David Tyme provides a timely update on TUPE & pre-packed administrations
In OTG Limited and others v Barke and Others (EAT) [2011] UKEAT 0320/09/1602, the Employment Appeal Tribunal (EAT) considered five appeals listed together and determined that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) applied to pre-packed administrations. A pre-pack administration is where an insolvency practitioner becomes the administrator of a company experiencing financial difficulties and makes arrangements in advance of his appointment for the company to be sold immediately after his appointment. This circumvents the need to arrange a creditors meeting and also avoids any input from the court.
The relevant facts of each of the cases under appeal were as follows:
(i) The employer went into administration and on the same day, the entire business was sold as a going concern without any debts.
(ii) The employer went into administration and the business was sold immediately as a going concern. Two days later the claimant was dismissed.
(iii) The claimant was dismissed on grounds of redundancy with immediate effect and
