In respect of TUPE – Transfer of Undertakings (Protection of Employment) Regulations – insolvency and pre-pack administrations the Employment Appeal Tribunal has held in the case of:
OTG Ltd v Barke and others [UKEAT/0320/09]
that "administrations" (including pre-pack administrations) do not constitute "bankruptcy … or … analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor" within the meaning of Regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) and article 5.2 of the Acquired Rights Directive.
Consequently, TUPE Regulation 4 (transfer of employees rights etc) and Regulation 7 (TUPE related dismissals) amongst others, will apply in the normal way to any sale of a business by an administrator (including in a pre-pack situation) meaning that the employees will transfer to the buyer on their existing terms and conditions and have additional protection against unfair dismissal because of the transfer.
Regulation 9 will therefore apply to these situations which provide some latitude to agree changes to terms and conditions for transferring staff in insolvency situations.
In reaching this decision, the EAT chose not to follow the often criticised case on this area: Oakland v Wellswood (Yorkshire) Ltd UKEAT/0395/08.
For further advice on this aspect of TUPE, or TUPE or insolvency in general please contact us at:
Employment and TUPE:
nicholas.evans@healys.com or julia.stirling@healys.com
Insolvency:
melanie.badain@healys.com or michael.ellis@healys.com
