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TUPE transfer of insolvent company: liability payable by transferee

17 June 2011 #Employment


In Pressure Coolers v Molloy the EAT held that held that under TUPE Regulations it is the transferee, not the Secretary of State, who is liable to pay an employee`s claims following his unfair dismissal by the transferee after a TUPE transfer.
 
In this case Mr Molloy was employed by a company that went into "pre-pack" administration for the purpose of allowing Pressure Coolers to acquire its business. On the same day as the transfer Mr Molloy was dismissed without notice.

The purpose of the administration was to sell the business as a going concern, not to liquidate their assets. This meant TUPE Reg 8(7), which excludes TUPE where the purpose of administration is the liquidation of assets, did not apply and TUPE applied.

Pressure Cooler, the transferee, argued that on TUPE Reg 8 (1)-(6) applied. This states that liability for sums payable to an employee under the relevant statutory claims does not pass to a transferee, but is, instead, picked up by the Secretary of State.

However, the liabilities for notice pay and the basic unfair dismissal had not crystallised before the transfer, as they arose on dismissal. The dismissal was after Molloy had been transferred to Pressure Cooler. Therefore the EAT held that it was Pressure Coolers as the transferee was liable to pay for the sums claimed.

The Secretary of State was only liable to meet claims that were specifically due on or before the date an employee was transferred from an insolvent company.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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