The Insolvency And Employment Law

1727 WordsSep 29, 20167 Pages
The sale or transfer of an insolvent undertaking creates an interaction between differing bodies of law. The main statutes are the insolvency and employment law, principally although not exclusively encapsulated by TUPE (TUPE, 2006). The interaction between these laws is of particular interest to this study. Insolvency legislation is focussed upon the rescue of the company and employment legislation is concerned with employee protection. The interaction between the afore mentioned legislation is inevitable, with the potential for employment protection and business rescue to be characterised by tensions. Employment law is intended to ensure protection for the employees’ existing rights especially in matters relating to remuneration and can directly interfere with the attempt to transfer the struggling business with minimal financial liabilities (Thornton, 2014). There is certainly the opportunity for the divergent intentions to directly conflict during the insolvency related transfer. Pragmatically, an obvious tangible asset for cost reduction in a business rescue is often jobs. TUPE restricts the new employer’s options and had been described as impinging on new owner’s discretion to make financially cogent decisions (Thornton, 2014), consequently TUPE can also actually impact on entrepreneurial freedoms. Whilst recognising employee protection is necessary, if the business is unable to continue then subsequently this results in loss of all jobs. Thus from an external
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