Company insolvency, and my job, questions
Discussion
The company I work for is going through insolvency. They will be starting a new business and transferring personnel. As far as I'm aware everything regarding my position is covered via the TUPE regulations.
Obviously I'll be looking to get out, but in the short term is there anything I should be aware of?
in this situation can staff numbers be cut without paying redundancy?
Thanks
Obviously I'll be looking to get out, but in the short term is there anything I should be aware of?
in this situation can staff numbers be cut without paying redundancy?
Thanks
If the company is going through administration and the newco is buying in a conventional pre-pack, TUPE would usually apply, to the point that it's actually mentioned in the contract (that is to say, the contract to sell oldco's assets to newco)
But even if it's a different scenario, including liquidation and even if the newco only buys assets and doesn't formally buy 'the business' as a going concern, it's not easy to get out of TUPE
If the newco does by & large the same thing, with by & large the same customers & clients, using the same or similar trading name, from the same premises, TUPE almost inevitably applies unless there is a significant period without trade inbetween
There are essentially however only 2 overriding scenarios for TUPE when there is a phoenix company, the first being where newco accepts from the start that TUPE will apply (acknowledging same in the process) and the second where newco tries to create a process to avoid TUPE.
If I understand correctly, you are saying you have been told TUPE applies - if that's the case, I really can't see why there is a concern that it wouldn't (easy for me to say - I understand why in the OP's position I'd be very unsettled right now)
Assuming TUPE does apply, anyone not taken on by the newco is considered as having been made redundant by newco for the purposes of redundancy/notice/backpay and new would have to pay same. Anyone who is taken on then takes with them their previous rights and in particular, years of service, so with say 5 years service for old, if newco makes someone redundant after another year, they get 6 years of entitlement in the payout
Also, regardless of TUPE, if newco doesn't take you on with a full TUPE transfer, the government underwrites that you get full redundancy payout, subject to some statutory maximums. So if your contract gives you better than normal entitlement or if you are on more than (from memory) c. £475 p week, it's limited to state minimum rules and capped at £475 p week
State also pays out backpay owed (including holiday entitlement accrued) and in addition, notice pay (less any money you earn during the period of notice you are entitled to)
I would add that I wouldn't necessarily look to 'get out' just because the company is going through the process. There are of course many instances of phoenix co / newco where the directors are delusional, the business simply can't be saved and it's a disaster. But there are also many where it's exactly what they need, to reduce fixed overheads if turnover has dropped, or to get out of onerous leases, or perhaps if they were hit by a very bad debt/s, to get rid of an underperforming division, to go from manufacturing to simply design and outsource manufacturing, etc, etc - I see both sides of the fence so I would look at what the reasons were and why they think it will be different going forward before assuming there is no future there
But even if it's a different scenario, including liquidation and even if the newco only buys assets and doesn't formally buy 'the business' as a going concern, it's not easy to get out of TUPE
If the newco does by & large the same thing, with by & large the same customers & clients, using the same or similar trading name, from the same premises, TUPE almost inevitably applies unless there is a significant period without trade inbetween
There are essentially however only 2 overriding scenarios for TUPE when there is a phoenix company, the first being where newco accepts from the start that TUPE will apply (acknowledging same in the process) and the second where newco tries to create a process to avoid TUPE.
If I understand correctly, you are saying you have been told TUPE applies - if that's the case, I really can't see why there is a concern that it wouldn't (easy for me to say - I understand why in the OP's position I'd be very unsettled right now)
Assuming TUPE does apply, anyone not taken on by the newco is considered as having been made redundant by newco for the purposes of redundancy/notice/backpay and new would have to pay same. Anyone who is taken on then takes with them their previous rights and in particular, years of service, so with say 5 years service for old, if newco makes someone redundant after another year, they get 6 years of entitlement in the payout
Also, regardless of TUPE, if newco doesn't take you on with a full TUPE transfer, the government underwrites that you get full redundancy payout, subject to some statutory maximums. So if your contract gives you better than normal entitlement or if you are on more than (from memory) c. £475 p week, it's limited to state minimum rules and capped at £475 p week
State also pays out backpay owed (including holiday entitlement accrued) and in addition, notice pay (less any money you earn during the period of notice you are entitled to)
I would add that I wouldn't necessarily look to 'get out' just because the company is going through the process. There are of course many instances of phoenix co / newco where the directors are delusional, the business simply can't be saved and it's a disaster. But there are also many where it's exactly what they need, to reduce fixed overheads if turnover has dropped, or to get out of onerous leases, or perhaps if they were hit by a very bad debt/s, to get rid of an underperforming division, to go from manufacturing to simply design and outsource manufacturing, etc, etc - I see both sides of the fence so I would look at what the reasons were and why they think it will be different going forward before assuming there is no future there
Edited by jonby on Friday 23 September 08:00
Edited by jonby on Friday 23 September 08:00
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff