Rebellion "not legally obliged" to rescue Derby subsidiary

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.