Red Flags Explained
When EmployerCheck detects a potential concern about a company, it surfaces it as a red flag. Here's what each flag means, how serious it is, and what you should ask about it.
Financial Red Flags
Net Loss
MediumThe company reported a net loss in their latest accounts. A single year of losses isn't always concerning, but consecutive losses may indicate financial distress.
Declining Revenue
MediumRevenue has dropped compared to the previous year. Consider the context — was there a pandemic, sector downturn, or restructuring?
Negative Net Assets
HighThe company's liabilities exceed its assets. This is a serious warning sign for financial health, though some companies operate this way intentionally (e.g., high-leverage models).
Accounts Overdue
HighThe company has not filed their accounts by the statutory deadline. This suggests poor governance or potential financial difficulties.
Governance Red Flags
High Director Turnover
MediumMultiple directors have resigned recently. This may indicate internal disagreements, strategy changes, or underlying problems.
Single Director
LowThe company has only one director, meaning less oversight and governance. Common in small companies but unusual for larger ones.
Very Young Company
LowThe company was incorporated recently (under 2 years). Young companies have less track record and higher failure rates.
Culture Red Flags
Large Gender Pay Gap
MediumA significant gap between men's and women's average pay. A gap above 15% is notably higher than the UK average.
Poor Employee Reviews
MediumEmployee reviews average below 2.5/5 on major review platforms, based on 50+ reviews. Suggests widespread dissatisfaction.
Regulatory Red Flags
Active Insolvency
CriticalThe company is in formal insolvency proceedings (administration, liquidation, or CVA). Your employment may be at risk.
HSE Prosecution
HighThe Health & Safety Executive has prosecuted the company for safety violations. Check the details and when it occurred.
Employment Tribunal
MediumThe company has been involved in employment tribunal cases. Review the nature and outcome of the cases.
A Note on Context
Red flags are automatically detected from public data and don't account for every circumstance. A company with red flags may still be a great employer — and vice versa. Use red flags as conversation starters in your interview process, not as final judgements. See our methodology for more on how we detect signals.