service.
Institute of Directors
The Institute of Directors (IoD) is a membership organisation for business leaders. It has 20,000 members, as well as a large international network.
Read the IoD's factsheet on the duties and responsibilities of directors.
Companies House
Companies House is responsible for:
- incorporating and dissolving limited companies
- examining and keeping company information delivered under the Companies Act and other legislation
- making this information available to the public
Find and update company information by searching the Companies House register.
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Completing a winding-up petition
In this guide:
- Wind up a limited company that owes you money
- What is compulsory winding up?
- How do I wind up a company?
- Completing a winding-up petition
- Steps to serve a winding-up petition
- After serving a winding-up petition
- What happens at a winding-up hearing?
- What happens after a winding-up order is made?
- Support for winding up a company that owes you money
What is compulsory winding up?
The legal process of compulsory winding-up orders against insolvent companies through the courts.
In compulsory winding up, a creditor asks the High Court to wind up the affairs of an insolvent limited company. This legal process ends with the company's removal from the Companies House register - effectively ceasing to exist.
Once the order has been made the High Court appoints the Official Receiver (OR) as liquidator. The Official Receiver works for the Insolvency Service and finds out how and why an individual became bankrupt or a company went into compulsory liquidation.
The OR interviews the directors and informs the creditors of the liquidation. If the OR believes the company has enough assets for something to be paid to its creditors the OR will seek the appointment of an insolvency practitioner as liquidator - either by calling a creditors' meeting for the creditors to vote for the liquidator or by asking the Department for the Economy (DfE) to appoint one. If there are no assets the OR will remain liquidator.
Compulsory winding up involves the following:
- all the company's contracts - including employee contracts - are completed, transferred or ended
- the company ceases to do business
- outstanding legal disputes are settled
- all of the company's assets are sold
- any money owed to the company is collected
- any funds are distributed to creditors
- surplus funds - after the repayment of all debts - and share capital can be distributed to shareholders
For more information, see insolvency.
Sources of advice
If you are a creditor, it can be expensive to request a compulsory winding-up order, so you should get specialist legal and financial advice before petitioning the Court. Other sources of advice include:
- Citizens Advice Northern Ireland
- solicitors
- accountants
- authorised insolvency practitioners
- financial advisers
- debt advice centres
You will need to instruct a solicitor to handle the winding-up petition. A winding-up petition is heard in the High Court. The High Court may award costs against you if it considers that you have brought the petition inappropriately - eg the company disputes the debt between you.
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How do I wind up a company?
How to petition the High Court or a county court for a winding-up order against a company.
If you are owed money by a company that cannot or will not pay it back, you can apply to the Court for a winding-up order. As part of your petition, you will need to prove to the Court that the company cannot pay its debts.
It can be proved that a company cannot pay its debts if:
- a creditor owed over £750 serves the company with a 'statutory demand' - form 4.01 - which the company does not comply with within three weeks
- a creditor obtains judgment against the company and execution is unsatisfied (there are not enough assets or funds to clear the debt)
- the company cannot pay its debts when they are due
- the company's total debts exceed its total assets
Obtaining a judgment
A creditor obtains judgment against the company, it is lodged for enforcement with the Enforcement of Judgments Office and a certificate of unenforceability is issued under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981.
You must apply to the court if you want to issue a claim for judgment yourself.
Presenting your winding-up petition to the High Court
Winding-up petitions are presented in the Northern Ireland High Court in Belfast.
To contact the High Court, write to:
Northern Ireland High Court
Royal Courts of Justice
Chichester Street
BelfastAlternatively, you can contact the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812.
Find NI Court Service Court contact details and information.
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Completing a winding-up petition
How to complete a winding-up petition for a compulsory winding-up order against a company.
To apply for a compulsory winding-up order against a company, you must pay a deposit to the Department for the Economy (DfE) and you must complete a winding-up petition form 4.02 along with an affidavit (form 4.03) verifying matters giving rise to the petition.
Download winding-up petition form 4.02 (PDF, 97K).
Download affidavit form 4.03 (PDF, 80K).
Access DfE guidance on how to wind up a company that owes you money.
Companies House
You will need details of the company to complete the petition. You can search for company information using the WebCHeck service at Companies House. See find company information using Companies House services.
You can also get company details by calling the Companies House Contact Centre on Tel 0303 1234 500. You may, however, have to pay for some of the information you require.
Grounds for your winding-up petition
The petition will ask you to give your grounds for applying for a winding-up order, as well as other relevant information:
- where you have written a letter to the company to ask for your money, you should say what the debt was owed for, the amount you asked for in the letter and the date of the letter
- if you sent an invoice that was not paid, you should say what the debt was for, the amount you requested, and the date of the invoice
- if you are giving details of a certificate of unenforceability, you should include the date of the judgment, the High Court information and the case number
- if you sent a statutory demand for your money, you should give details of the amount you demanded, the date it was served on the registered office, and proof that at least three weeks have passed since it was served
Your grounds for petitioning should always include a statement that the company has not paid the debt, or an agreed proportion of it. You should also say if the company has been struck off, and give the date.
European Community Regulation on insolvency proceedings
In your winding-up petition, you must say whether or not the European Community (EC) Regulation on insolvency proceedings 2000 applies. There are three types of proceedings: 'main', 'secondary' and 'territorial':
- Main proceedings - can be opened only in a European Union member state where the debtor company has its 'centre of main interests'.
- Secondary proceedings - can be opened in a member state where the debtor company has an establishment. Secondary proceedings apply only to assets located in that state.
- Territorial proceedings - can be opened before main proceedings, but only by creditors of a company's establishment in the same country. These proceedings can also be used where main proceedings cannot be opened because the company has its main interests in a country with laws which disallow it.
Companies House provide information on cross-border insolvency proceedings.
If the company is registered in Northern Ireland and mainly carries out business in Northern Ireland, the EC Regulation will apply and the proceedings will be main proceedings. In other circumstances you should seek more legal advice.
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Steps to serve a winding-up petition
How to present a winding-up petition to the court and how to serve a winding-up petition on the debtor company.
