Can employees be made redundant during administration?

Yes, employees can be made redundant during administration if the administrator believes this is necessary to reduce costs or prepare the business for sale. Administrators have a duty to act in the best interests of creditors, and sometimes this requires reducing staff numbers to make the company more viable. Employees who are dismissed become preferential creditors for unpaid wages and holiday pay, and they may also claim statutory redundancy payments through the government’s Redundancy Payments Service. If the business is sold during administration, employees may transfer to the new owner under TUPE (Transfer of Undertakings Protection of Employment) regulations, although some redundancies may still occur. Communication is critical, as employees often feel uncertain during administration. While job losses can be distressing, administration sometimes saves more jobs than liquidation, where all employees are automatically dismissed. By restructuring during administration, businesses can preserve the core workforce while reducing costs to secure survival.