The Court of Appeal has handed down Judgment in Key 2 Law (Surrey) LLP v DeAntiquis (Secretary of State for Business Innovation and Skills Interveniing) [2011] EWCA Civ 1567 which concerns the thorny issue of whether the pre pack administration of a company is analogous “insolvency proceedings” for the purposes of Regulation 8(7) of TUPE. If the pre-pack administration fell within Regulation 8(7), TUPE would be disapplied.
The Court of Appeal has upheld the decision of the President in the EAT. A pre-pack administration is not “insolvency proceedings” within the meaning of Regulation 8(7) and therefore TUPE applies.
In addition to the issues over technical construction of TUPE and the Acquired Rights Directive, there is a real dispute as to the underlying purpose of TUPE that is highlighted in this case. It is widely accepted that the purpose of TUPE is to protect the rights of workers in giving effect to the Acquired Rights Directive. However, are the rights of those workers best protected by applying TUPE or by disapplying TUPE and therefore giving a better chance of the undertaking being rescued as a going concern, even if rights are not protected?
The Judgment is worth a read in full by all employment practitioners. My view is that there is scope for the issue to be considered by the Supreme Court given the contentious nature of the point. However, it may be that this is not the specific case to go that far and until that point, advisers should consider the issue determined.