When you have completed your winding-up petition you must present it to the Court. You do this by sending these documents:
- the original winding-up petition
- three copies of the petition - or four if the company has been dissolved
- the original affidavit
- receipt of deposit for £1165 paid to the Department for the Economy (DfE)
- a Court fee of £186
You will also be responsible for the costs involved in advertising the petition in the Belfast Gazette, using a process server for the service of a statutory demand and the petition and any costs for instructing a solicitor.
Download the DfE guidance on how to wind up a company that owes you money (PDF, 44KB).
If the Court is satisfied with your petition and the other documents, it will seal the petition and all copies, and send copies back to you. These will be marked or endorsed with the date and time they were filed, as well as the date and venue of the Court hearing.
Serving the petition on the debtor company
After the High Court has returned the sealed copies of the petition containing the date and time it was filed and the date and venue of the hearing, you must serve it on the company that owes you money. The petition must be served at the company's registered address - as shown on the public Register held by Companies House - either by you or by a process server company.
To find out more about process servers, see statutory demands.
You can serve a petition at the debtor company's registered office by handing it to:
- someone who acknowledges themselves as a director, officer or employee of the company
- a person authorised to accept service on the company's behalf
- a person who - in the server's opinion - is a director, officer or other employee of the company
If you or your agent cannot find a suitable person at the registered offices, the petition can be served by:
- placing it in a letter box
- placing it on a table, desk, chair, the floor or a radiator
- placing it on a receptionist's desk
After serving the petition
Immediately after service of the petition, the petitioner must file an affidavit at Court, verifying the service of the petition (Form 4.04/4.05).
The certificate of service must be sufficient to identify the petition served and must specify:
- the name and registered number of the company
- the address of the registered office of the company
- the name of the petitioner
- the Court in which the petition was filed and the Court reference number
- the date of the petition
- whether the copy served was a sealed copy
- the date on which service was effected
- the manner in which service was effected
If you cannot serve the petition by any of the methods listed above, you will need to apply to the High Court for permission to use another route, eg posting it to a director's last-known address. If you do this, you must attach a sealed copy of the order for substituted service to the certificate of service.
Where the company has been dissolved, you must serve the extra copy of the petition to the Crown Solicitor for Northern Ireland. This will enable you to apply for it to be restored to the Register.
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After serving a winding-up petition
What to do after you have served a winding-up petition on a debtor company.
After you have served a winding-up petition on a company that owes you money, you must complete forms to:
- provide the High Court with evidence that the petition has been served
- notify specified parties
- advertise the petition in the Belfast Gazette
- certify compliance with the winding-up petition procedures
Providing evidence of service (form 4.04/4.05)
Immediately after service of the petition, the petitioner must file an affidavit at the High Court, verifying the service of the petition (Form 4.04/4.05). For details of what this must show see steps to serve a winding-up petition.
Other people you should notify of a winding-up petition being served
Special arrangements apply if the company to which you have served a winding-up petition is:
- in voluntary liquidation
- in administrative receivership
- subject to an administration order or voluntary arrangement
If you discover that any of these arrangements are in place, you must send a copy of the petition on the next working day after service to the:
- liquidator
- administrative receiver
- administrator
- supervisor
For more information read company liquidation.
Advertising your petition (form 4.06)
Your petition must be advertised in the Belfast Gazette, at least seven working days after it was served and not later than seven working days before the winding-up hearing. The Gazette is monitored by banks and other financial institutions, which are obliged to freeze the accounts of companies listed, in case they worsen creditors' positions by disposing of assets before the hearing.
Find out how to advertise your petition on the Belfast Gazette.
Certificate of compliance (form 4.07)
At least five working days before the hearing, you must file a certificate of compliance with the court . This is a declaration that you have followed all the relevant procedures correctly, and must be accompanied by a copy of the full page of the Belfast Gazette containing the advert for your petition.
List of persons attending hearing
On the day before the winding-up hearing, you will need to send the Court a list of people who intend to appear. You can do this by completing form 4.10 'List of Persons Intending to Appear on the Hearing of the Petition'.
Withdrawing your petition
You can withdraw your petition if the company concerned pays their debt to you, or for another reason. However, once a petition has been issued, the winding-up hearing will still go ahead in the Court.
Contact the Court staff to find out the procedure for withdrawing your petition.
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What happens at a winding-up hearing?
Information on the court procedures at a winding-up hearing.
A winding-up hearing takes place if a Court decides to accept a winding-up petition from a creditor. If the Court finds that the company is unable to pay its debts or meet its liabilities, it can order it to go into compulsory liquidation.
All winding-up hearings take place in the High Court.
Hearings in the High Court
Your hearing will take place on the date marked - or endorsed - on the petition and copies returned to you by the Court.
For more information, see steps to serve a winding-up petition.
Hearings are presided over by the Master. You can appear in person or instruct a solicitor or barrister. Company creditors can be represented by one of their employees, if they choose, but must get the High Court's permission first.
The High Court will usually hear a large number of petitions on the same day as yours, and the time it begins may vary. You can confirm the time your hearing will begin by calling the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812, the day before it is due to take place.
On the day, try to arrive at the High Court at least half an hour before the proceedings begin to give yourself time to familiarise yourself with the building's layout. The Court's officials will tell you which room to go to and you should ensure you are there before your slot begins.
During the hearing, the High Court can then:
- make a winding-up order if your papers are in order
- dismiss the petition, eg if the company has paid its debt to you or you have come to an agreement
- adjourn the hearing if you have not been able to complete the documentation according to the Court's procedures or if you are still in negotiations with the company
- make an interim order
- make any other order it thinks fit
To find out more about the rules for completing your documentation, see completing a winding-up petition.
After considering the evidence, the High Court will decide whether or not to grant the order, and how costs should be awarded. If the order is granted, the registrar will appoint the Official Receiver to supervise the company's liquidation.
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What happens after a winding-up order is made?
What happens to a company after the court makes a winding-up order against it.
If the High Court makes an order to wind up a company it means that the company has gone into compulsory liquidation.
The High court will appoint the Official Receiver (OR) to act as liquidator for the company. The OR's duties are to:
- forward to the Registrar of Companies a copy of the order
- ensure that the winding-up order is advertised in the Belfast Gazette
- advertise the order in any other way if they feel it is appropriate to do so
- investigate the company's affairs to find out why it failed
The OR will also report to creditors on the company's assets and liabilities and tell them the likelihood of them being repaid any of their money. The OR also has a duty to investigate the causes of the failure of the company and the conduct of the directors. Where there are assets they may call a meeting of creditors, or ask the Department for Economy to appoint an insolvency practitioner (IP) to sell the assets and pay creditors.
