[Thanks to Saul Margo of Outer Temple Chambers for preparing this case summary]
This morning the Court of Appeal handed down Judgment in the case of Key2law (Surrey) LLP v Gaynor De'Antiquis. The issue before the Court was whether administration proceedings under Schedule B1 of the Insolvency Act 1986 can constitute, "insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor" within the meaning of regulation 8(7) of the TUPE Regulations 2006. The Court upheld the decision of the EAT that administration proceedings cannot constitute such proceedings, ie the test is absolute rather than fact-based.
Ms De'Antiquis was a solicitor employed by a firm of solicitors and was dismissed on grounds of redundancy on 21 July 2008. The firm entered administration on 25 July 2008 and on 28 July the administrators entered into a management contract with Key2 in relation to the office that Ms De'Antiquis had worked at prior to her dismissal. She brought claims under various heads against Key2 on the basis that Key2 was liable as transferee of the undertaking in which she had worked.
Regulation 8(7) provides that where insolvency proceedings are analogous to bankruptcy proceedings and have been instituted with a view to liquidation of the assets, then Regulations 4 and 7 do not apply. There is no transfer of staff to the transferee and no claim for unfair dismissal against him. Key2 claimed that exception could, depending on the facts of the particular case, also apply to administration proceedings under Schedule B1 of the Insolvency Act.
In what is a lengthy judgment, Rimer LJ examined in detail the origins and purpose of the Acquired Rights Directive which the TUPE Regulations implemented. He found significance in the fact that an administrator is bound to pursue certain objectives one of which is the rescuing of the company. Even though it may be immediately clear to administrators that a rescue of the company is not on the cards it does not follow that the appointment of administrators was "with a view" to the liquidation. A fact-based approach which focusses on the intention or views of the administrator or upon what is likely to be achieved is therefore not appropriate.
Tuesday, 20 December 2011
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