A trust deed is formal insolvency, recorded on the public Register of Insolvencies. Those are the facts some employers react to, and our trust deed page sets out what the procedure involves.

What follows is where the question comes up, what the rule turns on in each case, and what to check before you sign. Nothing here is a guess about how employers behave.

No. There is no provision in Part 14 of the 2016 Act barring a person who has granted a protected trust deed from any occupation, and no restrictions regime applies after discharge.

Two different things, constantly confused

• A statutory disqualification stops you doing the job. Nothing in the trust deed rules does that.
• A contractual or regulatory duty requires you to disclose, and lets the employer or regulator decide what follows.

Almost every real difficulty here is the second kind. That is a document you can read rather than a law you are stuck with.

The bankruptcy restrictions provisions sit in Part 13 of the 2016 Act and apply to sequestration. There is no equivalent for someone who has completed a trust deed.

What the Act does require

Advice, before you commit. Section 167(3) requires your trustee to advise you about the consequences of granting the deed, including the possible effect on employment.

So the employment question is one your trustee is under a statutory duty to raise with you. If it has not been raised, ask.

Four places, and only one of them is legislation. Working out which applies to you turns a vague worry into a question somebody can answer.

The four sources

The pattern is consistent across sectors: the law does not take your job away, but the paperwork you already signed might require you to speak up. Whether you have to tell your employer goes through that in detail.

The one sector official Scottish guidance names

mygov.scot states that some employers do not allow people who have signed a trust deed to work for them, and that the most common example is financial institutions.

That is described as an employer position rather than a legal prohibition. It is the only sector named in the official guidance.

It is worth reading that sentence carefully before you act on it. It says some employers, and it does not say which, or how many, or on what terms.

Roles with a professional registration

Where you are registered with a professional body, that body sets its own rules on reporting financial difficulty. Check its published rules directly, and note that insolvency practitioners are themselves regulated this way, which whether trust deed providers are regulated explains.

That is a published document you can read for yourself. Where the body runs a member helpline, the question can be asked without giving your name.

Roles with security vetting

A vetting or clearance process is a separate route into the same subject, and it asks direct questions about your financial circumstances rather than about your job title.

The answer for you depends on the vetting policy that applies to your own post. Ask about it before you sign anything.

It depends on whether the fitness rules apply to your particular post, and a trust deed is relevant where they do. It is a factor in an assessment rather than a bar.

The Handbook, not employment law

The relevant module is the Financial Conduct Authority’s fit and proper test, and financial soundness is one of its three headings. The scope of the module is set by a further chapter, so check it against your own role.

The Financial Conduct Authority’s fitness test treats bankruptcy, sequestration and arrangements with creditors as matters to weigh rather than as automatic disqualifications.

What it says, and what it does not

Nobody in a regulated role should be told a trust deed is invisible to their employer. A protected trust deed falls within the arrangements with creditors that the financial soundness provision treats as relevant, though the Handbook does not mention trust deeds by name.

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.

That sentence is about limited means rather than about insolvency, so read the two provisions separately. Whether a wage arrestment affects a financial services job draws the same distinction for the diligence side.

Establish your own position first

A back-office administrator, a branch cashier or a call-centre adviser may be outside the scope of those rules entirely. Ask your compliance team, in confidence, which category your role falls into.

That single question is worth more than any general article, including this one. It converts a sector-wide worry into a rule that either applies to you or does not.

Being a company director is not restricted by a trust deed as a matter of law. The disqualification in section 11 of the Company Directors Disqualification Act 1986 applies to an undischarged bankrupt, which someone in a protected trust deed is not.

Where the restriction really comes from

The disqualification in section 11 of the Company Directors Disqualification Act 1986 bites on an undischarged bankrupt, and a protected trust deed is not sequestration.

mygov.scot nonetheless says you cannot be a company director unless your trustee agrees. Treat that as a matter of the trust deed’s own terms and the company’s articles rather than a statutory bar.

The practical instruction is the same either way. Get your trustee’s agreement in writing before you continue in or take up a directorship.

Three routes, and only one of them involves your employer being contacted. The public register, a credit check where the role involves one, and a payment instruction under section 174.

The register

The Register of Insolvencies is public and searchable by anyone. The Accountant in Bankruptcy’s information document says the entry appears for the deed’s duration plus 12 months after completion, which is its own statement rather than a statutory period.

How often any particular kind of searcher uses it is not recorded anywhere. Whether your trust deed appears on the register covers what is held.

The section 174 route, which is the one that reaches payroll

After two consecutive missed contributions, section 174 lets the trustee require a payment instruction to your employer, and the employer must comply with it once delivered.

That is the circumstance in which payroll learns, and it follows missed payments. How trust deed payment instructions to employers work sets out the mechanics.

Credit checks

mygov.scot puts the credit file effect at six years from when the trust deed begins, and how long a trust deed stays on your credit file goes through what is recorded.

Where an application form asks a direct question, answer it honestly. A discovered non-disclosure causes more damage than the insolvency itself.

Yes, and the difference is real. Sequestration carries a statutory directorship bar and a restrictions regime, and a protected trust deed carries neither.

The two side by side

For sequestration, mygov.scot lists company director, Justice of the Peace, MP, local council member and insolvency practitioner, and says expressly that this is not a complete list of how bankruptcy can affect work.

It also says bankruptcy may affect applying for some jobs, giving accountant and solicitor as examples. That is a may, not a bar, and a trust deed against sequestration compares the two routes properly.

Read the documents before you sign the deed, not afterwards. You are entitled to a minimum of three calendar days to consider the papers, and this is exactly what that time is for.

A sensible order to do it in

• Read the employment contract, the handbook and any code of conduct it refers to.
• Check your professional body’s published rules on financial difficulty, if you have one.
• Ask your compliance team or union representative, in confidence, which rules apply to your post.
• Raise the employment question with the trustee before signing, because they are under a duty to advise on it.
• Ask a free money adviser to compare a trust deed against the alternatives on your figures.

The alternative worth putting on the table

The Debt Arrangement Scheme is not insolvency and does not appear on the Register of Insolvencies. For some people it deals with the same debts without a formal insolvency entry.

It is not automatically better, and it repays the debt in full. A trust deed against the Debt Arrangement Scheme and whether to use a free debt charity or a paid adviser are the two comparisons to make first.