Urgent advice needed
Discussion
Sorry. This is on behalf of my stepdaughter. Company she has worked for in excess of 2 years (which I think might be important in terms of employment rights) has just gone into liquidation.
As(see below) it is moving to a new (ha) company, would TUPE apply? She’s the only employee who has worked there in excess of 2 years, which I believe might be important. It’s also not clear whether she will be paid (in arrears) through the old company for her shifts prior to liquidation (email says from start of month, but she is paid monthly, so 2 additional weeks). The email also implies a degree of urgency as to whether she wants to take up a new contract (under a new probationary period).
Comments gratefully received, especially those from experience in employment law. She’s not in a union.
This is the email she’s just been sent (after a f2f with all employees, which would seem to have been chaotic) - company name redacted.
Good Afternoon All,
Following up on from today’s staff meeting. I am writing to inform you of an unfortunate development regarding REDACTED. The company is being liquidated, and as a result, all existing contracts will be terminated with immediate effect.
However, there is a new management company that will be taking over operations. If you are interested in continuing with the new company, whether through a new employment contract or self-employment arrangement, please reply to this email to confirm. Further details about the new company and the terms will be passed along when I know more, however there will be a probationary period.
If you choose to continue employment under the new company, the shifts you are currently scheduled for will remain as planned.
Regarding payment:
• Staff will be paid from today until the end of the month by the new company.
• The first two weeks of this month's pay will be handled through the liquidation process. Representatives managing the liquidation will contact you directly to collect any necessary information to ensure you are paid correctly for this period.
I understand this is a challenging time, and we appreciate your patience and cooperation as we navigate this transition. Should you have any questions or concerns, please do not hesitate to reach out.
I apologise wholeheartedly as this is a less than ideal situation to be in.
As(see below) it is moving to a new (ha) company, would TUPE apply? She’s the only employee who has worked there in excess of 2 years, which I believe might be important. It’s also not clear whether she will be paid (in arrears) through the old company for her shifts prior to liquidation (email says from start of month, but she is paid monthly, so 2 additional weeks). The email also implies a degree of urgency as to whether she wants to take up a new contract (under a new probationary period).
Comments gratefully received, especially those from experience in employment law. She’s not in a union.
This is the email she’s just been sent (after a f2f with all employees, which would seem to have been chaotic) - company name redacted.
Good Afternoon All,
Following up on from today’s staff meeting. I am writing to inform you of an unfortunate development regarding REDACTED. The company is being liquidated, and as a result, all existing contracts will be terminated with immediate effect.
However, there is a new management company that will be taking over operations. If you are interested in continuing with the new company, whether through a new employment contract or self-employment arrangement, please reply to this email to confirm. Further details about the new company and the terms will be passed along when I know more, however there will be a probationary period.
If you choose to continue employment under the new company, the shifts you are currently scheduled for will remain as planned.
Regarding payment:
• Staff will be paid from today until the end of the month by the new company.
• The first two weeks of this month's pay will be handled through the liquidation process. Representatives managing the liquidation will contact you directly to collect any necessary information to ensure you are paid correctly for this period.
I understand this is a challenging time, and we appreciate your patience and cooperation as we navigate this transition. Should you have any questions or concerns, please do not hesitate to reach out.
I apologise wholeheartedly as this is a less than ideal situation to be in.
More than 2 years means either redundancy or TUPE.
She should immediately ask "is this a redundancy or TUPE" situation, and in writing.
It'll be either one or the other.
Both come with certain rights:
https://www.gov.uk/redundancy-your-rights
https://www.gov.uk/transfers-takeovers
M.
She should immediately ask "is this a redundancy or TUPE" situation, and in writing.
It'll be either one or the other.
Both come with certain rights:
https://www.gov.uk/redundancy-your-rights
https://www.gov.uk/transfers-takeovers
M.
