Leathes Prior's leading Employment and Insolvency Teams have, in recent months, become aware of a worrying trend whereby the Government's Redundancy Payments Office ("the RPO") have sought to reject claims from redundant employees for their statutory redundancy payment and/or notice pay following dismissal from an insolvent business.

In most cases, the RPO have justified the refusal to pay on the basis that the business the employee worked for (or part of it) has transferred to a new employer by virtue of the TUPE Regulations and that the employee therefore has a claim against the new (and solvent) employer.

Whilst it is the case that, where a genuine sale of a solvent business pursuant to TUPE has occurred, an employee will have no claim to the RPO (their claims will lie elsewhere) that is not necessarily the case whereemployees have been dismissed by an insolvent business.

An employee who loses their job because of insolvency may well be entitled to receive statutory redundancy and/or notice pay from the RPO even if they were immediately re-employed in the same business.This is because Regulation 8(7) of TUPE 2006 excludes the operation of TUPE in relation to the sale of businesses in certain insolvent situations.

Each case will turn on its own facts, and it is simplistic to say that where an employee has been made redundant by an insolvent company he or she will always be entitled to claim from the RPO, but at Leathes Prior we have become aware that the RPO do not seem to be considering each case on its merits but are instead taking the blanket approach of rejecting claims wherever there is an alleged TUPE transfer without considering the applicability of Regulation 8.

The RPO's stance is leaving many employees in an extremely unfortunate position.Their employer has not paid them redundancy monies (since they are insolvent), the purchaser will not pay them redundancy monies (rightly, since they did not make the employee redundant) and the RPO will not pay either because they say a TUPE transfer took place.The blow is all the worse for those employees who are not even employed by the purchaser.Even those who have been fortunate enough to gain a job with the purchaser lose out ; they have no continuity of service with their new employer, their terms and conditions are likely to have changed (to their detriment) and the compensation they are entitled to flowing from their old employment has been denied to them.

How can the RPO refuse claims which should be paid?The simple answer is that, we suspect, the RPO are taking a pragmatic view to refuse claims where they may be grounds for them to do so.The individual employee, whose claim in isolation is not likely to be worth significant sums of money, is then in a difficult position.They have a little known remedy of issuing a Tribunal claim against the Secretary of State, but such a claim is very specialist and complex and the cost of engaging solicitors to pursue the matter will very quickly outweigh the value of the claim.Due to the complexity, employees are experiencing difficulties in obtaining assistance from either their CAB or ACAS.

Leathes Prior are considering acting for employees in a 'class action' against the RPO, where they have been unlawfully denied payment of sums due to them.If you, or any of your colleagues, were made redundant or have been transferred to a new employer as a result of insolvency and have been refused payments from the RPO in the last 6 months then please lodge your interest in pursuing a claim (on a no obligation basis) by emailing the Employment Team's Secretary, Jade Jarrold,on jjarrold@leathesprior.co.uk.