Sources tell The Esports Advocate that the management team at London-based esports marketing firm Hotdrop Limited sent emails on Oct. 31, to employees asking them to fully refund salaries paid for that month by the end of the day—shortly after they were informed that they had been let go.
TEA reported last week that the company had laid off its entire staff as it went into liquidation. From what we understand, the company employed around a dozen employees at the time of its shutdown.
In an email sent by the company to former employees, it noted that:
Hotdrop regrets to inform you that the PAYE was processed incorrectly, using outdated information that does not accurately reflect the PAYE for days worked between October 1st and October 29th including holiday entitlements.
To enable Kent Insolvency to proceed with funding via the RPS scheme, you are required to return funds mistakenly received from Hotdrop Limited earlier today to the following account:
Hotdrop Limited
Sort Code [REDACTED]
Account Number: [REDACTED]
Please ensure that the payment is returned in full by the end of the working day.
If funds are not returned by this time Barclays will initiate a recall of the payment.
Failure to return funds will also prevent providing an accurate total for your RPS allocation, as the necessary RPS documentation cannot be completed without this adjustment.
Kindly confirm the receipt of this email and the return of funds as soon as possible.
In other correspondences seen by TEA, Hotdrop noted that the “formal request” was part of its liquidation proceedings, adding that payslips in Xero were inaccurate because they reflected “work through October 31st,” which did not reflect actual days worked by employees as the company shut down on “October 29th, 2024.” The company would go on to inform employees that Kent Insolvency, a firm specializing in liquidations and insolvencies out of Herne Bay, UK, was handling the matter.
In response to a TEA inquiry, Hotdrop CEO Heather Dower shared that “staff payments will be processed according to the terms outlined in their letters from the RPS scheme. This includes PAYE for the period from October 1st to October 29th, unused holiday pay, redundancy notice, and the notice period, as directed by Kent Insolvency Limited.” Furthermore, she wanted to clarify that the decision to liquidate Hotdrop was made “in order to protect creditors and ensure that all outstanding debts could be met in a responsible and rational manner.” Dower closed her statement with the note that “moving forward Kent Insolvency has been appointed and I will not be making any further comments.”
A representative from Kent Insolvency told TEA Tuesday morning that while the firm has been instructed to assist with putting Hotdrop into liquidation, it currently “remains under the control of the director and will continue to be so until it is formally wound up and a liquidator or liquidators are appointed.”
For some added context, XERO is a payroll system company aimed at small businesses that operate in multiple locations in the world including the United States and the United Kingdom.
RPS stands for “Redundancy Payments Service,” which employees who have been made redundant (laid off) have a right to. Under the government-run system, former employees may be entitled to “redundancy pay,” a “paid notice period,” and “any money your employer owes you” (which might include unpaid wages). Employers that have “gone insolvent” typically direct employees to the government’s Insolvency Service to file a claim. More information on that can be found on this UK government website.
Finally, PAYE stands for the “pay as you earn system,” which is required in the United Kingdom for all “salary earnings, as well as other forms of compensation if the earnings are expected to meet the National Insurance Lower Income Level,” according to Investopedia. “An employer will report sums collected for each payday using a Full Payment Submission (FPS) form to His Majesty’s Revenue and Customs (HMRC). Should an employee’s work be terminated in the U.K., the employer will submit a Form P45 to the HRMC.”