Employment Law Advocates

There has been an interesting recent judgment from the Court of Appeal, reversing the decision of the Employment Appeal Tribunal in Oakland v Wellswood (the link is to the now overruled judgment). The case is unusual because the insolvency issue did not arise in the context of an employee who had been made redundant immediately afterwards but rather someone who had been transferred to a new company but then dismissed less than a year later. Therefore, the question which arose was whether service with the old company could be taken into account in considering his continuity of employment.

Because of these facts, the Court of Appeal did not need to consider TUPE at all in making its decision. As a result of section 218(2) of the Employment Rights Act 1996, continuity of employment is preserved where there is a transfer from one employer to another, whether or not TUPE applies. Therefore, there was jurisdiction for a claim of unfair dismissal and it did not matter that the point was not argued below.

Nevertheless, the obiter comments of their Lord Justices may prove to be more significant. By virtue of regulation 8(7) of TUPE, the regulations do not apply¬†to insolvency proceedings¬†instituted¬†with a view to liquidation of the¬†assets of a company.¬†Judge Peter Clark at the EAT concluded that this includes “pre-pack” administrations where an administrator is appointed solely for the purpose of selling the company assets to a new company before liquidation is commenced. This would seem to be an easy way¬†to avoid the effects of TUPE and, with respect to¬†Judge Clark, it does not really promote a rescue culture because of the frequency with which pre-packs are used by owners to sell businesses to themselves.

In any event, the Court of Appeal doubted that regulation 8(7) would apply in these circumstances and, although it was not necessary to resolve the case, it is likely that their approach will be followed in the future. As usual, I shall be posting a link to the judgment on this blog as soon as it is published online.