This 2nd article in our 2-part series on ‘Employment Contracts vis-à-vis CIRP’ examines the validity of ipso facto clauses which permit employees to terminate their employment on the occurrence of an insolvency event; and acknowledges the duelling priorities of upholding contractual freedom and ensuring that the debtor remains a ‘going concern’.
The United Arab Emirates legislators have enacted Federal Decree Law No. 51 of 2023 on Financial Restructuring and Bankruptcy (the “New Bankruptcy Law”).
It is worth noting that the New Bankruptcy Law established special courts to adjudicate bankruptcy applications which will be referred to as the bankruptcy courts (“Bankruptcy Courts”).
Diese Gretchenfrage ist dem Insolvenzrechtssenat des BAG am 25. Mai 2022 einmal mehr gestellt und diesmal eindeutig - mit Auswirkungen über den zu entscheidenden Fall hinaus - beantwortet worden (Az. 6 AZR 497/21). Hintergrund war die Anfechtungsklage eines Insolvenzverwalters gegenüber einer Arbeitnehmerin des Insolvenzschuldners.
Receivers and employees are the greatest losers from a recent chain of court cases. Unless overturned on appeal or by legislation, the cases impose financial burdens on employees and administrative burdens on receivers.
At stake are employees' accrued leave entitlements and the statutory requirement to pay them once a company enters external administration. Employees of companies in receivership can lose entitlements they would ordinarily receive during liquidation depending entirely on the time at which a company enters administration or liquidation.
New restructuring legislation was recently adopted in Belgium and comes into force on 1 April 2009. The Act of 31 January 2009 on the continuity of undertakings (the Act on Continuity) aims to replace the existing judicial composition procedure (concordat judiciaire/ gerechtelijk akkoord) with a more effective and flexible restructuring instrument.
The key features of the Act on Continuity are:
On 6 November 2008, the Belgian House of Representatives adopted a bill on the continuity of companies. Although the Senate has exercised its right to examine the bill and may propose amendments until 26 January 2009, we thought it useful to go ahead and address this new bill, which will replace the Act of 17 July 1997 on composition with creditors (Wet op het gerechtelijk akkoord/Loi sur le concordat judiciaire).
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The Supreme Court of Justice's July 5 2016 decision in Case 6034/13.8TBBRG-N1.S1 examined whether the payment due for the termination of an employment contract as a result of a collective dismissal following an employer's declaration of insolvency was a debt of the insolvent estate or the insolvent company.
Legal Developments
Potential hourly wage system
The Ministry of Labor and Social Development (MOL) is discussing a potential new employment system for Saudi employees named “Flexible Work” (Flexible Work). Flexible Work will be a system whereby an employee may be paid an hourly wage on a weekly basis in arrears, and various entitlements currently required under the Labor Law for conventional employees would not be required, such as:
A. THE PROBLEM
Many charities and associations have cash flow challenges, particularly in the current economic situation. They usually budget to break even financially. If some funding does not materialize as expected, they may be forced to close down. Their directors may be at financial risk as a result.