Laid-Off Utopia Staffers Left High and Dry With Few Financial Options

Utopia staffers
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Utopia staffers
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Photo Credit: Utopia

Due to Utopia UK’s incomplete liquidation, more than 30 former staffers at the company have reportedly been left in financial limbo with few options.

More than 30 former Utopia UK employees are reportedly left in financial “double limbo” due to the incomplete liquidation of the company. According to a painfully detailed report in Music Ally, multiple former Utopia UK R&D employees across numerous departments have come forward about the “emotional toll” these issues are causing them.

The former staffers have yet to receive their full severance pay. They are barred from accessing government finances designed for employees of an insolvent company, nor can they apply for financial support from the UK government, according to the report.

The UK arm of the company first announced a downsizing effort at the end of 2022, with a second round announced on May 26. Most staff affected by the second round of layoffs were allowed a “three-month garden period,” meaning their employment was extended by another three months, yet they were prevented from performing meaningful work as the company began downsizing.

For these staffers, their effective termination date for their employment is August 26, with some senior executives granted longer garden leave periods in their contracts. But this money, which also consists of July salaries and accrued holiday pay, is still unpaid.

Approximately 17 staff members were on garden leave starting May 26, along with another category of employees who were not on garden leave and are no longer working for Utopia but are still awaiting full payout as per their termination agreements. Music Ally reports there may also be another category of UK staffers individually verbally promised potential consultancy roles elsewhere in the company.

“The vast majority of people haven’t been in the company for more than two years, so they aren’t entitled to any redundancy pay,” says a source with close knowledge of the situation. “But almost everyone’s on three-months contractual notice and any approved holidays that would have built up. Obviously, garden leave means that you’re still an employee.”

“Some employees were arbitrarily denied pro-rata vesting of stock options, that they were clearly entitled to, with no reason given,” the source continues. A Utopia spokesperson told Music Ally that they “unfortunately have to wind down the Utopia UK (R&D) Ltd. entity in order to safeguard the rest of the business” while the company goes through creditors’ voluntary liquidation — meaning “all payments from the affected entity, including to staff and garden leavers, are frozen pending the liquidation process.”

Former UK staff members will now only be able to make claims once the filing of the liquidation request is completed, according to Utopia. At that point, the company adds that the UK’s National Insurance Fund will handle payments in collaboration with HMRC.

“Our commitment remains steadfast in ensuring that all aspects are handled with utmost care and diligence,” says a statement from Utopia, even though all affected staff members were issued July pay slips yet received no funds. Utopia blames this on an administration issue.

Utopia made it clear in the announcement call with the affected former employees that the July salaries will not be covered by Utopia,” says the company. “This was also reiterated in the initial call between ERA Solutions and the affected former employees, that July salaries can be claimed as part of the regulated process.”

“Then there was indeed, unfortunately, a mistake made in accounting regarding the July salary payment slips that were wrongfully sent out,” Utopia continues. “As soon as this mistake was identified, we immediately addressed the problem and informed HMRC to rectify this, which was done in under a day.”

Meanwhile, a source claims that Utopia has reported this money to HMRC as already having been paid to its employees, making those employees concerned that a liquidator may believe that the staff was paid for July when they were not. Some said that 5% of their salaries for certain months were deducted but have yet to appear in their private pension or other relevant accounts.