The past week has seen three important cases about the protection of employees on the transfer of undertakings come all in a rush. Taking them in reverse order of appearance:
- Yesterday's Court of Appeal decision confirms that the full insolvency exemptions from TUPE are not available in the case of administration proceedings. These exemptions remove the protection of TUPE from the employees of an insolvent business. Before this case reached the Court of Appeal it was thought arguable that the application of the exemptions could depend on the exact circumstances of the administration. This decision has removed that uncertainty, although it will not be universally welcomed by administrators.
- Last week we had another Court of Appeal judgment, dealing with a different aspect of TUPE in the context of administration proceedings. This time the question was whether a dismissal by an administrator could be for a reason connected with the transfer even if the buyer of the business had not been identified at that point. The Court of Appeal said there was no reason in principle why that should not be the case – it would depend on the facts. This is an important issue because such a dismissal will normally be unfair, unless the administrator can establish the ETO defence (ie by showing that the dismissal was for an economic, technical or organisational reason entailing changes in the workforce).
- Slightly earlier last week we had an important EAT decision about service provision changes. This case held that TUPE did not apply in a second-generation outsourcing situation at the point where the original client went into receivership, since this resulted in the client as well as the contractor changing. Surprisingly this issue has not come up in the EAT before. But it may be questioned whether this decision establishes a broader principle that the service change provisions of TUPE will never apply if there is a change in the identity of the client as well as the contractor.
All these decisions establish important principles about TUPE, though probably only the first can be said to increase legal certainty in this difficult area of law.