TUPE and insolvent administrations

TUPE applies whenever an administrator is appointed over an insolvent business. This is because the primary aim of an administrator is always to sell the business as a going concern (Key2Law (Surrey) LLP v De’Antiquis [2011] EWCA Civ 1567, OTG Ltd v Barke and Others [2011] UKEAT0320/09/1662).

To assist in the rescue of failing businesses, TUPE makes special provision in two ways, where an insolvency administrator is appointed:

• by ensuring that some of the transferor’s pre-existing employment debts do not pass to the new employer. These include statutory redundancy pay, arrears of pay, pay in lieu of notice and the basic award for unfair dismissal (all capped as set out on page 354). These sums are paid instead by the Redundancy Payments Office; and

• by providing much greater freedom to change contract terms (see below).