Refused redundancy under Transfer of Undertakings act

Morphy

Hi all,

I have a situation where my previous employer went into administration and am now going through the process of claiming redundancy, holiday entitlement and owed salary. The MD and several employees from the old company immediately set up a new company and employed me and several others. The problem is the Insolvency Service is claiming we are not entitled to any payment from them as the business was transferred to a new employer.

Although my new position has largely remained the same I understand that the new business is not related to the old one financially in any way. There were no debts transferred and no other part of the business transferred or sold in any way. This is just essentially a new start up business with a lot of the same employees and customers.

The Insolvency Service is suggesting I pursue my new employer for any outstanding salary or holiday entitlement and my new employer is suggesting this is not the case. I am preparing to write back to them contesting the decision but I was just wondering if anyone had any experience or suggestions with this?

Thanks in advance.

NowWhat_2

I think this is what is meant by a "phoenix company"???

Worth googling the term to see what comes up. AFAIK I believe the whole reason for a firm doing this is precisely in order to "ditch" all those financial commitments they dont wish to honour - errr....in which case....I am guessing that the money they owe you might count as one of those things they wish to "ditch" (ie not pay).

Worth contacting your trade union as well - as hopefully they will have come across this before and be able to advise you. If this counts as a "new" firm according to the law (yes we know the facts are quite different - in actual fact its just the "old" firm in a "new" guise)- then I would imagine a redundancy payment would be due from the "old" firm. Where firms do not have the money to pay out due redundancy money themselves - then I know there is this Government "body" that does so instead (but only at the legal minimum level).

So - I would think there has to be a chance of getting the redundancy money due from your "old" firm (via this Government body) - but I would imagine other money owed to you by it have possibly been "ditched" and might not get paid by the firm - either in its "old" guise or its "new" guise.

You do need good legal advice on this - but meanwhile google "phoenix companies" as I suggested - to get the general idea why firms do this.

NowWhat_2

See this:

www.payontime.co.uk/collect/phoenix_companies.html

Morphy

Thanks for your reply NowWhat. As far as I'm aware my new company is not a "phoenix company" as we have no association with the previous company at all. No assets have been transferred and none of the directors are the same. We are all under new contracts of employment too.

As far as the old firm paying redundancy and monies owed this won't be the case as I'm sure all debts have been written off as unpayable. Also ex colleagues who have not been employed by the new company have received payments by the redundancy service.

I will reply to the Insolvency Service contesting the decision as I'm sure I am entitled to statuary redundancy and monies owed.