Insolvent businesses

Depending on the circumstances, the employees of an insolvent business may transfer by operation of TUPE. However, if that is the case then some of the transferor’s debts in respect of the employees will not transfer to the transferee, but will instead be taken on by the Secretary of State and paid out of the National Insurance Fund. Furthermore, the transferee will have greater scope than normal to vary the employees’ terms provided the variation is designed to safeguard employment opportunities by ensuring the survival of the business.

However, employees will not always transfer from an insolvent business. This is an intricate area of law and legal advice should always be sought.