Learn how to manage employment disputes and protect your business from legal action. <\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n
In a CVL, you place the company into liquidation and appoint a liquidator, who will dismiss employees as part of the winding-up. Compulsory liquidation involves the court issuing a winding-up order that automatically terminates employment contracts. In both cases, your business permanently closes, and your employees lose their jobs.<\/p>\n\n\n\n
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Your employees retain their legal rights when your company closes. They may be entitled to redundancy pay, unpaid wages, holiday pay, and statutory notice pay.<\/p>\n<\/div>\n\n\n\n
The law sets a strict priority order for employee claims. Certain entitlements, such as unpaid wages and holiday pay up to the statutory limit, rank as preferential debts and must be paid ahead of unsecured creditors. Redundancy pay and statutory notice pay normally rank as unsecured claims and are only paid if funds remain after preferential and secured creditors have been satisfied. Where funds are insufficient, your employees can claim statutory amounts directly from the National Insurance Fund. Insolvency changes<\/a> the payment mechanism but does not remove your employees’ rights.<\/p>\n\n\n\n When your business closes permanently, you will normally dismiss employees by reason of redundancy. You must follow the required statutory procedures even where closure cannot be avoided, and you must give employees notice or payment in lieu of notice in accordance with their contract or the statutory minimum, whichever is greater.<\/p>\n\n\n\n Where you propose to make 20 or more redundancies within 90 days, you must carry out collective consultation and notify the Secretary of State by submitting an HR1 form before any dismissals take effect. This duty applies in insolvency, and insolvency practitioners will typically handle this in practice. Failing to submit the HR1 form is a criminal offence, and failing to consult can result in protective awards that employees may claim, with payments potentially made through the National Insurance Fund if your company cannot pay.<\/p>\n\n\n\n You must also calculate and pay final wages, accrued holiday pay, and any commissions or bonuses owed up to the last day of employment. You must issue P45 forms, payslips, and written termination notices to enable your employees to make their claims.<\/p>\n\n\n Redundancy Duties and Consultation Requirements<\/h2>\n\n\n\n
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\n Guide to UK Employment Disputes<\/div>\n \n