Duties of company directors in liquidation proceedings
During a compulsory liquidation proceeding, the company's directors have the following duties:
- giving information about the company's affairs to the OR
- giving information about the company to any IP
- preserving the company's assets and handing them over to the OR or liquidator
The OR will interview the directors face to face. They will ask for information about the company's accounts, cashflow, assets and liabilities, and anything else affecting its ability to trade.
Directors can make a statement of truth about their conduct, which is admissible as evidence. The OR can also take into account statements of truth made by creditors, other company officials or employees, or third parties such as accountants.
The directors have a duty to ensure that the company's assets have not been disposed of. They must also give the OR or liquidator any management accounts, company books and records, insurance policies and bank statements relating to assets held.
For more information, see company liquidation.
Stays, rescissions and appeals
Even after an order has been made, the winding-up procedure can be stayed or rescinded, or the company can appeal against it. Applications for a permanent or temporary stay can be made by the liquidator, the OR or any creditor. If the High Court grants a permanent stay, the directors will usually regain control of the company.
The High Court can also rescind, or cancel, an order at the request of the OR, the liquidator or creditors. A rescission can be granted if it can be shown, for example, that the High Court did not have all the relevant facts when it was considering the order. Applications must be made within seven days of the order, unless the High Court gives permission otherwise.
The High Court's staff will tell you how to apply for a stay or rescission.
Period of liquidation
How long it takes to liquidate a company's assets will depend on its size and the complexity of its assets and liabilities. It can take some time for the liquidator to establish the facts concerning these, and to translate them into funds for release to creditors.
When the liquidation is complete following a final meeting, the liquidator will give notice to the High Court that winding up is complete and will be released from office. Three months from the date of the notice from the liquidator or OR, the company will be dissolved, unless a request for a deferral has been made. The company is then removed from the public Register at Companies House and ceases to exist.
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Support for winding up a company that owes you money
Sources of information on compulsory winding-up proceedings.
There are several organisations that can provide detailed information about winding up a company that owes you money.
The Insolvency Service
The Insolvency Service is a branch within the Department for the Economy (DfE) that is responsible for insolvency issues in Northern Ireland. This includes investigating the financial affairs of individuals who become bankrupt and failed companies in compulsory liquidation to find out how and why they became insolvent.
Where there is evidence of misconduct they may take action which can result in bankrupts receiving extended restrictions and directors being disqualified, both for periods of up to 15 years.
Read DfE's information about the Insolvency Service.
Institute of Directors
The Institute of Directors (IoD) is a membership organisation for business leaders. It has 20,000 members, as well as a large international network.
Read the IoD's factsheet on the duties and responsibilities of directors.
Companies House
Companies House is responsible for:
- incorporating and dissolving limited companies
- examining and keeping company information delivered under the Companies Act and other legislation
- making this information available to the public
Find and update company information by searching the Companies House register.
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Ensuring you are registered as a creditor
In this guide:
- Owed money from a bankrupt or a company in liquidation
- Who deals with bankruptcy and company liquidation claims?
- Ensuring you are registered as a creditor
- Order of priority for repayment of creditors
- Making a bankruptcy or company liquidation claim
- Creditors' meetings and creditors'/liquidation committees
- Conduct and voting at creditors' meetings
- Completion of bankruptcy and company liquidation cases
Who deals with bankruptcy and company liquidation claims?
The role of the official receiver, insolvency practitioner, trustee and liquidator, and relevant costs and fees.
The early stages of a bankruptcy or compulsory liquidation are usually handled by the official receiver (OR). If there are significant assets, an insolvency practitioner (IP) may be appointed as trustee/liquidator in place of the OR.
The OR is a civil servant at the Insolvency Service and an officer of the High Court. The Insolvency Service is responsible for dealing with financial failure and misconduct through the OR. As well as administering cases, the OR has a duty to investigate the affairs of individuals in bankruptcy and companies in compulsory liquidation.
IPs are licensed insolvency specialists who work in the private sector - usually as accountants or solicitors. By law, they must be authorised to act as IPs. They handle all other insolvency procedures except fast-track voluntary arrangements and debt relief orders. To find out more see individual voluntary arrangements, administration orders and debt relief orders.
Both the OR and IPs are legally required to report unfit conduct to the Directors Disqualification Unit of The Insolvency Service. They will then decide whether or not to begin court proceedings to disqualify the director or extend the restrictions on a bankrupt.
The trustee in bankruptcy is the OR/IP who takes control of the assets. The trustee's main duties are to sell these assets and share out the money among the creditors.
The liquidator is the OR/IP appointed to administer the liquidation of a company or partnership.
Trustee or liquidator payment
Payment - known as remuneration - the OR acting as trustee/liquidator is specified under insolvency law.
If an IP is acting as trustee/liquidator, the remuneration can be fixed as a percentage of the value of the assets realised - sold - and distributed, or on a time basis. If creditors don't agree a remuneration, the IP gets the same amount that would have been paid to the OR - unless the IP applies to court and arranges a higher amount.
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Ensuring you are registered as a creditor
How to find contact details for the official receiver or insolvency practitioner dealing with your debtor's case.
If the official receiver (OR) or insolvency practitioner (IP) dealing with the case of someone who owes you money knows that you are a creditor, you should be contacted automatically. All known creditors are notified of the initial bankruptcy or winding-up order.
If you believe a company or individual that owes you money may be subject to insolvency proceedings, and you haven't been notified, you should write to the OR/IP dealing with it. You should give the full name of the company or individual, as well as your own details.
Any information you can provide about the assets of the company or individual - or about the conduct of the director(s) or individual - would also be useful.
There are various ways of finding out who is dealing with the case:
- For a company insolvency, search for details using the Companies House BETA service.
- Contact the Insolvency Service NI Enquiry Line on Tel 028 9054 8531 or by email at insolvency@economy-ni.gov.uk.
- Insolvency notices and details about administrators/liquidators/trustees are published in The Belfast Gazette.
If a partnership is involved, bankruptcy orders may have been made against individual partners - details of which would be on the register maintained by the High Court.
