As Phones 4U collapses into administration, Helen Moore, employment law solicitor at Worcester-based Gordon Lutton Solicitors, explains your employee rights if your employer’s business fails.
It was announced this morning that Phones 4U has been placed into administration, placing more than 5,500 at risk including jobs at local branches in Worcester, Hereford, Bromsgrove, Kidderminster and Evesham.
The accountancy firm PWc has been appointed as administrator. However, where does this leave those employees of Phones 4 U facing redundancy? What are your rights if the business you work for is placed into administration?
Helen Moore, employment solicitor at Gordon Lutton said, ‘Employees often feel shocked and upset when they learn that the company they work for has gone into administration, particularly if it was not expected by staff. They can also feel powerless in terms of the outcome of the administration and can often struggle to get answers from the administrator.’
‘Employee rights will depend upon their employment status and the plans for the administration.’
‘In an administration, you will not be able to make any immediate legal claim against your employer. The administrators have a period of 14 days after their appointment to decide if they want to dismiss employees to save the business money. If they do so within the 14-day period, those former employees become "ordinary creditors" within the administration, so will line up along suppliers and other creditors.
‘Of course it is always possible that a buyer for the business can be found. If the business is sold and you are transferred, your employment rights are generally protected and transferred to the new owner under the Transfer of Undertaking (Protection from Employment) Regulations. This includes payments owed to you.’
‘It is also possible that your contract may be varied to some extent by an administrator and these changes are permitted. You may, therefore, find yourself being forced to accept some changes to your terms of employment.’
‘If you are made redundant, you will not qualify for redundancy pay unless you have two years' qualifying service. Any entitlement to notice and redundancy pay will ultimately be guaranteed and be paid by the Government.’
‘If you are confused about your rights and entitlements, I would advise you to seek initial legal advice, even just to set your mind at rest.’
For further information contact Helen Moore at Gordon Lutton on 01905 354012 or e-mail her at email@example.com.