Insolvency of the employer

This overview summarises the main issues that employment lawyers should be aware of in relation to an employer's insolvency.

When a company becomes insolvent, or is at risk of insolvency, the effect upon the company's employees will often be a key consideration. If the business is rescued as a going concern, then the hope will be that most, if not all, jobs will be saved. If the employees (or certain among them) are key to the business, they are also likely to be key to the success of any rescue, in which case it may be necessary to assure them at an early stage that their position will be safe to keep them from jumping ship. However, the need to get key employees on side early on will need to be balanced with the need to maintain confidentiality when negotiating a rescue. Care must also be taken not to misrepresent the situation.

If the business continues in some guise then it is likely that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) will apply to transferring employees. If there is no hope of a rescue deal,

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