The government has admitted that its interpretation of new regulation relating to the rights of employees during an insolvency situation is unclear, claims R3.

The trade body for business recovery and personal insolvency professionals has claimed that a letter written to president Ron Robinson by Gerry Sutcliffe, minister for employment relations and consumer affairs, shows that new regulations intended to clarify the transfer of employees from a struggling business are still unclear.

Robinson also claims that the letter suggested that clarification would be attained in time as 'case law builds up', a situation Robinson described as a 'wholly irresponsible approach to legislation'.

'What the minister’s reply amounts to is – "yes, I know we got it wrong, but we’re going to leave it to the courts to sort out",' said Robinson.

He said R3 would continue to put pressure on government to amend the legislation.

'In the meantime, there will be an unacceptable level of uncertainty, and much delay, while employees and creditors bear the costs of sorting out the consequences of the government’s incompetence and complacency.'

The furore is focused on clarification of TUPE law, which relates to the rights of employees when their company changes hands.

In relation to insolvency, the new regulation contains options to enable more insolvent businesses to better handle employment issues and give them an improved chance of operating as going concerns.

But the insolvency profession has described the regulations as 'vague' and it is unclear in which type of insolvency proceeding they are intended to apply.