The aftermath of Thomas Cook
by Michael Menzies-Baird, Litigation & Employment Law Solicitor
The failure of Thomas Cook has seen an unprecedented peacetime action to recover over 150,000 holidaymakers who are currently on holiday overseas. Whilst there have been signs for many years that Thomas Cook has been under increased pressure from the travel industry it was yesterday, on the 23rd September, that things finally took a turn for the worse.
For many that have already paid for their holidays with a debit card or cash, they are unlikely to see any of that returned to them. If they have used a credit card to book and pay that may allow their money to be returned to book an alternative holiday, but nothing is guaranteed.
The biggest concern is the 21,000 employees who have lost their jobs.
Redundancy is a difficult discussion at any stage, but with no prior warning, is a devasting blow. Some employees were unlucky enough to find out when planes had landed. One Thomas Cook Airline Steward was praised by holidaymakers for returning them home with the professionalism
Employees will find themselves in a difficult and stressful situation, wondering what is happening moving forward and whether there is any guarantee of their wages being paid at the end of September. It is possible that parts of the business may be purchased by competitors which may allow the staff to continue to be paid but that can take some time. Those working overseas in hotels as representatives are likely to be the worst effected and may not even get a flight home.
Remember, you are only entitled to a redundancy payment if you have been employed for at least 2 years with the same business. The gravest concern here is how the staff will get their wages and any redundancy payments?
So what happens from here? As soon as a liquidator is appointed the employees will be dismissed immediately. Employees have a number of rights, one of which is they can file for wrongful dismissal. Even if a wrongful dismissal claim is found to be valid and the claim is awarded, the amount awarded will be classed as an unsecured debt and therefore not preferential. This means that it is likely the employee will see only a small amount of that money, or none at all especially if the company has little or no assets to sell.
Employees affected can still claim for the following: Payment in lieu of any notice period, holiday pay, redundancy pay, any wages that have gone unpaid. Compensation for these claims can be applied for by employees completing and returning a form called an RP1 to the Redundancy Payment Service (RPS). It will be the responsibility of the appointed liquidator to inform employees of their rights and send the appropriate forms giving advice on what allowances they can claim for.
For an up to date guide on current permissible allowances see: https://www.gov.uk/your-rights-if-your-employer-is-insolvent
All claims for redundancy are examined by an RPS officer and all verified claims are paid by the RPS. It is likely that employees will be able to claim such funds back providing they are entitled to them negating the need to pursue a wrongful dismissal claim.
If you need our advice on any employment issues contact our team on 0800 160 10 10.