The legislation will be retrospective to 14 March, the day the President of the Board of Trade announced it. The Bill will not prevent employees bringing claims against insolvency practitioners for sackings before that date.
The administrators of Paramount, Touche Ross, hope to solve this problem by appealing to the House of Lords. They are seeking funding from Paramount's creditors, other insolvency firms and the high street clearing banks. No final decision has been made, but any petition to the House of Lords must be lodged by early next week.
Without definite guidance on cases before 14 March, insolvency specialists fear an avalanche of claims from former employees of collapsed companies for pay in lieu of notice, holiday pay, pensions contributions and the like, stretching back to 1988.
Three former directors of Olympia & York, the Canadian-owned developer of Canary Wharf in Docklands, London, have already lodged claims worth a maximum pounds 12m against Ernst & Young, the administrators of O&Y.
Michael Dennis, Charles Young and Robert John are claiming they were not given adequate notice by the administrators. If successful they will claim bonuses promised them by the founders of O&Y. Receivers fear this could tempt other former directors of companies in administration to file claims.
Mark Homan, president of the Society of Practitioners of Insolvency, said: 'It would be better to have an early case in the House of Lords rather than hundreds of thousands of small cases.'
Dealing with the past effects of the Paramount ruling was important, Mr Homan said, because a lot of people were affected by it. But he welcomed the Government's Bill dealing with future cases.
'The practical effects of the Paramount ruling were disastrous on our ability to save businesses and therefore jobs. The speed with which Michael Heseltine has responded is highly commendable.'
The timing of the emergency Bill was announced yesterday and will pass through the Commons, Lords and Committee stages in a day. It becomes law on Monday evening.
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