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Rebellion "not legally obliged" to rescue Derby subsidiary

Tue 11 May 2010 11:20am GMT / 7:20am EDT / 4:20am PDT
Business

Lawyer clarifies legal position of Rebellion Derby employees claiming non-payment of wages

Reports of unpaid wages and withheld redundancy packages have begun to emerge from Rebellion Derby, the former Core Design studio responsible for the creation of Tomb Raider.

Rebellion acquired the studio and its assets in 2006, but announced its closure in March of this year - at the same time as a number of junior positions were made redundant at the company's main Oxford studio.

An email received by GamesIndustry.biz from the wife of a Rebellion Derby employee claimed that the company, "has failed to pay all the remaining Derby employees any wages owed for April, and any agreed redundancy payments for all those who left during April."

"In addition to this there are still a small number of employees working in the Derby studio - effectively for free, asset stripping the building," accused the email.

"Rebellion are claiming 'financial difficulties' as the reason for non-payment of wages and redundancy packages, but this has all been done verbally, over the phone, and are refusing to send anything out in writing," continued the claim. "They seem to be claiming that as Rebellion Derby is registered as a separate legal entity, and it's not currently making money, that they is no money to pay their remaining, and just left employees.

"The feeling amongst those who have been left is that it looks like they will be putting the studio into liquidation in order to get out of paying the packages that they have agreed."

However, Jas Purewal, a lawyer at Olswang LLP and writer of GamerLaw, has confirmed to GamesIndustry.biz that as a subsidiary Rebellion Derby's ability to pay is not dependent on its parent company's situation.

"The mere fact that it has a solvent parent company is immaterial," stated Purewal. "Since generally parent companies are not legally obliged to rescue their insolvent subsidiaries. A parent company is only liable to contribute funds to its insolvent subsidiary if there is some pre-existing debt which the parent already owes to the subsidiary. Generally if there is no debt, there is no obligation."

"Employees of an insolvent company are termed 'preferential creditors' and are therefore entitled to have their wages and redundancy payments paid to them in priority to most other creditors' claims. However, this depends entirely on whether the insolvent employer company has the funds to actually pay them with," he added.

"It's worth bearing in mind though that if you are made redundant by a company in the UK and that company is unable to pay you, there is a statutory body called the Redundancy Payments Office. The office was set up expressly to help employees where their companies either cannot or will not pay them."

Referring also to the ongoing legal disagreements between Infinity Ward employees and Activision, Purewal pointed out: "There is a theme here of an increasing awareness amongst games developers that receiving payment for their work is not necessarily set in stone - it can be affected by other developments.

"For all developers it's worth paying close attention to your employment agreement and making sure it's updated and that you and your employer are clear as to its terms to avoid any misunderstandings in the future".

Representatives from Rebellion have so far failed to respond to requests for comment when contacted by GamesIndustry.biz.

8 Comments

John Bye
Senior Game Designer

480 451 0.9
Regardless of whether or not they're legally obliged to pay overdue wages and redundancy money, *if* this report is true then this is disgraceful behaviour, and Rebellion should be ashamed of themselves. It's not fair that staff who worked there should have to go through the uncertainty and financial hardship this situation will inevitably cause, or that the British taxpayer should ultimately end up having to foot the bill just so the studio's parent company can shirk its responsibilities to those employees.

Posted:4 years ago

#1

Kingman Cheng
Illustrator and Animator

952 180 0.2
This is absolutely disgraceful.

Posted:4 years ago

#2

Joe Martin
Journalism

27 0 0.0
If this is all true and assuming that the parent Rebellion does have the cash to pay then this is utterly disgusting behaviour and one which will likely sour opinion of Rebellion - especially considering that Rebellion owner Jason Kingsley is chairman for TIGA.

I'll give benefit of the doubt until I hear confirmation, but it's certainly worrying news.

Edited 1 times. Last edit by Joe Martin on 11th May 2010 5:51pm

Posted:4 years ago

#3
Why not wait until hearing what Rebellion has to say, before reaching conclusions like this?

Posted:4 years ago

#4

robert troughton
UK General Manager

221 93 0.4
Rebellion Derby is a development studio, surely, funded by their publisher, Rebellion Publishing..?

I suspect that the same has happened here as happened with Midway Newcastle.

Midway Newcastle was, since 2006, funded by Midway Games.. Midway Games pumped in just enough money each month to pay wages, buy equipment, etc. They never paid any more in, there were no royalties, etc - the company simply operated on a month-to-month basis. That way, when Midway was going through bankruptcy, they were able to say "hey, you've got no money in the bank - therefore you're insolvent"... while other arms of the business were allowed to simply walk away with profits from games developed at Midway Newcastle and to later survive through management buyouts etc (at vastly reduced prices, of course).

It would be good to see TIGA and the government protect developers in the future... but TIGA's board seems to be built up with publishers and senior management, sadly, who don't necessarily care enough about UK workers.

Edited 3 times. Last edit by robert troughton on 11th May 2010 11:30pm

Posted:4 years ago

#5

Saehoon Lee
Lead technical artist

50 3 0.1
shame...

Posted:4 years ago

#6

John Bye
Senior Game Designer

480 451 0.9
Any further word / confirmation on this?

Posted:4 years ago

#7
Does anyone know is Olswang are Rebellion's lawyers? They may well be, I just don't know - but all the lawyer was doing was setting out the legal principle. The question is whether he was merely stating a principle or speaking on behalf of Rebellion - I suspect the former.

Rob Troughton said "but TIGA's board seems to be built up with publishers and senior management, sadly, who don't necessarily care enough about UK workers." Yep. Unfortunately, TIGA seems to represent those who own the businesses, not those who work in them, as evidenced by their promotion of a seminar back in Feb on helping businesses offshore.Though they'd no doubt claim they represent both.

Posted:4 years ago

#8

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