Don't expect frequent updates from the OR/IP. After your claim is filed, you will be sent a report to creditors - which will give you information about the assets and liabilities of the company or individual, and the circumstances of the insolvency.
It can take weeks, months or even years to realise - sell - assets. If you are concerned, contact the OR/IP handling the case. Remember to notify the OR/IP if you change your address.
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Order of priority for repayment of creditors
The strict order of priority in which creditors are repaid.
Secured creditors are the first to get paid when a debtor's assets are realised - sold or disposed of to raise money. For example, a creditor who holds a fixed charge - a security interest taken to protect against non-payment of debt - or security on an asset such as a mortgage has the right to sell the asset to recover their debt. Any surplus money is then handed over to the trustee/liquidator.
After the secured debts have been repaid, the trustee/liquidator distributes the remaining proceeds to pay the following - in strict order of priority:
- Liquidation/bankruptcy fees and charges - this does not include court fees.
- Debts due to preferential creditors - those entitled to certain payments in priority over other unsecured creditors - including wages owed in the four months before the date of the insolvency order, as well as all holiday pay and contributions to occupational pension schemes.
- In company cases, any creditor holding a floating charge over an asset, such as a debenture. This is where a class of goods or assets - eg the debtor's stock - are named as security for a debt.
- All unsecured creditors.
- Any interest payable on debts.
- The shareholders in company cases.
If full repayment of unsecured claims isn't possible, the money available is divided between creditors in proportion to the value of each claim.
How much you are paid will depend on the amount of money that can be realised and the number of claims. If there are few assets, you may not get anything.
If you wish to see a full list of creditors showing how much each is owed, you can ask the official receiver (OR)/insolvency practitioner (IP) for this. The OR/IP is allowed to charge a fee for this service. Alternatively, you have a right to view the court file - unless the court directs otherwise.
If a statement of affairs has been submitted, the OR/IP will direct you to the court file. A statement of affairs is a document completed by a bankrupt, company officer, or director(s) stating the assets and giving details of all debts and creditors.
When paying a dividend, the OR/IP can reject the whole or part of a creditor's claim but must give reasons for doing so in writing. If you are dissatisfied with the decision on your claim, you can apply to the court in which the bankruptcy or winding-up order was made for it to be reversed or varied.
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Making a bankruptcy or company liquidation claim
Submitting a proof of debt form for your claim.
If you have been contacted by the official receiver (OR) or insolvency practitioner (IP) who is acting as the trustee/liquidator, then they already have a note of your claim. If you contacted the OR/IP, your details will have been added to the list of creditors.
You will be sent a proof of debt form to complete and return if the OR/IP intends to make a payment to creditors or hold a meeting of creditors. The information you provide helps the OR/IP confirm that you are a genuine creditor and the amount you are owed.
Access the Department for the Economy (DfE) insolvency forms.
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Creditors' meetings and creditors'/liquidation committees
Procedures for calling a meeting of creditors and for appointing a creditors' committee or liquidation committee.
The official receiver (OR) usually decides to hold a first meeting of creditors if there are significant assets to be realised - ie sold. This is so creditors can vote to appoint an insolvency practitioner (IP) as trustee or liquidator.
If the OR doesn't believe the assets available are enough to attract an IP, the OR will send notice to all creditors that no first meeting is to be held and that they will be the trustee/liquidator.
The OR must hold a first meeting if it's requested, in writing, by enough creditors to account for at least 25% of the value of debt owed. Creditors requesting a meeting have to lodge a deposit to cover any costs of that meeting.
Further meetings of creditors - called general meetings - are sometimes held, if:
- requested by enough creditors to account for at least 25% of the value of debt owed
- the trustee/liquidator wants to find out the creditors' wishes in any matter relating to the insolvency proceedings
Where an IP is trustee/liquidator, a final meeting of creditors will eventually be called - see completion of bankruptcy and company liquidation cases.
Appointing a creditors'/liquidation committee
Where an IP is appointed, a creditors/liquidation committee can also be appointed to supervise the trustee/liquidator on behalf of the creditors. In liquidations - it's called a liquidation committee, in bankruptcies - it's called a creditors' committee.
The committee consists of between three and five elected creditors. You have a right to nominate yourself or any other creditor to be a committee member, and you can vote for yourself. The elected creditor can act personally, or appoint a representative.
If certain actions are proposed by the trustee/liquidator, they need to be approved by the creditors'/liquidation committee.
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Conduct and voting at creditors' meetings
What happens at a first meeting of creditors, how an insolvency practitioner is appointed and the rules on voting.
At a first meeting of creditors, the chair - usually the official receiver (OR) will check that everyone present is allowed to be at the meeting, explain its purpose and give details about the insolvent's assets. The meeting then votes on the appointment of an insolvency practitioner (IP) as trustee or liquidator.
You can normally only vote at a meeting if you returned your proof of debt form to the OR within the time limit specified. For more information on proof of debt forms, see making a claim and the order of repayment.
If you won't be attending the meeting and would like someone to vote on your behalf, you must submit a proxy form. You will find the proxy form supplied with the OR's notice that the creditors' meeting has been called.
Voting at a meeting of creditors is by value. This means certain voters may have more than one or a greater proportion of the vote - dependent on the amount of money they are owed. The chair will calculate this after checking the proofs of debt and proxy forms that have been submitted.
For an IP to be appointed by the meeting of creditors, the vote must be supported by a majority in value - relating to the total debt owed.
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Completion of bankruptcy and company liquidation cases
How the official receiver or insolvency practitioner is released from the case and your right to object.
If the official receiver (OR) is dealing with the insolvency case for which you are a creditor, they will inform you when they have completed the insolvency. You will also be sent a summary of the OR's receipts and payments as trustee/liquidator.
As a creditor, you can object to the OR's release. Generally, the OR's release can only be withheld if they have failed to realise - sell - assets that were available to be realised, or have misapplied the proceeds of any assets realised.
If an insolvency practitioner (IP) is dealing with the case, you will be invited to the final meeting of creditors. At this meeting, the IP will report on how they have handled the case and give a summary of the receipts and payments. The creditors may question the liquidator about what is in the report and have the option of either granting or refusing the release of the IP.
What legal action can I take against the bankrupt, company or the trustee/liquidator?
