Comment on collapse of Carillion – Sam Murray-Hinde, Partner, Employment, Howard Kennedy
Comment attributed to Sam Murray-Hinde, Partner, Employment, law firm Howard Kennedy
“Carillion employees face an uncertain future. Whilst the Government has indicated it will provide funding to maintain the delivery of public services, it is not clear what is to be done in the longer term, or what will happen to those engaged on Carillion's private sector contracts.
“In respect of employees engaged on contracts which are ultimately be taken over by a new service provider, their employment will not automatically transfer under TUPE due to the terminal insolvency proceedings. If a new provider opts to take on any of the employees, it could do so on new terms and conditions less favourable to them.
“In a compulsory liquidation, all employees are automatically dismissed by operation of law from the date of the winding-up order. There will be a moratorium on legal proceedings, but even once lifted the employees are not entitled to bring unfair dismissal claims. Further, any other damages claimed will rank as an unsecured debt and will be difficult to recover in full. Only remuneration is treated as a preferential debt and even then this is capped.
“The National Insurance Fund guarantees payment of specific debts to employees, such as arrears of pay, notice pay and a redundancy payment. However, these payments are subject to caps."
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