Readers of this blog will be aware that the Transfer of Undertakings (Protection of Employment) Regulations 1981 were replaced for transfers on or after 6 April 2006 by the Transfer of Undertakings (Protection of Employment) Regulations 2006.
Cases on the new Regulations are now starting to filter through the Tribunal system and this week saw the handing down of the first EAT judgment on the new insolvency provisions contained in regulation 8 of TUPE 2006. As one might expect for a TUPE case, the case is not light bed time reading.
Regulation 8 makes provision for parts of TUPE (relating to Unfair Dismissal) not to apply in full in the case of an insolvent transferor. Different types of insolvency are treated slightly differently, depending on whether the insolvency is with a view to the liquidation of assets. However, the two sets of rules for the two different types of insolvency have one thing in common. For either of them to apply, the Transfer must occur after the insolvency practitioner is appointed to act in the capacity of insolvency practitioner (IP) (as distinct from being involved with a view to being appointed in the capacity of IP at a later date).
The transfer must also occur after insolvency proceedings are instituted. Proceedings are instituted for the purposes of TUPE at the same time as they are instituted for the purposes of the statutory insolvency procedures themselves.
If the Transfer pre-dates the appointment of the IP, or pre-dates the institution of insolvency proceedings, regulation 8 does not kick in and therefore TUPE applies in full. If TUPE applies in full, the Transferor takes on all liabilities post transfer and the Secretary of State is not responsible for any payments.