After the date of the court order, unsecured creditors cannot take any action against the bankrupt or company without the court's consent. You must submit your claim to the trustee/liquidator. You can apply to the court if you are dissatisfied with the actions of the OR/IP. Before you apply to the court you may wish to take legal advice.
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Who deals with bankruptcy and company liquidation claims?
In this guide:
- Owed money from a bankrupt or a company in liquidation
- Who deals with bankruptcy and company liquidation claims?
- Ensuring you are registered as a creditor
- Order of priority for repayment of creditors
- Making a bankruptcy or company liquidation claim
- Creditors' meetings and creditors'/liquidation committees
- Conduct and voting at creditors' meetings
- Completion of bankruptcy and company liquidation cases
Who deals with bankruptcy and company liquidation claims?
The role of the official receiver, insolvency practitioner, trustee and liquidator, and relevant costs and fees.
The early stages of a bankruptcy or compulsory liquidation are usually handled by the official receiver (OR). If there are significant assets, an insolvency practitioner (IP) may be appointed as trustee/liquidator in place of the OR.
The OR is a civil servant at the Insolvency Service and an officer of the High Court. The Insolvency Service is responsible for dealing with financial failure and misconduct through the OR. As well as administering cases, the OR has a duty to investigate the affairs of individuals in bankruptcy and companies in compulsory liquidation.
IPs are licensed insolvency specialists who work in the private sector - usually as accountants or solicitors. By law, they must be authorised to act as IPs. They handle all other insolvency procedures except fast-track voluntary arrangements and debt relief orders. To find out more see individual voluntary arrangements, administration orders and debt relief orders.
Both the OR and IPs are legally required to report unfit conduct to the Directors Disqualification Unit of The Insolvency Service. They will then decide whether or not to begin court proceedings to disqualify the director or extend the restrictions on a bankrupt.
The trustee in bankruptcy is the OR/IP who takes control of the assets. The trustee's main duties are to sell these assets and share out the money among the creditors.
The liquidator is the OR/IP appointed to administer the liquidation of a company or partnership.
Trustee or liquidator payment
Payment - known as remuneration - the OR acting as trustee/liquidator is specified under insolvency law.
If an IP is acting as trustee/liquidator, the remuneration can be fixed as a percentage of the value of the assets realised - sold - and distributed, or on a time basis. If creditors don't agree a remuneration, the IP gets the same amount that would have been paid to the OR - unless the IP applies to court and arranges a higher amount.
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Ensuring you are registered as a creditor
How to find contact details for the official receiver or insolvency practitioner dealing with your debtor's case.
If the official receiver (OR) or insolvency practitioner (IP) dealing with the case of someone who owes you money knows that you are a creditor, you should be contacted automatically. All known creditors are notified of the initial bankruptcy or winding-up order.
If you believe a company or individual that owes you money may be subject to insolvency proceedings, and you haven't been notified, you should write to the OR/IP dealing with it. You should give the full name of the company or individual, as well as your own details.
Any information you can provide about the assets of the company or individual - or about the conduct of the director(s) or individual - would also be useful.
There are various ways of finding out who is dealing with the case:
- For a company insolvency, search for details using the Companies House BETA service.
- Contact the Insolvency Service NI Enquiry Line on Tel 028 9054 8531 or by email at insolvency@economy-ni.gov.uk.
- Insolvency notices and details about administrators/liquidators/trustees are published in The Belfast Gazette.
If a partnership is involved, bankruptcy orders may have been made against individual partners - details of which would be on the register maintained by the High Court.
Don't expect frequent updates from the OR/IP. After your claim is filed, you will be sent a report to creditors - which will give you information about the assets and liabilities of the company or individual, and the circumstances of the insolvency.
It can take weeks, months or even years to realise - sell - assets. If you are concerned, contact the OR/IP handling the case. Remember to notify the OR/IP if you change your address.
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Order of priority for repayment of creditors
The strict order of priority in which creditors are repaid.
Secured creditors are the first to get paid when a debtor's assets are realised - sold or disposed of to raise money. For example, a creditor who holds a fixed charge - a security interest taken to protect against non-payment of debt - or security on an asset such as a mortgage has the right to sell the asset to recover their debt. Any surplus money is then handed over to the trustee/liquidator.
After the secured debts have been repaid, the trustee/liquidator distributes the remaining proceeds to pay the following - in strict order of priority:
- Liquidation/bankruptcy fees and charges - this does not include court fees.
- Debts due to preferential creditors - those entitled to certain payments in priority over other unsecured creditors - including wages owed in the four months before the date of the insolvency order, as well as all holiday pay and contributions to occupational pension schemes.
- In company cases, any creditor holding a floating charge over an asset, such as a debenture. This is where a class of goods or assets - eg the debtor's stock - are named as security for a debt.
- All unsecured creditors.
- Any interest payable on debts.
- The shareholders in company cases.
If full repayment of unsecured claims isn't possible, the money available is divided between creditors in proportion to the value of each claim.
How much you are paid will depend on the amount of money that can be realised and the number of claims. If there are few assets, you may not get anything.
If you wish to see a full list of creditors showing how much each is owed, you can ask the official receiver (OR)/insolvency practitioner (IP) for this. The OR/IP is allowed to charge a fee for this service. Alternatively, you have a right to view the court file - unless the court directs otherwise.
If a statement of affairs has been submitted, the OR/IP will direct you to the court file. A statement of affairs is a document completed by a bankrupt, company officer, or director(s) stating the assets and giving details of all debts and creditors.
When paying a dividend, the OR/IP can reject the whole or part of a creditor's claim but must give reasons for doing so in writing. If you are dissatisfied with the decision on your claim, you can apply to the court in which the bankruptcy or winding-up order was made for it to be reversed or varied.
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Making a bankruptcy or company liquidation claim
Submitting a proof of debt form for your claim.
If you have been contacted by the official receiver (OR) or insolvency practitioner (IP) who is acting as the trustee/liquidator, then they already have a note of your claim. If you contacted the OR/IP, your details will have been added to the list of creditors.
You will be sent a proof of debt form to complete and return if the OR/IP intends to make a payment to creditors or hold a meeting of creditors. The information you provide helps the OR/IP confirm that you are a genuine creditor and the amount you are owed.
Access the Department for the Economy (DfE) insolvency forms.
