Insolvency
The European Court of Justice has held that "pre-pack" administration, which is designed to facilitate the sale of a business as a going concern in the event of insolvency, may not prevent employees from having TUPE rights.
A Northern Ireland tribunal has awarded protective awards of 90 days' pay to former City Link employees over the company's failure to consult on their redundancies.
In DLA Piper's latest case report, the Employment Appeal Tribunal examined the TUPE provisions that mean that employees do not automatically transfer where the transferor is "under the supervision of an insolvency practitioner".
The Court of Appeal has held that the transfer from a company in administration does not lead to an exemption from automatic employee transfer under reg.8(7) of TUPE.
The employer in this case fell into the classic trap of burying its head in the sand and failing to consult collectively with employees over the realistic possibility that its business might close and its workforce be made redundant.
The Employment Appeal Tribunal has held that it is the transferee, rather than the Secretary of State, that is liable to pay the unfair dismissal basic award and notice of an employee who is dismissed after a "pre-pack" administration and TUPE transfer of the business as a going concern.
The Employment Appeal Tribunal has held that the exemption from automatic employee transfer under reg.8(7) of TUPE cannot apply to a transfer from an administration.
In Haine and another v Day [2008] IRLR 642, the Court of Appeal held that a protective award made after the employer company went into liquidation in respect of its failure to consult before making collective redundancies was a provable, and therefore potentially recoverable, debt.
This article looks at some of the important judgments in the area of the transfer of undertakings over the past year.
Employment law cases: HR and legal information and guidance relating to insolvency.