Business experts

Expert opinion: The real victims of the Thomas Cook collapse show insolvency laws are not fit for purpose

Written by Richard Woodman.

Richard WoodmanAmidst stories of financial chicanery fit only for the Wolf of Wall Street, there has been a tidal wave of emotion as the country waves goodbye (and certainly not au revoir) to another much-loved High Street name and a cornerstone of the British package holiday market – Thomas Cook.

Whilst headlines about repatriation exercises and ruined “holidays of a lifetime” are understandable, the greatest damage caused by insolvent businesses is to the employees who have made them what they are and have had their careers cut from under them.

Unlike the process of administration in which at least some employees may find their employment preserved before transferring to an incoming buyer, compulsory liquidation simply makes all staff redundant at the stroke of a pen.

Yet, whilst the media has been full of stories of last ditch talks to try and save the business, there is little evidence of discussions with the staff. In fact, reports suggest that many were the last to know of the collapse.

No wonder then that the Labour Party has used this year’s annual conference to promote an agenda for increased boardroom representation for employees and wider employee share ownership.

At least redundant Thomas Cook staff can apply to the insolvency service for certain payments such as statutory redundancy pay, notice pay and unpaid salary – hardly riches and not much for a ruined career, but hopefully sufficient to tide people over while they look for a new employer.

Richard Woodman is a partner at Royds Withy King, specialising in employment law and commercial litigation.