What’s next for Thomas Cook employees?

Following the news that the tour operator Thomas Cook has ceased trading, we take a look at what might be next for the 9,000 employees in the UK.

What happened to Thomas Cook?

Thomas Cook was put into compulsory liquidation, or ‘winding up’. This process begins when a creditor informs the High Court that a company owes them a sum of money which the company cannot pay. If the Court issues the order, and appoints the Official Receiver to act as liquidator for the company, the company is forced into liquidation: it must stop trading and its assets are distributed to its creditors.

Following a winding up order, and upon appointment of the liquidator, employees are automatically dismissed. Depending on an employee’s length of service, age and the details in their employment contracts, former employees may be entitled to redundancy payments, holiday pay or unpaid wages and notice pay. Some may even be considering seeking compensation in the employment tribunal, by way of a Protective Award, for failing to consult with them before being made redundant.

Thomas Cook employees living in England, Scotland or Wales and working under an employment contract, who have been informed that they are being made redundant have been advised to contact the Insolvency Service, in order to claim for such payments or monies owed.

Redundant employees of an insolvent employer can apply to the Insolvency Service for statutory redundancy pay, so long as they have two years or more continuous service.

Redundancy payments

Redundancy pay is based on weekly earnings before tax (gross pay). For each full year worked, employees can get:

• Half a week’s pay for each full year they were under 22 years old
• One week’s pay for each full year they were between 22 and 40 years old
• One and a half week’s pay for each full year they were 41 or older

There are limits to redundancy pay if made redundant after 6 April 2019:

• The maximum weekly amount is £525
• It is only paid to a maximum of 20 years of service (even if their length of service is longer)

Redundancy pay, including severance pay, under £30,000 is not taxable, but tax and National Insurance payments will be taken from any wages or holiday pay.

Holiday pay

Employees will also be able to claim for payment of all accrued yet untaken holiday owing as at the date of termination of employment. The maximum payment that can be made is 6 weeks and as above is capped at £525 per week.

Wages

Employees can also claim for payment of unpaid wages or other contractual monies owed e.g. bonus, commission, overtime. Claims for arrears of pay can be made for periods of up to 8 weeks and are subject to the £525 weekly cap.

Statutory Notice Pay

Given the speed at which this process took place, it is unlikely that any form of notice periods were worked and as such, employees will be able to claim for statutory notice to cover the notice period that they did not get paid for. This is calculated on the basis of one week’s notice for every full year of employment and can be paid up to a maximum of 12 weeks (regardless of whether the employment contract entitles them to a longer notice period). Deductions may be made to this payment, in respect of the receipt of benefits.

More information

You can read the statement about Thomas Cook’s compulsory liquidation here:
https://www.thomascookgroup.com/news/23092019/compulsory-liquidation-of-thomas-cook-group-plc

Contact us

The GatekeeperHR team is here to help. GatekeeperHR is a fixed cost, employment law and HR retainer service which provides businesses with access to a dedicated team of experienced lawyers and HR professionals who you can speak to, or meet face-to-face, at any time. The service includes a full HR compliance audit, access to an online portal full of valuable employment law and HR resources and an annual training session on topics of your choosing.

If you need HR support or advice or wish to discuss how GatekeeperHR can ensure that your employment documentation is legally compliant, contact Jenny Reardon, a member of our GatekeeperHR team, on e. JennyReardon@rixandkay.co.uk or visit the GatekeeperHR website for more information on how we can help you.

If you need Employment Law advice to discuss how these situations could affect your business, contact Elaine Abbs, a solicitor with our Employment team for more information on how legislative changes could affect your business.