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Creditors' meetings and creditors'/liquidation committees
Procedures for calling a meeting of creditors and for appointing a creditors' committee or liquidation committee.
The official receiver (OR) usually decides to hold a first meeting of creditors if there are significant assets to be realised - ie sold. This is so creditors can vote to appoint an insolvency practitioner (IP) as trustee or liquidator.
If the OR doesn't believe the assets available are enough to attract an IP, the OR will send notice to all creditors that no first meeting is to be held and that they will be the trustee/liquidator.
The OR must hold a first meeting if it's requested, in writing, by enough creditors to account for at least 25% of the value of debt owed. Creditors requesting a meeting have to lodge a deposit to cover any costs of that meeting.
Further meetings of creditors - called general meetings - are sometimes held, if:
- requested by enough creditors to account for at least 25% of the value of debt owed
- the trustee/liquidator wants to find out the creditors' wishes in any matter relating to the insolvency proceedings
Where an IP is trustee/liquidator, a final meeting of creditors will eventually be called - see completion of bankruptcy and company liquidation cases.
Appointing a creditors'/liquidation committee
Where an IP is appointed, a creditors/liquidation committee can also be appointed to supervise the trustee/liquidator on behalf of the creditors. In liquidations - it's called a liquidation committee, in bankruptcies - it's called a creditors' committee.
The committee consists of between three and five elected creditors. You have a right to nominate yourself or any other creditor to be a committee member, and you can vote for yourself. The elected creditor can act personally, or appoint a representative.
If certain actions are proposed by the trustee/liquidator, they need to be approved by the creditors'/liquidation committee.
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Conduct and voting at creditors' meetings
What happens at a first meeting of creditors, how an insolvency practitioner is appointed and the rules on voting.
At a first meeting of creditors, the chair - usually the official receiver (OR) will check that everyone present is allowed to be at the meeting, explain its purpose and give details about the insolvent's assets. The meeting then votes on the appointment of an insolvency practitioner (IP) as trustee or liquidator.
You can normally only vote at a meeting if you returned your proof of debt form to the OR within the time limit specified. For more information on proof of debt forms, see making a claim and the order of repayment.
If you won't be attending the meeting and would like someone to vote on your behalf, you must submit a proxy form. You will find the proxy form supplied with the OR's notice that the creditors' meeting has been called.
Voting at a meeting of creditors is by value. This means certain voters may have more than one or a greater proportion of the vote - dependent on the amount of money they are owed. The chair will calculate this after checking the proofs of debt and proxy forms that have been submitted.
For an IP to be appointed by the meeting of creditors, the vote must be supported by a majority in value - relating to the total debt owed.
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Completion of bankruptcy and company liquidation cases
How the official receiver or insolvency practitioner is released from the case and your right to object.
If the official receiver (OR) is dealing with the insolvency case for which you are a creditor, they will inform you when they have completed the insolvency. You will also be sent a summary of the OR's receipts and payments as trustee/liquidator.
As a creditor, you can object to the OR's release. Generally, the OR's release can only be withheld if they have failed to realise - sell - assets that were available to be realised, or have misapplied the proceeds of any assets realised.
If an insolvency practitioner (IP) is dealing with the case, you will be invited to the final meeting of creditors. At this meeting, the IP will report on how they have handled the case and give a summary of the receipts and payments. The creditors may question the liquidator about what is in the report and have the option of either granting or refusing the release of the IP.
What legal action can I take against the bankrupt, company or the trustee/liquidator?
After the date of the court order, unsecured creditors cannot take any action against the bankrupt or company without the court's consent. You must submit your claim to the trustee/liquidator. You can apply to the court if you are dissatisfied with the actions of the OR/IP. Before you apply to the court you may wish to take legal advice.
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Steps to serve a winding-up petition
In this guide:
- Wind up a limited company that owes you money
- What is compulsory winding up?
- How do I wind up a company?
- Completing a winding-up petition
- Steps to serve a winding-up petition
- After serving a winding-up petition
- What happens at a winding-up hearing?
- What happens after a winding-up order is made?
- Support for winding up a company that owes you money
What is compulsory winding up?
The legal process of compulsory winding-up orders against insolvent companies through the courts.
In compulsory winding up, a creditor asks the High Court to wind up the affairs of an insolvent limited company. This legal process ends with the company's removal from the Companies House register - effectively ceasing to exist.
Once the order has been made the High Court appoints the Official Receiver (OR) as liquidator. The Official Receiver works for the Insolvency Service and finds out how and why an individual became bankrupt or a company went into compulsory liquidation.
The OR interviews the directors and informs the creditors of the liquidation. If the OR believes the company has enough assets for something to be paid to its creditors the OR will seek the appointment of an insolvency practitioner as liquidator - either by calling a creditors' meeting for the creditors to vote for the liquidator or by asking the Department for the Economy (DfE) to appoint one. If there are no assets the OR will remain liquidator.
Compulsory winding up involves the following:
- all the company's contracts - including employee contracts - are completed, transferred or ended
- the company ceases to do business
- outstanding legal disputes are settled
- all of the company's assets are sold
- any money owed to the company is collected
- any funds are distributed to creditors
- surplus funds - after the repayment of all debts - and share capital can be distributed to shareholders
For more information, see insolvency.
Sources of advice
If you are a creditor, it can be expensive to request a compulsory winding-up order, so you should get specialist legal and financial advice before petitioning the Court. Other sources of advice include:
- Citizens Advice Northern Ireland
- solicitors
- accountants
- authorised insolvency practitioners
- financial advisers
- debt advice centres
You will need to instruct a solicitor to handle the winding-up petition. A winding-up petition is heard in the High Court. The High Court may award costs against you if it considers that you have brought the petition inappropriately - eg the company disputes the debt between you.
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How do I wind up a company?
How to petition the High Court or a county court for a winding-up order against a company.
If you are owed money by a company that cannot or will not pay it back, you can apply to the Court for a winding-up order. As part of your petition, you will need to prove to the Court that the company cannot pay its debts.
It can be proved that a company cannot pay its debts if:
- a creditor owed over £750 serves the company with a 'statutory demand' - form 4.01 - which the company does not comply with within three weeks
- a creditor obtains judgment against the company and execution is unsatisfied (there are not enough assets or funds to clear the debt)
- the company cannot pay its debts when they are due
- the company's total debts exceed its total assets
Obtaining a judgment
A creditor obtains judgment against the company, it is lodged for enforcement with the Enforcement of Judgments Office and a certificate of unenforceability is issued under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981.
