The Court of Appeal has today handed down a conceptually complex judgment concerning the effect of the Law Society's intervention in a firm of solicitors on the contracts of employment of those employed by the firm.
It held that where the firm is that of a sole practitioner, the act of intervention by the Law Society does not operate to terminate the employment contracts of staff. Nor does the suspension of the principal's Practising Certificate. Therefore the staff will be transferred under TUPE if the practice is sold as a going concern.
However, where there is a partnership (i.e. not a sole practitioner), the question of whether intervention dissolves the partnership depends on the facts of each case. Intervention will normally dissolve the partnership, as it becomes unlawful for the firm to continue in practice. Thus:
- if, following dissolution, it becomes impossible or unlawful for the employee to do any of the work he is employed to do, the contract of employment is frustrated and comes to an end. Accordingly, if the practice is later sold, the employee will not transfer under TUPE;
- if, following dissolution, the parties try to keep the contract alive and to continue it while steps are taken to challenge the intervention or transfer the practice as a going concern, there is no reason for the contracts of employment to terminate automatically. In that situation, if the practice is transferred, TUPE will apply.
Rose v Dodd