Tony Mitchell
Tony's recent articles
- When Business Meets Fantasy
18th February - IVA Failure Rates Revealed
1st January - Food for Thought
20th November
TUPE v The Rescue Culture
17th June 2009 14:28
The one question that I am always asked when advising a company about the various types of insolvency procedures is “But what about TUPE?”
This question relates to the point about where does the liability lie in respect of employees’ claims for unpaid wages, holiday pay, redundancy and pay in lieu of notice when a company enters into an insolvency procedure. A simple question one might think but as in all matters relating to employment legislation not so easy to answer. It all revolves around the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”)
It appears that where the intention is to liquidate the company and its assets, then TUPE will not apply and the liability to the employees will be met by the National Insurance Fund (“NIF”). Therefore, if a company is put into liquidation and either a connected party or a third party purchases the assets of the company from a liquidator, it appears clear cut that the employees’ liabilities will be paid by through the Redundancy Payments Office out of the NIF.
In Pre-Pack Administration situations the position is not so clear. In an employment Appeal Tribunal’s decision in Oakwood v Wellswood (Yorkshire) Limited, formally handed down in January 2009, it was concluded that if Administrators continue to trade a business with a view to a sale as a going concern and achieve such a sale, then TUPE protection will apply to employees who will be transferred across to the new business. Where, however, as in the Oakwood case, the Administrators recognised that there was no possibility to trade the business and sold the company’s assets immediately upon their appointment, it was held that TUPE did not apply and similar to a liquidation situation, the employees did not transfer across and the liability to the employees will be met by the National Insurance Fund, potentially good news for the purchaser.
At the time of writing, an application for permission to appeal to the Court of Appeal has been heard and a decision is awaited. It seems likely that permission will be granted for the appeal.
