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Published on June 16th, 2014 | by The GC Team


Fresh calls for review of insolvency laws following Comet Tribunal

The Government is facing renewed demands for a review of UK insolvency laws following the outcome of last week’s Comet Tribunal, which could result in thousands of employees who were not properly consulted about their redundancy sharing a £25 million payment, financed by the British taxpayer.

The Tribunal Judgment puts more pressure on Business Secretary Vince Cable, who in December 2012 instructed The Insolvency Service to investigate Comet’s collapse after the Government [i.e. the taxpayer] was left with a £50 million bill for unpaid taxes and redundancy costs.

Usdaw General Secretary John Hannett, commenting on the findings of the Tribunal, said: “This area of law requires review because it is riddled with injustices for both workers and taxpayers and is stacked in favour of the financial and business sector. The Government needs to end the perverse financial incentive for employers and Administrators not to comply with legal obligations on collective redundancy consultation.

“Yet again the taxpayer will have to pick up the bill for what is owed to sacked staff because administrators deliberately flouted the law. It’s absolutely disgraceful that companies can get away with this sort of tactic in the 21st century.

“The former staff at Comet have had to wait over 18 months for this decision, having already been through the trauma of losing their job and being forced to seek justice through a lengthy Tribunal hearing.”

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Shadow Secretary for Business Chuka Umunna first raised his concerns about the investigation into the Comet collapse in November 2013, shortly after it was revealed that new owner OpCapita was to receive almost £117 million from the retail chain’s demise. “One year on, ministers are still letting down the high street. Vince Cable promised in December [2012] that he would review the way insolvency works in the UK so that the lesson can be learned but no action has been taken,” he said at that time.

Mr Umunna has again voiced his opinion that no action has been taken.

The Insolvency Service said it is considering the Employment Tribunal Judgment making an award to former staff of Comet because of inadequate consultation prior to redundancy, but cannot at present confirm former employees’ eligibility for a payment.  No comment was made on why the investigation, the findings of which will not be made public, has taken so long.

A further hearing to confirm who is eligible to claim a payment will be held on 17 July 2014.

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