It has been reported that Thomas Cook had initially approached the Government for a loan of £200 million to make up a shortfall in its funding to avoid going insolvent, however this loan was not made and the government avoided setting a precedent which others might have sought to follow.
With the last of the repatriation flights media attention is beginning to focus on the costs that the taxpayer will be paying. It has been reported that the estimated cost to the taxpayer of the repatriation flights was in the region of £100 million.
Thomas Cook globally employed 21,000 employees and the liquidation of Thomas Cook will mean that there are an estimated 9,500 who will be able to make various claims from the National Insurance Fund through the Redundancy Payments Office.
As Thomas Cook entered into a compulsory liquidation the effect was that it automatically ended the employment of all employees.
Employees may be able to claim some amounts owed to them from the National Insurance Fund, as it guarantees a basic minimum payment in relation to certain debts owed by the employer to the employee. The payments take time to administer and are subject to statutory limits. The government website sets out what can be claimed. This includes:
Arrears of pay – Up to a maximum overall limit of eight weeks’ arrears of pay, up to the current maximum statutory limit on a week’s pay (less tax and National Insurance contributions).
Holiday pay – Up to six weeks’ holiday pay again up to the current maximum statutory limit on a week’s pay, for holiday taken or accrued in the 12-month period ending on the date of the liquidation (less tax and National Insurance contributions).
Statutory notice pay – Up to the current maximum statutory limit on a week’s pay, less “notional” tax and National Insurance contributions. NOTE: the employee is required to mitigate their loss.
Basic Award – Up to the current statutory maximum in relation to a claim established by the Employment Tribunal.
A Statutory redundancy payment
Thomas Cook employees owed more that the statutory amount can prove for the balance as an unsecured claim in the liquidation.
The insolvency of Thomas Cook will also impact on landlords of their premises, at the time of liquidation there are believed to have been in the region of 600 shops open.
As has already been seen the cost of a holiday will rise, in the short term we have seen the costs of flights rise and conversely the costs of accommodation fall as hotels try to attract new customers having lost the Thomas Cook block booking.
There is also the knock on effect for those in the supply chain. Third party suppliers who were reliant on Thomas Cook’s business such as those who dealt with airport transfers, car hire or excursions for Thomas Cook holidaymakers, will be affected. Depending on how reliant such businesses were on Thomas Cook’s business, this loss of custom could put many businesses at risk.
If your employer becomes insolvent and you would like to discuss the claims that you can make Cognitive Law can assist, likewise if you are a landlord whose tenant has become insolvent we can guide you through the process with a view to minimising your losses.
By Darren Stone