Countdown said:
OP - is she some kind of Agency worker where the company contracts her out to customers? For some reason this seems like a Phoenixing situation…
Nope, she is solely employed by this ‘organisation’. It’s a pub/restaurant and she’s a waitress.Thanks all for the advice, I will update!
Assuming the Company is going into liquidation then Employees should be able to claim what they are owed (pay arrears, holiday pay, redundancy) from the Insolvency Service. As others have said I don’t think TUPE applies.
Insolvency usually takes a while so I’m surprised there’s already a new Management Company lined up. Does it have any connections with the current management?
Insolvency usually takes a while so I’m surprised there’s already a new Management Company lined up. Does it have any connections with the current management?
TUPE is very complex.
If the company heading to liquidation has made a prior (pre-pack) agreement with newco, then there may be a transfer.
If Newco has popped up so quickly you'd think that might be the case.
If it were me I think I'd take the redundancy and then apply to the Newco with a clean sheet. She would be a more attractive proposition to Newco, coming with no baggage as it were.
But, as I say, it's a really complex area.
Good luck to stepdaughter, they are tricky times.
If the company heading to liquidation has made a prior (pre-pack) agreement with newco, then there may be a transfer.
If Newco has popped up so quickly you'd think that might be the case.
If it were me I think I'd take the redundancy and then apply to the Newco with a clean sheet. She would be a more attractive proposition to Newco, coming with no baggage as it were.
But, as I say, it's a really complex area.
Good luck to stepdaughter, they are tricky times.
Jasey_ said:
AFAIK tupe doesn't apply in liquidation.
The old company is gone. Ex employees are creditors in a queue for any money still available.
The deal for starting with the new co is essentially nothing to do with the old co.
Tupe aplies where a company is still trading but wants a section of the work force to go work for someone else.
See "supply of services" section under TUPE, link above.The old company is gone. Ex employees are creditors in a queue for any money still available.
The deal for starting with the new co is essentially nothing to do with the old co.
Tupe aplies where a company is still trading but wants a section of the work force to go work for someone else.
Role may still exist (and sounds like it does)
Eta- call acas.
M.
ChevronB19 said:
Will call ACAS tomorrow. To me it is just a new employer taking over an insolvent one, and I don’t see why she should have to have a new probationary period.
To be honest, it definitely sounds like a TUPE situation, mainly because the roles are being offered to the previous employees. But there may be technical reasons due to the insolvency as to why it's not.If it's not tupe, the it is redundancy. With all that goes with that- PILON as well as the x weeks per year of service, legal support etc.
M.
ChevronB19 said:
Will call ACAS tomorrow. To me it is just a new employer taking over an insolvent one, and I don’t see why she should have to have a new probationary period.
Insolvency means it no longer exists, there’s nothing to take over. As part of the liquidation process the assets are being sold off to the highest bidder and the proceeds being used to pay off the creditors (as much as possible).If it was a takeover then it would be different- all the assets and liabilities and contracts of employment transferring to the new owners.
That’s basically why companies do this- they can walk away from the liabilities and cherry pick the assets.
(Mods - if at all possible please update title with ‘UPDATE’? Thanks).
Hi all and thanks for the advice so far. I’ve just come off the phone to ACAS, and they seem to think TUPE may well apply, at least in the case of workers in continuous employment in excess of 2 years, as is the case with my stepdaughter.
I’ve drafted something (below) that I will suggest she sends to the employer. As you will see, time is sort of the essence, as the original message suggests that if she wants any further shifts (e.g. today) she has to agree to either a new contract and probation, or self employed and probation.
Any advice, again, would be very gratefully received. I just don’t want to accidentally make a fool of myself or her in a situation we’ve fortunately never had to go through before.
Dear REDACTED,
Thank you for your message (copied below in italics) regarding the liquidation of REDACTED. Understandably, I have a few questions, which I would need answered before I make a decision on how to proceed. It is simplest to number these in order to make them clear.
Naturally I would politely ask for a quick response.
For context, I have been employed by REDACTED in excess of 3 years, 2 years being an important aspect in employment rights.
1) Your message asks for me to reply by email to confirm whether I am interested in continuing with the new company. Please can you provide what timescale you are expecting, as clearly this requires some thought and, where necessary, advice from a third party. Your message states ‘If you choose to continue employment under the new company, the shifts you are currently scheduled for will remain as planned’. This implies, for example, that if I was scheduled to work today, I would have to make an immediate decision. This does not allow for adequate consultation.
2) Please confirm what type of liquidation REDACTED has applied for. As you will be aware there are several types of liquidation, each of which has specific implications, both on the directors of the liquidated company and on employees. The three types are Creditors Voluntary Liquidation (CVL), Compulsory Liquidation and Members Voluntary Liquidation.
3) As the new company is immediately taking over from REDACTED, with your statement saying any pay from 15th January will be paid by the new company, are my current scheduled shifts being under the REDACTED contract (which doesn’t seem to be the case given your statement that all contracts are cancelled immediately), or under a new contract which I have yet to see or sign? Wouldn’t this in essence mean I am working on a non-contractual basis with associated risk?
4) As I have worked for REDACTED in excess of 2 years, does TUPE apply, and if not, why?
5) The offer of new employment in the same role (irrespective of how it is managed) implies that the role is not redundant and there will be continuity of employment. Again, this would appear to be a situation where TUPE would be applicable.
6) Regarding your notes about pay, please confirm this also includes obligations regarding pension, NI, income tax.
7) Please confirm whether any directors or shareholders of the new company are, or have been, directors or shareholders of the now defunct REDACTED.
Hi all and thanks for the advice so far. I’ve just come off the phone to ACAS, and they seem to think TUPE may well apply, at least in the case of workers in continuous employment in excess of 2 years, as is the case with my stepdaughter.
I’ve drafted something (below) that I will suggest she sends to the employer. As you will see, time is sort of the essence, as the original message suggests that if she wants any further shifts (e.g. today) she has to agree to either a new contract and probation, or self employed and probation.
Any advice, again, would be very gratefully received. I just don’t want to accidentally make a fool of myself or her in a situation we’ve fortunately never had to go through before.
Dear REDACTED,
Thank you for your message (copied below in italics) regarding the liquidation of REDACTED. Understandably, I have a few questions, which I would need answered before I make a decision on how to proceed. It is simplest to number these in order to make them clear.
Naturally I would politely ask for a quick response.
For context, I have been employed by REDACTED in excess of 3 years, 2 years being an important aspect in employment rights.
1) Your message asks for me to reply by email to confirm whether I am interested in continuing with the new company. Please can you provide what timescale you are expecting, as clearly this requires some thought and, where necessary, advice from a third party. Your message states ‘If you choose to continue employment under the new company, the shifts you are currently scheduled for will remain as planned’. This implies, for example, that if I was scheduled to work today, I would have to make an immediate decision. This does not allow for adequate consultation.
2) Please confirm what type of liquidation REDACTED has applied for. As you will be aware there are several types of liquidation, each of which has specific implications, both on the directors of the liquidated company and on employees. The three types are Creditors Voluntary Liquidation (CVL), Compulsory Liquidation and Members Voluntary Liquidation.
3) As the new company is immediately taking over from REDACTED, with your statement saying any pay from 15th January will be paid by the new company, are my current scheduled shifts being under the REDACTED contract (which doesn’t seem to be the case given your statement that all contracts are cancelled immediately), or under a new contract which I have yet to see or sign? Wouldn’t this in essence mean I am working on a non-contractual basis with associated risk?
4) As I have worked for REDACTED in excess of 2 years, does TUPE apply, and if not, why?
5) The offer of new employment in the same role (irrespective of how it is managed) implies that the role is not redundant and there will be continuity of employment. Again, this would appear to be a situation where TUPE would be applicable.
