Employment Cases Update

The Employment Rights Act 1996 and Pension Schemes Act 1993 (Amendment) Regulations 2017

Definition of employer expanded for the purposes of payments by the National Insurance Fund

Sections 166 and 182 of ERA 1996 provide for payment to employees of certain sums due to them from their employer in circumstances where the employer becomes insolvent. Section 123 of the PSA 1993 provides for payment to pension schemes of relevant outstanding employee and employer contributions. All three sections define when an employer becomes insolvent for the purposes of the Acts. These definitions do not encompass all employers that become insolvent, but only those insolvent employers who are companies, limited liability partnerships (in the case of ERA 1996) or individuals; nor do they cover some types of collective  insolvency proceeding in Member States (which are broadly analogous to the UK's administration procedure). Following a review conducted by the Redundancy Payments Service, which administers such payments on behalf of the National Insurance Fund to employees, it was concluded that the definition of an insolvent employer should be expanded to include all insolvent employers in the situations required to be covered under the Directive.