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Transferred from insolvent company to new company, not entitled to redundancy pay?

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  • Transferred from insolvent company to new company, not entitled to redundancy pay?

    Hi all, hoping someone can give me some guidance -

    I worked for company "A" for three years and 1 month, continuously, as a PAYE employee with a valid contract of employment and salary of £36,000/annum paid monthly in arrears.

    I only received one-third of my June 2013 salary, as the employer advised it was having cash-flow problems caused by a "client going bust". I then only received one-third of my July salary for the same reason. At the very end of July the employer advised it was insolvent, and had appointed an insolvency practitioner to liquidate the company.

    At the same time as declaring insolvency, the Directors of company "A" formed a new company "B" in order to continue business, and legally purchased, via an agent, the "assets and goodwill" of company "A".

    Prior to this, I had begun seeking a new job, as I was concerned at the way the business was operating when I only received part of my salary. I have been very lucky to secure a new job starting in September.

    I completed the RP1 form to claim my outstanding pay, holiday pay and redundancy payments from the National Insurance Fund via the Insolvency Service Redundancy Payments Office.

    However, I have been advised today by the Liquidator that, because company "B" purchased the assets and goodwill of company "A", I am not entitled to any claim for outstanding pay, holiday pay or redundancy pay from the National Insurance Fund, as my employment was transferred to company "B" under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

    This is despite the fact that I received NO communication (either written, emailed or verbal) from company "A" that I was being invited to join company "B". My understanding is that they made the assumption all employees would transfer, and so carried this out without reference to the employees. I did not receive a new contract of employment from company "B", although if the terms are the same I suppose I might not have received one. I did advise company "B" that I had found new employment elsewhere.

    Additionally, it is worth noting that the Accountants (same accountant for both companies) have issued me with a P45 effective the day company "A" declared insolvency, which I would surmise signals the end of my employment - had the accountants been notified of continuity of employment you would assume my tax records would be migrated internally.

    What are my options - the Liquidator suggests that, as my employment has been transferred (whether I was aware of it or not), the only option is to take legal action against company "B" for the outstanding salary. Is this feasible, given that the salary owed is from the insolvent company or are salary debts and underpayments transferred along with my other rights? I was not listed as a creditor at the liquidation of company "A" although I do not know if unpaid employee salaries are normally included in that list.

    One issue that I'm relatively confident doesn't complicate the scenario is that the Directors asked for my temporary help at company "B" to migrate management of some of the services for which I was responsible. I was happy to do this, as I was otherwise in limbo during August, waiting for my new job to start. I have NOT received any payment for this work.

    Thanks in advance to anyone who can help!

    Bill.
    Tags: None

  • #2
    Re: Transferred from insolvent company to new company, not entitled to redundancy pay

    Hi and welcome!

    What happened when company A was liquidated? Did you just carry on working there like nothing happened? Or did you stop working for some time? Are you still working for them?

    You may want to look at this for guidance on TUPE transfers:

    Comment


    • #3
      Re: Transferred from insolvent company to new company, not entitled to redundancy pay

      The fact that you received a P45 should show that your employment was terminated rather than transferred.

      Comment


      • #4
        Re: Transferred from insolvent company to new company, not entitled to redundancy pay

        Originally posted by FlamingParrot View Post
        What happened when company A was liquidated? Did you just carry on working there like nothing happened? Or did you stop working for some time? Are you still working for them?
        I carried on working for company "A" between the date it was declared insolvent (24th July) and the date it was liquidated, which was last Wednesday (28th August). I haven't worked for them since. The liquidator claims that, as company "B" was set up on the same day that company "A" was declared insolvent, I have in fact been working for company "B" but I dispute this, as I was not informed of the fact, I received my P45, and received no further monies.

        Cheers,
        Bill.

        Comment


        • #5
          Re: Transferred from insolvent company to new company, not entitled to redundancy pay

          Do you know the 'trigger date' for your dismissal?
          CAVEAT LECTOR

          This is only my opinion - "Opinions are made to be changed --or how is truth to be got at?" (Byron)

          You and I do not see things as they are. We see things as we are.
          Cohen, Herb


          There is danger when a man throws his tongue into high gear before he
          gets his brain a-going.
          Phelps, C. C.


          "They couldn't hit an elephant at this distance!"
          The last words of John Sedgwick

          Comment


          • #6
            Re: Transferred from insolvent company to new company, not entitled to redundancy pay

            If your role transferred on 24th July, company B are liable for your outstanding pay and holiday pay.

            Comment


            • #7
              Re: Transferred from insolvent company to new company, not entitled to redundancy pay

              Originally posted by BungalowBill View Post
              At the same time as declaring insolvency, the Directors of company "A" formed a new company "B" in order to continue business, and legally purchased, via an agent, the "assets and goodwill" of company "A".
              This is a common scam.

              Firstly, you are a creditor of company A. Secondly, if you can make a case that the transfer of assets was made in order to avoid liabilities, then you can apply to the court for that transfer to be reversed. That would then put their assets back in the firing line.

              Comment


              • #8
                Re: Transferred from insolvent company to new company, not entitled to redundancy pay

                Originally posted by mariefab View Post
                If your role transferred on 24th July, company B are liable for your outstanding pay and holiday pay.
                This is the angle I have gone for - since this has arisen and I've stamped my feet about it, the Liquidator has chastised the new company somewhat for failing to take proper legal advice on employment law. Seems this was recommended by the Liquidator before the declaration of insolvency, but never taken up. I've had a verbal promise from company "B" that they are going to pay me for the work I did in August, which I had previously been happy to do for free, and the outstanding pay for June and July in two instalments over the next two months, although not any holiday or redundancy pay.

                Perhaps this is the best I can hope for - I suppose at the very least I won't be out of pocket in the long term - assuming they pay then I'll get everything I should have earned or was owed, when it could have been a lot worse?

                Thanks everyone so far, all great stuff.

                Comment

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