6) Regarding your notes about pay, please confirm this also includes obligations regarding pension, NI, income tax.
7) Please confirm whether any directors or shareholders of the new company are, or have been, directors or shareholders of the now defunct REDACTED.
Just being devil's advocate for the moment.
They are at present offering to accept an application to move over to NEWCO. If this is accepted it sounds like stepdaughter might (on the face of it) lose two year's employment history.
If it were me I'd hold fire on poking the hornet's nest. I'd apply for the job & see what happens.
If I got the job & it appears I've been diddled out of two year's service I'd still hold fire. This is only really important if things go wrong later. The facts remain TUPE or not TUPE (in the words of the bard) will still hold true.
I think your letter is spot on if I were looking to lose say 20 years' service.
You risk antagonising a new employer before things have already started.
I'm speaking as an employer who's been through this scenario several times. (But...I'm not a legal expert).
They are at present offering to accept an application to move over to NEWCO. If this is accepted it sounds like stepdaughter might (on the face of it) lose two year's employment history.
If it were me I'd hold fire on poking the hornet's nest. I'd apply for the job & see what happens.
If I got the job & it appears I've been diddled out of two year's service I'd still hold fire. This is only really important if things go wrong later. The facts remain TUPE or not TUPE (in the words of the bard) will still hold true.
I think your letter is spot on if I were looking to lose say 20 years' service.
You risk antagonising a new employer before things have already started.
I'm speaking as an employer who's been through this scenario several times. (But...I'm not a legal expert).
Jasey_ said:
Step daughter is currently unemployed.
If you send that letter my guess is she will remain unemployed.
all the points are valid - fact is the original letter states she no longer has a contract and it's clear she would be being taken on as a new start.
Depends how much she needs the job I guess.
That's the better abbreviated version of what I was trying to say above If you send that letter my guess is she will remain unemployed.
all the points are valid - fact is the original letter states she no longer has a contract and it's clear she would be being taken on as a new start.
Depends how much she needs the job I guess.
Appreciate advice from all.
Letter sent, advice (generic) provided by ACAS. It’s not a case of ‘cutting nose off to spite face’, as far as I’m concerned they are perfectly reasonable questions.
In terms of other jobs, she’s (comparatively) independently wealthy as she is mortgage free with large savings, and there are plenty of other similar jobs much closer to her new house.
This isn’t about principle as such, but I can understand how some may feel that way.
Letter sent, advice (generic) provided by ACAS. It’s not a case of ‘cutting nose off to spite face’, as far as I’m concerned they are perfectly reasonable questions.
In terms of other jobs, she’s (comparatively) independently wealthy as she is mortgage free with large savings, and there are plenty of other similar jobs much closer to her new house.
This isn’t about principle as such, but I can understand how some may feel that way.
ChevronB19 said:
Appreciate advice from all.
Letter sent, advice (generic) provided by ACAS. It’s not a case of ‘cutting nose off to spite face’, as far as I’m concerned they are perfectly reasonable questions.
Of course they are reasonable questions. They are also a label to a so far unknown employer that says "heyup, we've got one here".Letter sent, advice (generic) provided by ACAS. It’s not a case of ‘cutting nose off to spite face’, as far as I’m concerned they are perfectly reasonable questions.
ACAS are absolutely fine, but often lack a bit of practical experience on being on the other side of the fence as it were.
As I've said before this situation is massively challenging for all three parties. What NEWCO want is to manage a bit of a s
tstorm (to their advantage admittedly) and get on with business. On one occasion my company was attempting to buy a company out of administration and the whole TUPE thing was nearly the factor that scuppered the whole deal. Something designed to help employees often works against them.
In the end we waded through the treacle, saved 70 jobs and within a year the garage concerned was the most profitable in the group.
Good things can happen! We wish her well, but it's also good to know it's not an overall critical situation for her
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