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- Is there a legal duty to tell a new employer you are sequestrated?
- Which roles carry a real duty, and what is its source?
- Is financial services work closed to you?
- How might a new employer find out anyway?
- What should you say if an application form asks?
- Does your employer get involved in your payments?
- What should you check before you accept a new job?
- Related guides
- Frequently asked questions
There is no general duty in Scottish insolvency law to tell an employer you have been sequestrated. The disclosure duties the Bankruptcy (Scotland) Act 2016 imposes are about credit, not employment.
Where a duty does exist it comes from your contract, your professional body or a statute attached to the role itself. Those are documents you can read.
Part of your pay is protected by law
The deduction is set by statutory tables, not the creditor
An arrestment can be stopped or replaced
Starting a new job while sequestrated? Get free advice on what you must say.
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This page names each of them with its source. It does not tell you what employers usually do, because nothing published establishes that.
There is one situation where your employer is contacted directly, and it has a statutory trigger. How sequestration works covers the process this sits inside.
Is there a legal duty to tell a new employer you are sequestrated?
Not as a general rule. The duty the Act does impose is in section 218(13), and it is owed to a person providing you with credit.
What that duty actually covers
While you are undischarged you must tell a lender you are bankrupt if you are borrowing £2,000 or more, or any amount at all if you already owe £1,000 or more.
Utility charges and council tax are left out of that £1,000 calculation.
Section 218(13) and the definitions in section 219 have been in force since 30 November 2016, and neither figure has been changed since.
The four places an employment duty can come from
| The source | What it is | What to do about it |
|---|---|---|
| A statute attached to the role | The only category that is a matter of law in its own right | A short list, and each item has a section number |
| Your professional body's rules | Published, and usually with a member helpline behind them | Ask directly and in confidence rather than reasoning from a general article |
| A bankruptcy or insolvency clause in the contract | A contractual duty regardless of what the general law says | Read the offer letter, the contract and any handbook they refer to |
| A direct question on an application or vetting form | Answer it honestly and to the wording used | The register is public, so a non-disclosure is discoverable |
Only the first of those is a matter of law in its own right. The other three are documents you can obtain and questions you can ask before you commit to anything.
Start with the offer letter, not the Act
Read the contract and any handbook or code of conduct it refers to. That answers the question for most people in about ten minutes.
Which roles carry a real duty, and what is its source?
Five, each with a statute behind it. A short sourced list is worth more than a long invented one.
The five statutory bars, and the one that is not one
| The role | The provision | What it does |
|---|---|---|
| Company director, and taking part in promoting, forming or managing a company | Section 11 of the Company Directors Disqualification Act 1986 | A criminal offence to act without the leave of the court |
| Insolvency practitioner | Section 390(4)(a) of the Insolvency Act 1986 | Not qualified to act while undischarged |
| Justice of the Peace | Section 73(1)(a) of the Criminal Proceedings etc. (Reform) (Scotland) Act 2007 | Disqualified from being appointed as, or acting as, a JP |
| Scottish solicitor | Section 18(1)(c) of the Solicitors (Scotland) Act 1980 | The practising certificate ceases to have effect, and section 18(2) requires immediate intimation to the Council |
| Charity trustee in Scotland | Section 69(2)(b)(i) of the Charities and Trustee Investment (Scotland) Act 2005 | Disqualified, acting while disqualified is an offence, and the regulator may waive it |
| An FCA controlled function | FIT 2.3 of the FCA Handbook | Not a bar. A factor to have regard to |
Each of those is set out in full, with what ends it and when, in which jobs sequestration affects.
The clearest disclosure duty in Scots law is the solicitor’s
Section 18(1)(c) of the Solicitors (Scotland) Act 1980 makes a practising certificate cease to have effect on sequestration, and the solicitor is suspended from practice.
Section 18(2) then requires the solicitor to intimate the circumstances to the Council in writing immediately. That is a statutory duty to tell somebody, and it is not owed to the employer.
The director rule is the one with a criminal offence
Acting as a company director, or taking part in promoting, forming or managing one, is a criminal offence for an undischarged bankrupt without the leave of the court, under section 11 of the Company Directors Disqualification Act 1986.
The wording of section 11 reaches taking part in management directly or indirectly, so it goes beyond the job title on a contract.
Public office is where the position is not settled
The provisions covering members of parliament and local councillors are written around a sequestration awarded by a court in Scotland. A creditor petition is awarded by the sheriff, so that wording is met on its face.
A debtor application is determined by the Accountant in Bankruptcy instead, whether it is full administration or a Minimal Asset Process, and nothing published resolves what that means. Whether the provisions bite is not settled.
mygov.scot lists MPs, local council members and Justices of the Peace among the roles a bankrupt cannot hold, and says in terms that its list is not complete.
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Is financial services work closed to you?
Financial services work is not closed off. The Financial Conduct Authority’s fitness test treats bankruptcy as a matter to weigh rather than a disqualification.
What the Handbook actually says
FIT 2.3 of the FCA Handbook is guidance rather than a rule, and it lists having had assets sequestrated among the matters to have regard to in assessing financial soundness.
The Financial Conduct Authority’s fitness test treats bankruptcy, sequestration and arrangements with creditors as matters to weigh rather than as automatic disqualifications.
The Handbook says in terms that the fact a person may be of limited financial means will not, in itself, affect their suitability to perform a controlled function.
So the question is your firm’s policy, not the rulebook
An employer or a firm may still have requirements of its own, and a compliance team can tell you what they are. That is a conversation worth having early rather than late.
What is not true is that the approved persons regime bars a bankrupt. Whether a MAP affects your job or professional licence covers the same ground for that route.
How might a new employer find out anyway?
No notification is sent to employers by anyone. Section 200(7) makes the register public, though, and that is the route most people worry about.
The routes, and what triggers each one
| The route | When it happens | The detail |
|---|---|---|
| A search of the Register of Insolvencies | Only if somebody looks | It is public and free, under section 200(7) |
| A credit check as part of vetting | Only where the employer runs one and you have consented | Not automatic |
| An instruction from your trustee to deduct the contribution | Only after you have failed to comply and failed to pay for two payment intervals | Section 94(4) of the 2016 Act |
| An existing wage arrestment stopping | On the date of sequestration, automatically | Section 72(2) of the Debtors (Scotland) Act 1987. Payroll sees the deduction end |
| A notification from the Accountant in Bankruptcy | No such notification is sent to employers | There is no provision for one |
| A direct question you are asked | Only if the employer asks it | Answer honestly and to the wording used |
Anyone can search the register free of charge and there is no record of who looked. Whether your sequestration is public sets out what it shows.
The payroll route works the other way round
Section 72(2) of the Debtors (Scotland) Act 1987 ends an existing earnings arrestment on the date of sequestration, so a deduction stops appearing on the payslip.
If you change jobs, the new employer starts with a clean payroll record and has no arrestment to notice. What sequestration does to diligence explains why that deduction ends.
What should you say if an application form asks?
Answer the question that has been asked, honestly and briefly. Read the wording first, because two common questions have different answers.
The questions, and what each is actually asking
| What the form asks | What it means | How to approach it |
|---|---|---|
| Are you an undischarged bankrupt? | Sequestrated and not yet discharged | Full administration discharge comes no earlier than twelve months after the award, and a Minimal Asset Process discharge at six months |
| Have you ever been sequestrated or made bankrupt? | Any time, including after discharge | Answer yes and give the date. Discharge does not erase the history |
| Are you subject to a bankruptcy restrictions order? | A separate order made on conduct grounds | Most sequestrations do not involve one |
| Are you disqualified from acting as a company director? | Aimed at the 1986 Act position | Relevant while undischarged, and while any restrictions order runs |
| Do you consent to a credit check? | The employer may see the entry | Refusing is itself a piece of information you are giving them |
Undischarged is not the same as ever
You stop being an undischarged bankrupt on your discharge, and the history does not disappear. Whether discharge ends everything at twelve months sets out what changes on that date and what does not.
Keep the certificate of discharge once you have one. Being able to show the position is resolved is more useful than any explanation.
A restrictions order is a separate question
A bankruptcy restrictions order runs for between two and five years where the Accountant in Bankruptcy makes it.
