What Happens to Employees in a CVL?
Employees are often at the forefront of directors’ concerns. Managing this aspect correctly is both a legal obligation and an important part of demonstrating responsible conduct.
At Keywood Group, we help directors handle employee matters with clarity, compliance, and sensitivity.
What Typically Happens
- Employment terminates on liquidation
Employees are usually made redundant when the company enters CVL. - Statutory claims
Employees may claim redundancy pay, arrears of wages, holiday pay, and notice pay via the Redundancy Payments Service (RPS). - TUPE / transfers (limited scenarios)
In some cases involving pre-pack or asset sales, roles may transfer — but this is less common in straightforward CVLs.
Director Responsibilities
- Clear, timely communication
Keep employees informed once a decision is made. Avoid speculation or promises that cannot be met. - Accurate records
Payroll, contracts, and service dates must be correct to support employee claims. - Cooperation with the liquidator
Provide required information promptly to avoid delays in claims processing.
Common Pitfalls to Avoid
- Selective payments to certain employees
- Incomplete payroll data
- Delayed communication leading to confusion or disputes
Final Thought
Handled properly, a CVL provides a structured route for employees to access their statutory entitlements while demonstrating that directors have acted responsibly.
Keywood Group
Licensed Insolvency Practice
📞 Contact us for confidential advice today on 0121 201 0399 or by emailing us at info@keywoodgroup.co.uk
