£453.4m in missing wages and benefits paid in 2020

New figures released by the Insolvency Service indicate that £453.4 million was paid out in missing wages and benefits to workers at firms that went bust last year, the highest total in a decade. 

The money comes from the National Insurance Fund, going to former members of staff as a result of their employer entering into either administration, liquidation, a CVA or another form of corporate insolvency

The data, compiled by real estate adviser Altus Group, shows that payouts included £297.5 million in redundancy pay. The analysis also shows that Government support rolled out amid the pandemic meant the number of firms going insolvent fell 27% compared to 2019. 

The payments made by the agency, which is part of the Department for Business, Energy and Industrial Strategy (BEIS), were at the highest levels in a decade although the various company lifelines provided by the Chancellor meant the number of firms going insolvent fell.

A total of £297.5 million was paid out in redundancy pay, whilst £93.3 million was for months that would have been earned working a notice period, according to numbers obtained under the Freedom of Information Act by real estate adviser Altus Group and seen by the PA news agency.

A further £28.4 million went on unpaid holiday pay and £34.2 million on outstanding payments for wages, overtime and commission owed.

The amount paid was up by 31% on the previous year – £107.3 million higher than the £346.1 million paid during 2019.

Laura Ashley, was amongst the big name brands which disappeared and saw 155 stores close, with 2,300 job losses; Brighthouse closed 240 stores with 2,700 redundancies and Debenhams lost 7,000 staff last year. More job losses are expected to follow in 2021 as Debenhams sinks into liquidation and Arcadia stores close for good.

Around 109,407 positions in the sector were affected last year, with 47% of those employees losing their jobs compared with around one third during the previous recession in 2008

Robert Hayton, UK president of property tax at Altus Group, said “Ending the holiday too early is one material pressure on company finances that risks affecting the recovery from the pandemic now the end is in sight.”

“The Chancellor must use his upcoming Budget to ensure that viable businesses are adequately supported through a discerning targeted extension.”