You must apply to the court if you want to issue a claim for judgment yourself.
Presenting your winding-up petition to the High Court
Winding-up petitions are presented in the Northern Ireland High Court in Belfast.
To contact the High Court, write to:
Northern Ireland High Court
Royal Courts of Justice
Chichester Street
BelfastAlternatively, you can contact the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812.
Find NI Court Service Court contact details and information.
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Completing a winding-up petition
How to complete a winding-up petition for a compulsory winding-up order against a company.
To apply for a compulsory winding-up order against a company, you must pay a deposit to the Department for the Economy (DfE) and you must complete a winding-up petition form 4.02 along with an affidavit (form 4.03) verifying matters giving rise to the petition.
Download winding-up petition form 4.02 (PDF, 97K).
Download affidavit form 4.03 (PDF, 80K).
Access DfE guidance on how to wind up a company that owes you money.
Companies House
You will need details of the company to complete the petition. You can search for company information using the WebCHeck service at Companies House. See find company information using Companies House services.
You can also get company details by calling the Companies House Contact Centre on Tel 0303 1234 500. You may, however, have to pay for some of the information you require.
Grounds for your winding-up petition
The petition will ask you to give your grounds for applying for a winding-up order, as well as other relevant information:
- where you have written a letter to the company to ask for your money, you should say what the debt was owed for, the amount you asked for in the letter and the date of the letter
- if you sent an invoice that was not paid, you should say what the debt was for, the amount you requested, and the date of the invoice
- if you are giving details of a certificate of unenforceability, you should include the date of the judgment, the High Court information and the case number
- if you sent a statutory demand for your money, you should give details of the amount you demanded, the date it was served on the registered office, and proof that at least three weeks have passed since it was served
Your grounds for petitioning should always include a statement that the company has not paid the debt, or an agreed proportion of it. You should also say if the company has been struck off, and give the date.
European Community Regulation on insolvency proceedings
In your winding-up petition, you must say whether or not the European Community (EC) Regulation on insolvency proceedings 2000 applies. There are three types of proceedings: 'main', 'secondary' and 'territorial':
- Main proceedings - can be opened only in a European Union member state where the debtor company has its 'centre of main interests'.
- Secondary proceedings - can be opened in a member state where the debtor company has an establishment. Secondary proceedings apply only to assets located in that state.
- Territorial proceedings - can be opened before main proceedings, but only by creditors of a company's establishment in the same country. These proceedings can also be used where main proceedings cannot be opened because the company has its main interests in a country with laws which disallow it.
Companies House provide information on cross-border insolvency proceedings.
If the company is registered in Northern Ireland and mainly carries out business in Northern Ireland, the EC Regulation will apply and the proceedings will be main proceedings. In other circumstances you should seek more legal advice.
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Steps to serve a winding-up petition
How to present a winding-up petition to the court and how to serve a winding-up petition on the debtor company.
When you have completed your winding-up petition you must present it to the Court. You do this by sending these documents:
- the original winding-up petition
- three copies of the petition - or four if the company has been dissolved
- the original affidavit
- receipt of deposit for £1165 paid to the Department for the Economy (DfE)
- a Court fee of £186
You will also be responsible for the costs involved in advertising the petition in the Belfast Gazette, using a process server for the service of a statutory demand and the petition and any costs for instructing a solicitor.
Download the DfE guidance on how to wind up a company that owes you money (PDF, 44KB).
If the Court is satisfied with your petition and the other documents, it will seal the petition and all copies, and send copies back to you. These will be marked or endorsed with the date and time they were filed, as well as the date and venue of the Court hearing.
Serving the petition on the debtor company
After the High Court has returned the sealed copies of the petition containing the date and time it was filed and the date and venue of the hearing, you must serve it on the company that owes you money. The petition must be served at the company's registered address - as shown on the public Register held by Companies House - either by you or by a process server company.
To find out more about process servers, see statutory demands.
You can serve a petition at the debtor company's registered office by handing it to:
- someone who acknowledges themselves as a director, officer or employee of the company
- a person authorised to accept service on the company's behalf
- a person who - in the server's opinion - is a director, officer or other employee of the company
If you or your agent cannot find a suitable person at the registered offices, the petition can be served by:
- placing it in a letter box
- placing it on a table, desk, chair, the floor or a radiator
- placing it on a receptionist's desk
After serving the petition
Immediately after service of the petition, the petitioner must file an affidavit at Court, verifying the service of the petition (Form 4.04/4.05).
The certificate of service must be sufficient to identify the petition served and must specify:
- the name and registered number of the company
- the address of the registered office of the company
- the name of the petitioner
- the Court in which the petition was filed and the Court reference number
- the date of the petition
- whether the copy served was a sealed copy
- the date on which service was effected
- the manner in which service was effected
If you cannot serve the petition by any of the methods listed above, you will need to apply to the High Court for permission to use another route, eg posting it to a director's last-known address. If you do this, you must attach a sealed copy of the order for substituted service to the certificate of service.
Where the company has been dissolved, you must serve the extra copy of the petition to the Crown Solicitor for Northern Ireland. This will enable you to apply for it to be restored to the Register.
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After serving a winding-up petition
What to do after you have served a winding-up petition on a debtor company.
After you have served a winding-up petition on a company that owes you money, you must complete forms to:
- provide the High Court with evidence that the petition has been served
- notify specified parties
- advertise the petition in the Belfast Gazette
- certify compliance with the winding-up petition procedures
Providing evidence of service (form 4.04/4.05)
Immediately after service of the petition, the petitioner must file an affidavit at the High Court, verifying the service of the petition (Form 4.04/4.05). For details of what this must show see steps to serve a winding-up petition.
Other people you should notify of a winding-up petition being served
Special arrangements apply if the company to which you have served a winding-up petition is:
- in voluntary liquidation
- in administrative receivership
- subject to an administration order or voluntary arrangement
If you discover that any of these arrangements are in place, you must send a copy of the petition on the next working day after service to the:
- liquidator
- administrative receiver
- administrator
- supervisor
For more information read company liquidation.
