16 November 2009

Court of Appeal Success “Administration falls under Regulation 8 (7) or 8 (6) or TUPE”

Ashley Serr was successful on behalf of the Secretary of State in a case concerning the vexed question of whether administration falls under Regulation 8 (7) or 8 (6) or TUPE.

The distinction is crucial. If it falls under 8 (7) when the business is purchased the employees do not transfer to the new employer and have no rights. If it falls under 8 (6) the employees transfer across and the liability for outstanding debts is shared between the national insurance fund with any remaining debts not met by the state met by the new employer.

The question turns on whether administration is bankruptcy or an analogous proceeding instituted with a view to the liquidation of the assets.

The matter is of great importance to the Secretary of State as well. Even though he pays out in either case if its 8 (7) there is no transfer and so he will have to pay redundancy payments as well. If 8 (6) applies there is no redundancy as the employees transfer over to the new employer.

In the EAT Peter Clarke Rule that it is all a question of fact on each and every occasion usually to be determined based on the insolvency practitioners view

The court of appeal while not ruling on the point (as it determined it on another basis) said it was strongly arguable that the ET and EAT had got it wrong. 

For more, please read Court of Appeal Success "Administration falls under Regulation 8 (7) or 8 (6) or TUPE"