There is no such thing as a bankruptcy restrictions undertaking in Scotland. The 2016 Act provides for orders and interim orders only, and undertakings belong to the law of England and Wales.
Why honesty is the practical answer as well as the right one
The register is public and free to search, so a non-disclosure is discoverable at any point afterwards. How sequestration affects your credit file deals with the other record an employer might see.
Does your employer get involved in your payments?
Only if you stop paying. Section 94 lets the trustee instruct the person paying your income, and the power has two conditions.
Both conditions have to be met
Section 94(4) requires a failure to comply with the requirements imposed on you and a failure to pay the contribution in respect of two payment intervals. Until then the contribution is something you pay yourself.
The payer may charge a fee equivalent to the employer’s fee for operating diligence against earnings, and deduct it from the balance due to you. Regulation 20(5) of the 2016 Regulations sets that up.
In a Minimal Asset Process there is nothing for it to bite on
The contribution order in a Minimal Asset Process is fixed at zero. Where there is nothing to pay there is no failure to pay, so this route does not arise.
That distinction is not drawn on any page currently ranking for this question. How a debtor contribution order is calculated covers how the figure is set in the first place.
Talk to the trustee before arrears build
An order can be varied or quashed when your circumstances change, and a review and appeal route exists. What a trustee in sequestration does sets out who decides what.
What should you check before you accept a new job?
Three documents and one phone call. All of them are quicker than the worry that usually comes with this question.
The checklist
- The offer letter, the contract and any staff handbook or code of conduct they refer to, for insolvency or bankruptcy wording.
- Your professional body’s published rules on financial difficulty, or its member helpline.
- Whether the role involves being a director, which needs the leave of the court while you are undischarged.
- Whether the role is a public office, where the position is not settled and is worth advice.
- Any direct question on the application form, answered honestly and to its wording.
Five routes, and only two of them are automatic
The register entry and the arrestment stopping happen whatever you do. Everything else needs somebody to take a step, and most of those steps you will know about.
Tell your trustee about the new salary
A change in income is a reason to have the contribution reassessed, in either direction. National Debtline and the other free agencies will help you put that to the trustee at no charge.
A trust deed raises the same question in a slightly different form. Whether you have to tell your employer about a trust deed covers it.
Frequently asked questions
Will my new employer be told I am sequestrated?
No notification is sent to employers by anyone. The one route by which your employer is contacted directly is an instruction from your trustee under section 94, after you have failed to comply and failed to pay for two payment intervals.
Do I have to declare a sequestration on a job application?
There is no general legal duty to volunteer it. Where a form asks you a direct question you should answer it honestly and to the wording used, because the Register of Insolvencies is public and free to search.
Can I be a company director while sequestrated?
Not without the leave of the court. Section 11 of the Company Directors Disqualification Act 1986 makes it an offence for an undischarged bankrupt to act as a director or to take part in the promotion, formation or management of a company.
Does sequestration rule out working in financial services?
Not as a matter of law. FIT 2.3 of the FCA Handbook treats having had assets sequestrated as a factor to have regard to, and FIT 2.3.2 says limited financial means will not in themselves affect suitability to perform a controlled function.
Do I have to tell the Law Society if I am a solicitor?
Yes, and immediately. Section 18(1)(c) of the Solicitors (Scotland) Act 1980 makes the practising certificate cease to have effect, and section 18(2) requires you to intimate the circumstances to the Council in writing.
Does my employer find out because my wage arrestment stops?
Payroll will see the deduction end, because section 72(2) of the Debtors (Scotland) Act 1987 ends an existing earnings arrestment on the date of sequestration. Nothing requires anyone to explain why.
Does discharge remove the need to disclose?
It changes the answer to some questions and not others. You stop being an undischarged bankrupt, and a question asking whether you have ever been sequestrated still needs a yes.
Should I tell my trustee I am changing jobs?
Yes. A change in income is a reason for the contribution order to be looked at again, and the trustee can vary or quash it following a change in your circumstances.
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Written as general information about Scottish debt law rather than regulated financial or legal advice, and your own circumstances may change the answer. Free, impartial help is available from Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland.