The Trade Union Congress’ views on Insolvency

This report focuses on the effect of Insolvency and company liquidation on employees. It empathizes the importance of taking into account the interests of workers when conducting procedures. The report calls for a positive step towards mitigating the disruption on employees that results from their company’s insolvency.  The report points to the fact that as the law stands, there is no duty to take into account the interests of employees during receivership and winding-up.

What are the proposed solutions?

Fist, the report suggests that employment debt should be made preferential as a whole because it will mitigate the blow of loss of employment and the disruption to their financial arrangements.

Second, in order to avoid the issue as to who owns the subscription transfers in check-off arrangements, the report suggests that the definition of employment debt should include all payments due to the employee, whether paid to them or on behalf of them.

The report describes the current approach of liquidators to try and conserve the company’s value as a ’19th century approach’ to employment rights. This is because it tends to focus on reserving company’s assets, and protecting the interests of holders and creditors, rather than that of its employees.

The report proposes that the union be more engaged when redundancies are proposed. In relation to unfair dismissal awards, the report suggests that those be paid in full prior to the termination of employment. Before termination of employment, the other possible options must be thoroughly examined.

The report finally summarizes its ten change proposals.

 

 

ILRC summary c74 - meeting two additional materials - insolvencyprinciples