Carillion collapse; what happens to the employees?

We’re certainly not starting “Blue Monday” off in the best way; with breaking news revealing that the UK’s second largest construction company Carillion has been placed into liquidation. This will be the biggest liquidation of a company seen in the UK in recent years.

A compulsory liquidation is when a particular creditor insists upon this process when they have not been paid for a period of time, this is likely to be one of their four large lenders. As the news develops on this, it’ll certainly leave a lot of questions about the financial mismanagement of the business on the shoulders of the Directors.

As a result 19,500 employees this morning will face a difficult day, they may choose to go to their office or site, and are likely to be told by the liquidator, Price Waterhouse Coopers, that their jobs no longer exist.

Having been a part of the collapse of Woolworths in 2008, the employees are going to be shocked and upset irrespective of their length of service. I say this because people are passionate about the business they work for and with Carillion being such a large employer and carrying out the services that they did, it’s a company that would be difficult not to be proud of.

In any insolvency procedure it is important to consider the rights of the company’s employees, especially during compulsory liquidation, as the company is being forcefully wound up, potentially leaving many of the employees without a job.

With the compulsory liquidation process (the appointment of PWC (the liquidator) in this case) in motion, the employees of the company are likely to be automatically dismissed. Under the TUPE regulations, an employee can raise a claim of wrongful dismissal against the company but this is only in certain circumstances i.e. breach of contract, failing to consult giving the statutory entitlement and if the employees have suffered a loss as a result of the dismissal.

It is important to not that even if a claim is lodged, this will be noted as an unsecured debt, meaning that under the liquidation, the priority payments are due to the larger creditors so the employees will simply be left at the back of the queue as seen in the Woolworths case which was Brough by a group of former employees in 2012.

If Carillion owes unpaid wages, payment in lieu of notice, redundancy pay, or holiday pay, then the employees will need to apply for this by completing an RP1 form with the Redundancy Payments Service.

Unlike Woolworths, who entered into administration, Carillion’s fate seems sudden and final, this will most certainly be reflected on the employees; this news has been hanging over them all weekend so this is likely to have taken a heavy toll on their wellbeing.

The key part here is support, as part of the HR team, once the major tasks of assisting employees in completing RP1 forms is over, the focus needs to turn to seeking alternative employment, ensuring that agencies have been contacted, FAQ’s pulled together and that CV support is offered to those who are unable to pull together a CV as they may have been with the business for a substantial amount of time.

My thoughts are with all the employees of Carillion this morning and I am more than willing to support them where I can. I would actively encourage my HR connections to support them by doing the same.