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Insolvency Law exposed as flawed.
MP's have voiced their concerns that the laws governing insolvency are flawed.
A report's findings concluded that the present laws are in favour of investors at the detriment of workers, the report was requested following the much-publicised collapse of City Link, the nationwide delivery firm, and was a joint report from two parliament committees.
The report also found that in the case of City Link, the company deliberately hid the situation from its workforce.
The timing of the insolvency could not have been worse for its employees coming over the Christmas period, over 2500 employees lost their jobs and around a thousand contractors were affected.
The present legislation governing insolvency does not afford the protection it should to workers or a company's supply chain, whilst at the same time protects Directors and Investors.
The report found that the law at present, is structured so that it is in a company's financial best interest to break the law and flout the consultation process for redundancy, as in some situations the fine for ignoring this process is much less that continuing to trade and adhere to the law.
Especially in situations like this where the taxpayer is in effect, paying the fine.
The report highlights the need for a review, and identifies concerns that insolvency law has not kept up with changes in Employment Law.
In the situation with City Link many of its drivers and support workers were self-employed and will receive very little of what they are owed, which is largely down to the order of priority for creditors.
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