Employees
When your employer goes into liquidation or bankruptcy
Find out what to expect if your employer has gone into liquidation or bankruptcy – what might happen to your job, what money you can claim and how much you could be paid.
What happens if my employer goes into liquidation or goes bankrupt
If your employer is a company that cannot pay its debts, it may be put into liquidation.
If your employer is a sole trader or partnership that cannot pay their debts, they can declare bankruptcy.
If this happens, your job will be affected. You may:
- lose your job (if the business stops trading), or
- transfer to a new employer (if the business keeps trading).
For information about transferring to a new employer, visit:
Restructuring when a business is sold or transferred
To check if your employer is a company, you can search the Companies Register.
New Zealand Companies Register – NZ Companies Office (external link)
To check if your employer is a sole trader or partnership, you can search the Insolvency Register.
Search Insolvency register – NZ Insolvency and Trustee Service(external link)
Personal grievance claims stop
If you’ve already raised a personal grievance claim against your employer, it will stop. You cannot continue any claim against your employer without permission from the High Court or the liquidator. It is not possible to take any other new legal proceedings against your employer.
You can claim for money you are owed
In most cases, you will be owed money for work you did before your employer was liquidated or went bankrupt.
To get this money, you must file a claim with the:
- liquidator if your employer is a company
- official assignee if your employer is a sole trader or partnership.
Filing and withdrawing a claim | NZ Insolvency and Trustee Service(external link)
The liquidator or official assignee may sell things your employer owns, or sell parts of the business (if it keeps trading), to raise money to pay its debts. You might not get any — or only some of — the money you are owed.
You can make a preferential claim
Employees who are owed wages or salary can make a ‘preferential claim’. This means you may be paid before other people your employer owes money to.
If your preferential claim is accepted, the amounts you will be paid can include:
- any wages or salary (including commission and piece rates) you earned in the 4 months before your employer went into liquidation or bankruptcy
- any donations your employer deducted from your pay but has not transferred
- any holiday pay you are owed
- any redundancy compensation
- any child support or student loan payments that your employer deducted from your pay but has not transferred
- any reimbursements or awards from determinations by the Employment Relations Authority (ERA) or Employment Court that found in your favour. This is only if they relate to money you may have earned in the 4 months before your employer went into liquidation or bankruptcy
- any superannuation or KiwiSaver deductions from any of the above.
How much you could get
The most you can be paid for a preferential claim is set by legislation. As at 30 Sept 2024 the maximum amount is $31,820.
If your employer owes you more than this, or owes you money for other things, what you get will depend on how much money is left and what they still owe you and other people. This could include payments for:
- any wages or salary you earned earlier than 4 months before the business went into liquidation or bankruptcy
- any wages or salary earned for work you did after the business went into liquidation or bankruptcy
- any bonuses, commissions or other financial incentives
- any awards of compensation from determinations by the ERA or Employment Court found in your favour that are not included in a preferential claim.
Normally payments are made at the end of the liquidation or bankruptcy process. For more information about what happens once you’ve made a claim and what to expect, visit:
If owed by company in liquidation |NZ Insolvency and Trustee Service(external link)
If owed by bankrupt debtor | NZ Insolvency and Trustee Service(external link)
What you should do
- Keep a record of any hours or overtime you’ve worked and have not been paid for.
- Work out what you think your final pay should be. This could include pay for annual holidays and alternative holidays you have not taken, as well as any other payments you think your employer owes you.
- File a claim with the liquidator or official assignee for what you think you are owed. This is usually done online. You fill in the form detailing your claim and provide evidence in support.
- Contact a Community Law Centre for advice or contact your union if you have one.
Filing and withdrawing a claim | NZ Insolvency and Trustee Service(external link)
How to get help
- MBIE’s Insolvency and Trustee Services offer useful information for employers and employees.
- Employment New Zealand provides dispute resolution services. We help employees, employers, and their representatives (like unions) sort out problems at work. When a business goes into liquidation, we can work with the liquidator to provide accurate information on wage arrears, notice payments and holiday pay owed to employees.
- You might be able to get emergency financial assistance from Work and Income New Zealand, a local City Mission or the food bank.
The effect of liquidation on a company | NZ Insolvency and Trustee Service(external link)
Redundancy support - Work and Income(external link)
Migrant workers
If you are a migrant worker and your employer’s business is liquidated or goes bankrupt, and your work visa is tied to your employer, contact Immigration NZ. They can explain how this will affect your work visa.