The claims, issued against a business (“New Co”), related to New Co’s purchase of an insolvent company (“Old Co”) and the difficult issue of when employment law liabilities can transfer from Old Co to New Co.
Richard Bailey, a Principal in Steeles Law’s Company and Commercial team, worked with the Employment Team to advise New Co through the transaction process. Steeles Law recommended Old Co should be purchased in a creditors’ voluntary liquidation to prevent any outstanding employment law liabilities transferring to New Co under the TUPE Regulations.
The Employment Tribunal agreed.
In what is being regarded as a ground-breaking judgment, it was held that such liabilities will not transfer where Old Co is the subject of a creditors’ voluntary liquidation instituted with a view to liquidating Old Co’s assets under the supervision of an insolvency practitioner.
Oliver Brabbins, a Principal in Steeles Law’s Employment Team, represented New Co at the Employment Tribunal and comments:
“The TUPE Regulations are a notoriously complex piece of legislation and, if not complied with properly, can have devastating consequences for businesses. Fortunately, our client sought advice at the outset and we were able to take the necessary action to protect it from claims for substantial compensation, which could have caused the collapse of the company”.
For advice on the application of the TUPE Regulations, please contact a member of the Steeles Law Employment Team on 01603 598000 or noremp@steeleslaw.co.uk
For advice on issues concerning corporate restructuring and insolvency, please contact a member of the Steeles Law Company and Commercial Team on 01603 598000 or commercial@steeleslaw.co.uk.