THE EFFECT OF LIQUIDATION ON CONTRACTS OF SERVICE

Published date01 January 1952
DOIhttp://doi.org/10.1111/j.1468-2230.1952.tb02109.x
Date01 January 1952
THE
EFFECT
OF LIQUIDATION
ON
CONTRACTS OF SERVICE
THERE appears to be very considerable doubt as to the exact effect
of liquidation upon a contract of servicc between a company and its
employee. In particular the effect of a resolution to wind
up
voluntarily is obscure and the cases as a whole are not easy to recon-
cile.
It
is submitted, however, that if they are examined together
P.
principle can be deduced which
will
explain all the decisions and
will indicate the true effect of a resolution to wind
up
voluntarily.
is the
earliest case and was concerned with a winding-up order under the
Companies Act,
1862.
Romilly M.R. in a short judgment said:-
The Winding-up Order
.
.
.
is notice to all the world
of
the winding
up.
The applicant will be entitled
to
prove
for
his
salary on the footing of having had notice of discharge on the
day the order was made.”
It
will be observed that the crucial date was stated to be the date of
the order and not the commencement
of
the winding up.
Re English Joint
Stock
Bank,
Ltd.
(Ex!
p.
Harding)
*
was not
dissimilar, but in this case a winding-up order was made on May
27,
proccedings under it were stayed, a supervision order was made
on
July
31,
and the liquidator gave notice to the servant on August
1.
The servant claimed three months’ salary in lieu of notice as from
August
1
and the question arose whether the order of May
27
had
amounted to notice to the servant. Page-Wood
V.-C.
(as he then
was) said, firstly, that if the business did not continuc and there was
nothing for the clerks to do
‘‘
. . .
if
the clerks receive notice at
or
shortly after the
making
of
the winding-up order
.
. .
the discharge may be held
to
date from the making of the order,”
and secondly, that
if
the company continued in business
so
that there
was work
to
occupy the clerks they must continue under the old
contract. Thus, even in the first case the judge envisagcd some
notice other than thc winding-up order itself and in the second case
allowed the winding-up order no effect at all. In the light of sub-
sequent
decisions neither of these propositions will stand.
no authorities
were quoted and Romilly M.R., without giving any reasons, said:-
I
am of the opinion that the resolution to wind
up
the com-
pany
ips0
jacto
put an end to
Mr.
Shirreff’s employment and
was equal
to
his dismissal.’’
Re General Rolling
Stock
Co.
Ltd.
(Chapman’s Case)
In
Re Imperial Wine Company (Shirrefl’s Case)
1
L.R.
1
Eq.
316.
2
L.R.
3
Eq.
311.
3
L.R.
14
Eq.
417.
48

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