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My Employers Went Into Administration: A Case Study

By: Maggie Lonsdale BA (hons) - Updated: 5 Sep 2012 | comments*Discuss
Employers Employees Administration

It is surprising just how quickly some companies fall into administration, unless you are one of the people at the top that can see it all coming. For the employees, they are actually often the last to know and are left in the dark as much as possible to keep them coming into work day after day.

Economic Slowdown

For Beverly Shah, technical manager at a large out-of-town wet film processing company, that wasn’t the case. She could see the slowdown in orders at the company and felt confident that her employers were keeping their staff informed.

Beverly told us, “I had total faith in my employers. We had a weekly update meeting and all the staff were kept informed of the changes. We were all well aware that the wet film processing business was not a long-term business thanks to the rise in digital photography, and we knew how large the overheads were. The cost of new equipment was phenomenal and there were no guarantees that there would be the custom to pay for it, but our employers were confident.”

Voluntary Redundancies

The managers told their employees that there would be a couple of redundancies, which were carefully managed by offering Voluntary Redundancy. The weekly meetings highlighted the fact that the company was looking into diversifying its business while still offering a high-quality processing service to niche customers, and were launching a new website so they could capture customers worldwide.

Beverly was sure that the company was handling the ‘change over’ time well and felt secure in her role as technical manager. Her employers had discussed training opportunities to learn about new machinery and she was confident in the future.

A Total Shock

So Beverly was very surprised when she turned up for work one Tuesday morning after a bank holiday weekend to find no one at the office. She continued, “Colleagues started arriving and we didn’t know what was going on. I had a call from the boss and it turned out that the company had gone into administration over the weekend as they had been unable to rearrange their financing agreements, leaving all the staff out of a job. It was a terrible shock because I was so sure that the company was on top of the situation.”

Beverly and her colleagues went home and tried to take in the circumstances. Her first port of call was to inform her bank manager and check through her insurance policies to ensure the mortgage was paid. Luckily, it was only three days after pay day. Beverly went to the local job centre to make sure she gained some advice on statutory redundancy pay because she was now very doubtful that the company would honour their agreements. She is still going through official channels to gain redundancy pay from her previous employers.

She concluded, “It was a real wake up call. In some ways I am pleased that I learned the lesson not to be over trusting and I’m lucky that I was not left out of pocket, although I know of some suppliers that are still chasing money from the administrators.”

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