Transfer of Undertakings (Protection of Employment) (TUPE) regulations are primarily intended to ensure that employees are not wrongfully dismissed during Court proceedings. In some proceedings TUPE would allow the employees to make claims against their employer for redundancy pay, unpaid wages, and holiday pay.
Since members voluntary liquidation is not considered an insolvency proceeding at all (it is actually by definition a solvent winding up process) there are only a couple of TUPE regulation sections that would apply. Section 8 of TUPE would not be applicable at all while Sections 4 and 7 would apply if there is a relevant transfer of assets.
In other words, if some of the company's assets are sold to another party during the liquidation and the transaction is considered a relevant transfer then the employees would be protected by Sections 4 and 7 of TUPE, which means they may have employment protection rights or the right to claim unpaid wages and redundancy pay, depending on the particulars of the case.
Regardless of the outcome, as the director or member of a limited company in the UK you should not be held personally liable for any of the company debts or unpaid employee wages as long as you adhere to your duties as a director.
If, however, you continue to trade knowing that the company is insolvent, or you take out debts in the company's name knowing that there will be no reasonable prospect of repayment then you could be accused of wrongful or fraudulent trading. Being found guilty of such an offense could result in you being held personally liable for certain company debts and you may even face a directors' disqualification ban that forbids you from acting as the director of any limited company in the UK for a period of up to 15 years.
If the employee is unable to file a claim for unpaid wages or redundancy pay under TUPE regulations then they may attempt to file a wrongful dismissal claim with the Redundancy Payments Service (RPS), however this is a problem that is usually only seen in a creditors voluntary liquidation, as by definition a company must be solvent and have enough assets and funds to repay all debts, employees, and shareholders in order to be qualified to enter into a members voluntary liquidation.
Even so, the directors of the company entering into liquidation are required to issue an adequate members voluntary liquidation notice in order to give employees time to prepare. If such a notice is not given in accordance with the law then the employees may have a case for wrongful dismissal claims. If you're concerned about the possibility of having to pay employees out of your pocket, dont worry, as members voluntary liquidation redundancy payments are a relatively rare occurrence given the nature of the proceeding as a solvent winding up procedure.
If you have any questions about members voluntary liquidation, creditors voluntary liquidation, compulsory liquidation, administration, or any other insolvency-related matter please feel free to contact us with your questions. You can also call us on 0800 644 6080 for a complimentary phone consultation. With 55 offices across the UK, you’re never far away from expert and confidential advice.
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