Just over three years ago a new part of our business was established to create a new revenue stream. As we were uncertain about the success of this venture, the new staff hired to work in the area were given specific purpose contracts stating that they were employed to promote this project. Since then, this part of the business has limped along while being supported by the main business. This summer the new venture was legally split from the original company (continuity of employment has been preserved for relevant staff) in order to sink or swim on its own merits. It looks now as though it is going to sink and I am wondering if we are liable for redundancy payments for those still on the original specific purpose contracts.

For the purposes of responding to this question, we have assumed that there all the relevant employees qualify for redundancy payments (i.e. they have 104 weeks’ service) and that the specific purpose contracts have not expired.

The entity who is the employer of the employees shall be liable to make statutory redundancy claims. The question refers to a ‘split’ in legal entity, however if the Company is still the employer, then the Company shall be liable for redundancy payments.