An employment appeal tribunal has ruled that TUPE does not apply to all sales by administrators. On this view, whether TUPE applies will depend on the objectives of the administrator when appointed. In this case it was clear from the outset that continuing to trade was not viable and an immediate sale of the company’s assets was required to secure the best outcome for creditors. That put the administration in the category of “terminal” insolvency proceedings, for which a complete exemption from TUPE applies. If, on the other hand, the aim of the administrator had been to rescue the company by continuing to trade while preparing the business for a buyer, TUPE would have applied, with some modifications. That would have meant that all the employees assigned to the business being sold would have been automatically transferred to the buyer.
This decision is particularly relevant to administrators disposing of businesses or assets by way of pre-packs. Although the prospect of a TUPE-free sale is clearly attractive to the purchaser, this decision suggests that it is the intention of the administrator at the outset that is important. This will not always be easy to ascertain.
The employees have lodged an appeal to the Court of Appeal, so we may not have heard the last word on this.
For the full decision (Oakland v Wellswood (Yorkshire) Ltd) click here.