The rights of employees on corporate insolvency: a UK and US perspective

This thesis considers how Dworkin’s interpretative approach to law may be used to resolve the uncertainties in how a balance can be achieved between employee protection and corporate rescue laws during corporate insolvency. There exist a significant number of academic theses on the role that insolvency law should play in a legal system, and the tension that corporate insolvency creates between employment protection and corporate rescue laws during corporate insolvency. However, there is also a dearth of academic work on how the tension between employee protection and corporate rescue laws may be balanced through interpretation.
The commencement of formal insolvency proceedings by an employer affects employees’ rights and interests. Employment laws seek to protect employees’ rights and interests while insolvency laws seek to promote corporate rescue which may entail workforce changes. Consequently, this creates a tension between whose interest insolvency law should give primacy of protection.
Theoretical perspectives from what has been termed the traditionalist and proceduralist theoretical schools that dominate the field of insolvency, arguably, do not provide satisfactory avenues through which a balance may be achieved between employment protection and corporate rescue. While traditionalists’ perspectives consider the interests of extant stakeholders as a whole and support fairness in distributive imperatives in insolvency, they do not provide clear answers on how these perspectives may be balanced and applied to corporate insolvencies. Proceduralists, however, provide clear answers to the factors to be taken into account during corporate insolvency but their perspectives give primacy to maximising creditors’ returns rather than an inclusive distributive approach, which may be an unsatisfactorily narrow approach to stakeholders as a group.
This thesis therefore, applies Dworkin’s interpretative approach to law as a remedy that would arguably, provide an approach through which a balance may be achieved between employment protection and corporate rescue objectives during corporate insolvency.