TUPE and insolvency 


Regulations 8 and 9 of the TUPE regulations introduced a special insolvency regime, intended to encourage the rescue of failing businesses and to safeguard employment opportunities. 


To trigger this regime, an insolvency practitioner must have been formally appointed with responsibility for the business before the transfer date (Secretary of State for Trade and Industry v Slater [2007] UKEAT 0119/07/2706). 


The rules distinguish between sales of a business as a going concern (insolvent administrations), and liquidation sales aimed at selling off the assets, paying off the creditors and winding up the business.


TUPE applies to all cases when 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). However, to encourage the rescue of failing businesses, TUPE protection is modified in two ways, as long as the administrator was appointed before the transfer date: 


• firstly, 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 410). These sums are paid instead out of the National Insurance Fund; and


• secondly, by allowing greater freedom to change contract terms (see below).


The Secretary of State only takes on liability for the employment debts (such as unpaid wages) that are already due at the transfer date (Pressure Cooker v Molloy [2012] ICR 51, Secretary of State v Dobrucki [2015] UKEAT/0505/13/JOJ).