CVA and Employees

Employees are normally retained in a CVA. However it is likely that restructuring will be required which could mean some redundancies.

  • Are Employees jobs at risk in a CVA?
  • What rights do Employees have?

Company Voluntary Arrangement and Employees

Company Debt Expert James Falla talks about the affect of a CVA on the company's employees. For more company debt advice visit www.companydebtadvice.net

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Are Employees jobs ate at risk in a CVA?

A CVA (Company Voluntary Arrangement) allows a company to continue trading by restructuring its debts. The company is not closed and will normally need to retain employees so that its business can be maintained.

Having said that changes in the way the company is run and cost savings will often be required. As a result some departments may have to downsize and parts of the business could even face closure. This will normally result in job losses.

Clearly if jobs are lost this will be extremely difficult for the employees affected. However by using a CVA the intention is to preserve the core business. This will save jobs that would otherwise have been lost if the entire company was liquidated. It also leaves open the potential for job creation in the future.

What rights do Employees have in a CVA?

A Company Voluntary Arrangement does not absolve the company of its responsibilities towards its employees. It may be that to meet the terms of the Arrangement cost savings have to be made. However this must be undertaken with the proper regard to employee rights.

If redundancies are to be made the correct consultation process must be adhered to. Any employee who is to lose their job is entitled to a full redundancy notice period and pay as per the terms of their employment contract and prevailing employment law rules.

In order to avoid redundancies the company may consider changes to employee contracts. These might include cancelling overtime, reducing standard contracted working hours or salary reductions. Where such changes are required these must be undertaken in consultation will all relevant parties.

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