Insolvency & Employment Rights


Apart from the post below I haven’t touched upon these regulations, mainly because they are not the most interesting regulations in the world to read.  However, I have been spurred on by posting on the case of Royden & others v Barnetts  (see below) and TUPE comes up quite a few times on the search engines as a keyword.  In future posts I will look at the TUPE issues on the insolvency of the employer as well as the consultation obligations imposed upon employers by TUPE.

So, what do the Transfer of Undertakings (Protection of employment) Regulations 2006 (TUPE) actually do?

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Will SRP be increased?

I ask this because a Private Members’ Bill, sponsored by Lindsay Hoyle MP, is currently making its way through Parliament.  Its aim is to increase the level of statutory redundancy pay given to employees with more than two years’ service from the current cap of £350 per week per complete year of service (or £525 per week for workers over 41) in to line with average earnings, as opposed to RPI with which it is currently linked. This would mean an increase in the cap  from £350 to £500/750. The award is made up to a maximum of 20 years’ service. Over the years it has fallen behind inflation and means that the maximum an employee made redundant at the moment  can receive (in the absence of a claim for unfair dismissal or an enhanced redundancy package offered by the employer) is a maximum sum of  £7,000 (for those under 41 at dismissal) or £10,500 for those over 41 (and thus would have to be 61 at dismissal with 20 years service to receive it).  In addition employees are entitled to be given their contractual, or statutory notice, and can be asked to work the notice, be put on garden leave for the duration or be paid in lieu. If an employee has less than two years service with an employer he/she is not entitled to any statutory redundancy payment, only to notice.

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What happens if my employer goes bust? Part 2

It all depends on what is meant by “going bust” (sorry, typical lawyer’s answer).  There are several ways a company can go bust, i.e become insolvent, and much will depend on whether the company can be rescued or if it is beyond help.  Insolvency practitioners talk about “terminal” and “non-terminal” insolvencies.  Insolvency law is a complex area and what follows is only a “noddy’s guide”.

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What happens if my employer goes bust?

What happens if your employer is insolvent? Again, in today’s climate, this is happening all too frequently. If this does happen to you, you should immediately contact your employer’s Insolvency Practitioner for information of what is to happen to the company. You ought to be given forms to make claims for redundancy payments from the HMRC, or alternatively they should advise you if the business or any part of it is to be sold. It is possible for insolvency practitioners to keep employees in employment whilst they make decisions regarding the company’s future.


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Employment and Insolvency

If you are directly involved in the Lehmans collapse or working for any other business that looks to be on its last legs , do have a look at the Direct Gov website, run by the government, it’s got lots of interesting information on it.  Follow the link –

You’ll find links there to the Insolvency Service.

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