How does a company shutting down affect maternity pay?

I am currently on maternity leave and the company I am working for is possibly going into liquidation. I am scheduled to return to work after Easter 2012. At the moment I am still due three months full pay, then SMP until February 2012 and then a month’s holiday pay (carried over from this year’s holiday allowance). Should the company close what is still owed to me and how will I go about putting a claim in for it? All I have been told at the moment is that should the company go under I will have to claim the SMP directly from HMRC. Will I be owed the 3 months salary, any accrued holiday pay and any redundancy?

If the company becomes insolvent, then the position in terms of outstanding monies owed to employees will depend upon the type of insolvency proceedings that are used. However, it is likely that you will rank as a “preferential creditor” for the purpose of any outstanding contractual payments, e.g. contractual maternity pay, accrued holiday pay, etc. This means that you would be entitled to be paid in priority to other categories of creditors (with the exception of those holding fixed charges against the company’s assets).

In reality, it may be that the assets of the company following the insolvency proceedings are insufficient to cover all of the outstanding monies owed to you. If this is the case, you may be able to claim through the National Insurance Fund (NIF) in respect of some of the monies owed to you under your contract of employment, including notice pay and holiday pay. However, there are various caps as to the amounts that you can claim through the NIF, and contractual maternity pay is not listed as a principal debt payable from the Fund. As such, it may be that you are unable to recover this sum.

As you are already aware, your entitlement to statutory maternity pay is protected and you would claim this directly from HMRC.

Comments [25]

  • Agata says:

    I was on maternity leave from march 2020 and my company because of lockdown and pandemic said they are closing and made me redundant. They said this on November 2020 and my contract was finished in December 2020, I think I still have to be paid my SMP bit it stops with my contract. And company said I will receive payment still. And someone told me I should get full payment till march 2021 when my maternity will finish.

    • Mandy Garner says:

      Hi, If you have qualified for SMP, you will get your full SMP whatever happens. The company can choose to pay it in a lump sum on your redundancy or keep paying it regularly throughout your maternity leave.

  • Lauren says:

    Hi, so I don’t know what’s happening yet, but my company are now part of a CVA and there is a very big chance that my store could close down. I’m due to go on maternity leave on the 10th of August and been working for the company for 4 years in November so I’m entitled to 100% of my wages for the first 6 weeks, either 50% or 90% of my wages for the following 6 weeks, then for the remaining 27 weeks I get full SMP pay. What would happen if my store does close down? Should I still be entitled to all of above or just claim SMP through HMRC?

  • Nicole Freeman says:

    hello I’m 30wks pregnant and was getting ready to go on maternity leave in a month .I was just informed my job is going out of business. do I lose my maternity pay now?

    • Mandy Garner says:

      Hi, If you have qualified for SMP – ie you got pregnant after you started work there, were still there by the end of the 26th week of pregnancy and met the earnings criteria in the eight weeks up to the 26th week of pregnancy – then you should still get it regardless of what happens afterwards. If your employer is insolvent or refuses to pay all or part of your SMP, HM Revenue and Customs automatically becomes liable for any outstanding SMP.

  • Kirsten Rhoden says:

    How long does hmcr take to pay me my smp as I need my money to pay bills
    Also my job closed down

    • Mandy Garner says:

      Have you been made redundant while pregnant? When is your SMP due to start [ie when did you say you would start your maternity leave? Your SMP is paid by HMRC and will be protected]? Has it not started at that date? For information on financial support go to

    • Kay says:

      Hi I have been made redundant half was through my maternity leave. HMRC have told me they will continue to pay me once my claim has been processed but have not heard back for weeks after sending my information back. Does anyone know how they pay you, i.e. Weekly/monthly/as you were being paid by the company? Also does anyone know how it appears on your bank statement? Thank you for any advice.

      • Mandy Garner says:

        You should contact the HMRC Payment Disputes Line to check on the status of your claim and ask about when payments will resume and what happens with the backdated pay. You should get your full SMP entitlement.

  • Pat mob says:

    I am due to go on maternity leave in May 2018 and I have been told that I am being made redundant. Will I get the company enhanced maternity pay? I sent out my notice for maternity leave before redundancy was announced.

  • Nicola says:

    I’m almost finished being on maternity leave and the company I worked for had stopped trading and closed and have no job to go back to . Is there anything I can get help with .

  • Agnieszka says:

    I was due to go back to work in November. The company I work for have gone into liquidation. Am I still due holiday pay from the company? How do I claim it, what happens if the company refuse to pay?

  • Emma says:

    I am currently on maternity the place I work as gone in to administration. I found out by another member of staff. Then I rang the company and went mad with them then I eventually got a letter to tell me it was in administration. The next thing I new was it was closing it was in the paper there has been virtually no contact from the administrators only the letter I got when I kicked of. I rang the administer the other day to discuss what would happen about my smp baring in mind I had rang the HMRC up and they had said they still had to pay me that until I finish my maternity but the administrater said this is not the case. Could I take this further ?

  • Anonymous says:

    Hi, I am currently 19 weeks pregnant and have just been told that I am being made redundant (have been given 7 weeks notice). Will I still be entitled to SMP even though I will not be with the company when my maternity leave period begins? Thanks.

    Editor: IF you are still employed by the company at the end of the 26th week of pregnancy you will get SMP. If not, you will most likely get Maternity Allowance. For that you need to have worked for 26 weeks in the 66 weeks before your baby's due date either in an employed or self employed capacity.

  • Anonymous says:

    Hi the company I was working for has gone into liquidation. The week I wen on maternity leave. And I have just been told by the maternity dispute team that they will be paying my SMP. I
    I have been offered some part time work starting in April. Would i Be able to accept this or would it affect my smp payments ????

    Editor: SMP would stop the week you started a new job so if they pay you a lump sum it would cover the nine months and if you went back before then you would need to pay the remaining portion back.

  • Anonymous says:

    I am 26 weeks pregnant and not due to go on maternity until the 31st March 2015, the company I work for may be going into liquidation how does this affect my maternity pay, am I no longer entitle to maternity pay

    Editor: If you are still at the company at the end of your 26th week and otherwise qualify for SMP [eg you have earned at least £111 a week in the eight weeks leading up to your 26th week] you will get SMP no matter what happens afterwards. See, particularly the section at the bottom on insolvency.

  • Anonymous says:

    I added some of my accrued holiday to the end of my maternity and the administrators in my case have said that this is classed as wages and not accrued holiday meaning that I only get paid up to a cap by way of a preferential payment. Is there any case law that says that it can be classed as holiday pay and therefore not subject to the cap please?

    Editor: Our employment law expert Sarah Calderwood says:


    Where an employee is owed money from a company in liquidation, the debts are usuallyunsecured and are second to last in the order of priority for payment. However, under s.386 and Category 5, Schedule 6 of the Insolvency Act 1986, employees are owed their "remuneration" as a preferential debt. This means that remuneration is paid second after fixed charges (such as mortgages). Preferential debts include:

    ·         - Remuneration owed for the four month period before the start of the relevant insolvency proceedings, subject to a maximum overall claim of £800. This includes, for example your salary and SMP.


    ·         - Accrued holiday pay in respect of any period prior to the start of proceedings. This is not subject to the £800 cap. Please note that holiday accrued after the start of the insolvency proceedings does not fall under this section. You therefore need to check when the insolvency proceedings started.

    You should refer the administrator to the Insolvency Act 1986 in respect of your accrued holiday and ask for it to be paid uncapped.

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