What is the impact on the employees?
Should your employer become insolvent, it is important that you understand your position as an employee and your rights so that you can reduce the effect o your personal life and make effective plans for the future.
The main implications are that there is a possibility that;
You could be made Redundant;
You may not receive your wages from your employer;
You may not receive other payments from your employer (e.g. expenses);
Your employment may be transferred over to a new employer;
Your contract of employment could be changed (including pay, etc.); and
Your pension may be affected.
Employees have a privileged position over other people that are owed money by the insolvent entity as some or all of the amounts that are due to them may be payable out of the government’s National Insurance Fund. In addition some of the amounts owed may have preferential status and be paid ahead of certain other creditors.
Whilst it may be difficult for employees to find positive aspects of such a situation, it could present an opportunity to them. Although it is typically the management team, any party could make an offer to buy the business including one or more employees.
