TUPE and administration

Posted: 29th February 2012

In a case concerning the sale of a business in administration, which amounted to a ‘relevant transfer’ for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), the Court of Appeal has ruled that it is not necessary for a specific transferee to have been indentified at or before the moment of dismissal for the dismissal to be for a reason connected with the transfer (Spaceright Europe Ltd. v Baillavoine).
Prior to this decision, there had been conflicting authorities on this issue.Sale Sign
In Ibex Trading v Walton, the Employment Appeal Tribunal (EAT) attached significance to the definite article in TUPE Regulation 7(1), whereby an employee will be treated as unfairly dismissed if the ‘sole or principal reason for the dismissal is the transfer itself or a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce’. In this case, whilst it could be said that the employees had been dismissed for a reason connected with a possible transfer of the business, the EAT was not satisfied that they were dismissed by reason of the transfer or for a reason connected with the transfer.
In Harrison Bowden v Bowden, the EAT held that dismissals could be for a reason connected with the transfer, even when no actual prospective transferee had been identified at the time of the dismissal. This approach was also followed in Morris v John Grose.
The Court of Appeal ruled that the approach in Harrison Bowden was to be preferred as being more consistent with the broad purpose of the EC Directive which TUPE implements, which is to protect the employment rights of employees in the event of the transfer of an undertaking, and with the ordinary meaning and effect of the language of Regulation 7(1).