Government launches new insolvency staffing guidance
The government has unveiled plans to support insolvency practitioners and employers who need to consult with staff facing redundancy as a result of their firm’s insolvency.
Currently, in instances where an employers could make more than 20 employees redundant within a 90‐day period, they are required to consult with staff or representatives to limit the impact of those job losses.
The Secretary of State must also be notified in writing no less than 30 days before the redundancies are made.
A call for evidence was launched by the government in the first quarter of 2015 to discover the difficulties employers face with the process.
Numerous lawyers, insolvency practitioners and trade unions provided responses which were detailed in late 2015.
The report revealed that while the majority of respondents understood that the legislation is designed to promote constructive engagement with employees and to provide support, it can be difficult to apply in real‐life situations.
This is because decisions during the insolvency can need to be made quickly, while there are few funds and a limited number of options available.
Attention at that time is also often on securing the future of the business via restructuring or insolvency methods, meaning other aspects can be forgotten.
The consultation also found that a number of employers said the situation was particularly daunting, as they had little or no experience of navigating the complexities of both employment and insolvency law.
As a result, a new set of non‐legislative measures have been launched by the government to assist insolvency practitioners and employers ahead of large scale redundancies.
Under the new guidance, minimal expectations will apply for insolvency practitioners when notifying the government of redundancy proposals, as well as providing information to highlight legal compliance when dealing with employees.
This should ensure that consultation takes place in a recorded manner while the processes of rescuing or winding up a business are completed.
By Phil Smith