Advertising your petition (form 4.06)
Your petition must be advertised in the Belfast Gazette, at least seven working days after it was served and not later than seven working days before the winding-up hearing. The Gazette is monitored by banks and other financial institutions, which are obliged to freeze the accounts of companies listed, in case they worsen creditors' positions by disposing of assets before the hearing.
Find out how to advertise your petition on the Belfast Gazette.
Certificate of compliance (form 4.07)
At least five working days before the hearing, you must file a certificate of compliance with the court . This is a declaration that you have followed all the relevant procedures correctly, and must be accompanied by a copy of the full page of the Belfast Gazette containing the advert for your petition.
List of persons attending hearing
On the day before the winding-up hearing, you will need to send the Court a list of people who intend to appear. You can do this by completing form 4.10 'List of Persons Intending to Appear on the Hearing of the Petition'.
Withdrawing your petition
You can withdraw your petition if the company concerned pays their debt to you, or for another reason. However, once a petition has been issued, the winding-up hearing will still go ahead in the Court.
Contact the Court staff to find out the procedure for withdrawing your petition.
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What happens at a winding-up hearing?
Information on the court procedures at a winding-up hearing.
A winding-up hearing takes place if a Court decides to accept a winding-up petition from a creditor. If the Court finds that the company is unable to pay its debts or meet its liabilities, it can order it to go into compulsory liquidation.
All winding-up hearings take place in the High Court.
Hearings in the High Court
Your hearing will take place on the date marked - or endorsed - on the petition and copies returned to you by the Court.
For more information, see steps to serve a winding-up petition.
Hearings are presided over by the Master. You can appear in person or instruct a solicitor or barrister. Company creditors can be represented by one of their employees, if they choose, but must get the High Court's permission first.
The High Court will usually hear a large number of petitions on the same day as yours, and the time it begins may vary. You can confirm the time your hearing will begin by calling the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812, the day before it is due to take place.
On the day, try to arrive at the High Court at least half an hour before the proceedings begin to give yourself time to familiarise yourself with the building's layout. The Court's officials will tell you which room to go to and you should ensure you are there before your slot begins.
During the hearing, the High Court can then:
- make a winding-up order if your papers are in order
- dismiss the petition, eg if the company has paid its debt to you or you have come to an agreement
- adjourn the hearing if you have not been able to complete the documentation according to the Court's procedures or if you are still in negotiations with the company
- make an interim order
- make any other order it thinks fit
To find out more about the rules for completing your documentation, see completing a winding-up petition.
After considering the evidence, the High Court will decide whether or not to grant the order, and how costs should be awarded. If the order is granted, the registrar will appoint the Official Receiver to supervise the company's liquidation.
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What happens after a winding-up order is made?
What happens to a company after the court makes a winding-up order against it.
If the High Court makes an order to wind up a company it means that the company has gone into compulsory liquidation.
The High court will appoint the Official Receiver (OR) to act as liquidator for the company. The OR's duties are to:
- forward to the Registrar of Companies a copy of the order
- ensure that the winding-up order is advertised in the Belfast Gazette
- advertise the order in any other way if they feel it is appropriate to do so
- investigate the company's affairs to find out why it failed
The OR will also report to creditors on the company's assets and liabilities and tell them the likelihood of them being repaid any of their money. The OR also has a duty to investigate the causes of the failure of the company and the conduct of the directors. Where there are assets they may call a meeting of creditors, or ask the Department for Economy to appoint an insolvency practitioner (IP) to sell the assets and pay creditors.
Duties of company directors in liquidation proceedings
During a compulsory liquidation proceeding, the company's directors have the following duties:
- giving information about the company's affairs to the OR
- giving information about the company to any IP
- preserving the company's assets and handing them over to the OR or liquidator
The OR will interview the directors face to face. They will ask for information about the company's accounts, cashflow, assets and liabilities, and anything else affecting its ability to trade.
Directors can make a statement of truth about their conduct, which is admissible as evidence. The OR can also take into account statements of truth made by creditors, other company officials or employees, or third parties such as accountants.
The directors have a duty to ensure that the company's assets have not been disposed of. They must also give the OR or liquidator any management accounts, company books and records, insurance policies and bank statements relating to assets held.
For more information, see company liquidation.
Stays, rescissions and appeals
Even after an order has been made, the winding-up procedure can be stayed or rescinded, or the company can appeal against it. Applications for a permanent or temporary stay can be made by the liquidator, the OR or any creditor. If the High Court grants a permanent stay, the directors will usually regain control of the company.
The High Court can also rescind, or cancel, an order at the request of the OR, the liquidator or creditors. A rescission can be granted if it can be shown, for example, that the High Court did not have all the relevant facts when it was considering the order. Applications must be made within seven days of the order, unless the High Court gives permission otherwise.
The High Court's staff will tell you how to apply for a stay or rescission.
Period of liquidation
How long it takes to liquidate a company's assets will depend on its size and the complexity of its assets and liabilities. It can take some time for the liquidator to establish the facts concerning these, and to translate them into funds for release to creditors.
When the liquidation is complete following a final meeting, the liquidator will give notice to the High Court that winding up is complete and will be released from office. Three months from the date of the notice from the liquidator or OR, the company will be dissolved, unless a request for a deferral has been made. The company is then removed from the public Register at Companies House and ceases to exist.
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Support for winding up a company that owes you money
Sources of information on compulsory winding-up proceedings.
There are several organisations that can provide detailed information about winding up a company that owes you money.
The Insolvency Service
The Insolvency Service is a branch within the Department for the Economy (DfE) that is responsible for insolvency issues in Northern Ireland. This includes investigating the financial affairs of individuals who become bankrupt and failed companies in compulsory liquidation to find out how and why they became insolvent.
Where there is evidence of misconduct they may take action which can result in bankrupts receiving extended restrictions and directors being disqualified, both for periods of up to 15 years.
Read DfE's information about the Insolvency Service.
Institute of Directors
The Institute of Directors (IoD) is a membership organisation for business leaders. It has 20,000 members, as well as a large international network.
Read the IoD's factsheet on the duties and responsibilities of directors.
Companies House
Companies House is responsible for:
- incorporating and dissolving limited companies
- examining and keeping company information delivered under the Companies Act and other legislation
- making this information available to the public
Find and update company information by searching the Companies House register.
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