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Thomas Cook - What are your employment rights following Compulsory Liquidation of an employer?

Thomas Cook - What are your employment rights following Compulsory Liquidation of an employer?

Thomas Cook Liquidation

The demise of Thomas Cook in September makes us all fearful about our own employers and their viability in a changing world of companies facing challenging economic markets or financial crisis. ‘What would happen to us, if the same thing happened here?’

The travel sector appears particularly volatile in recent years. The collapse of All-Leisure Holidays Group, Buzzlines Travel, Lowcostholidays, WOW Air and Monarch Airlines spring to mind.

Compulsory Liquidation

Compulsory Liquidation is one of a handful of formal liquidation options available to limited companies, others include Creditors Voluntary Liquidation (CVL) and Member’s Voluntary Liquidation (MVL).

Compulsory Liquidation can mean very fast closure with an absolute restriction on trading.

It’s often the case with a Compulsory Liquidation that the more profitable parts of the businesses are sold off to new buyers with new vision, but this can leave employees with the stress of the unknown and feeling unsettled and in some cases, desperate with no job assurance in the short or long term.

This can leave employees in a daze wondering how it could have happened so quickly, patching together various communications and hearsay from fellow employees, friends, internet and media which can sometimes make the whole unemployment position seem confusing and hopeless.

Employees stuck in the middle of a Compulsory Liquidation are likely to be concerned and panicked about the following issues:

  • I have lost my job

  • I won’t be paid

  • I won’t be able to pay my mortgage and credit cards

  • I won’t be entitled to bonuses or holiday pay

  • I won’t be able to get a job locally

  • My family depend on me financially

  • What happens to my pension?

The law for employees

The law in these instances is clear. If you have been made redundant without consultation, you are entitled to compensation in the form of a Protective Award. The caveat to this is that your employer must have made or proposed to make 20 or more people redundant at the location in which you worked – this can include a particular office or a particular retail location. In these circumstances, you can claim the Protective Award from the Insolvency Service, which is a Government agency.

If your claim for the Protective Award is successful, you will be entitled to receive up to a maximum of 90 days’ (or 8 weeks’) pay at your usual weekly rate. For higher earners, weekly pay is, however, capped at a maximum of £525. The Protective Award will also have National Insurance deducted at the standard rate of 12%, and Income Tax will be deducted at 20% if you were made redundant in the same year as the Employment Tribunal makes the Protective Award judgment.

More here

Group Litigation

Where several employees are made redundant following a Compulsory Liquidation, they can join together to use the same employment lawyer, this form of litigation is known as a Group Litigation, with the lawyer preparing a case for a group of employees simultaneously against the employer. Group Litigation provides strength in numbers.

If you have been made redundant because your employer’s business has collapsed, or you are a Thomas Cook employee looking to recover your Protective Award, you should contact Lawson West Solicitors Limited who can advise you accordingly. The compensation payments might not be immediate, but they are guaranteed to be paid by the Insolvency Service following a successful tribunal claim.

Contact Us

If you have been affected by your employer’s business collapse, we can help you with supportive advice and action:

Carrie-Ann Randall, Lawson-West Solicitors:  crandall@lawson-west.co.uk   Tel: 01858 445485

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