Do redundancy payments form part of the Bankrupt’s estate?

A redundancy payment is compensation for the loss of employment not loss of earnings. Therefore, whilst the amount of a redundancy payment is calculated by reference to salary and the length of service, it is not income. Rather, a redundancy payment is classed as “property” which vests in the Trustee of the Bankrupt’s estate immediately upon his appointment taking effect.

Where employment has terminated prior to the date of the Bankruptcy Order and the individual has received their redundancy payment or is awaiting such payment, that payment is an asset of the bankruptcy estate which vests (in the same way as is the case with any property) in the Trustee.

If an individual receives or becomes entitled to a redundancy payment after the date of the Bankruptcy Order and at any time prior to discharge from bankruptcy, they are required to give notice to their Trustee of that receipt or entitlement. The Trustee has a period of 42 days from the date on which they receive such notice to claim the redundancy payment as after-acquired property for the benefit of the bankruptcy estate.

Sarah Mower is a solicitor in the Business Services Team at Barker Gotelee, Ipswich Solicitors.

If you would like to know more about redundancy, bankruptcy or after-acquired property, please call the Business Services Team on 01473 611211 or drop Sarah an email.

Suffolk Business Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email