The Appeal Tribunal has confirmed that employees will transfer under TUPE in pre-pack administrations.

This had been called into question not so long ago by the same court (Oakland v Wellswood (Yorkshire) Ltd).

In pre-pack administrations, the asset sale of the insolvent company is all but agreed before the administrator was appointed.

Under the TUPE regulations, employees will not transfer where insolvency proceedings have been commenced with a view to liquidation. Otherwise they will transfer.

The objective of pre-packs is usually to liquidate the insolvent company. However, when the administrator is appointed they are technically under a duty under the Insolvency Act 1986 to first consider rescuing the company as a going concern before putting it into liquidation. And although this may be a fiction in the circumstances, the court found that, for this reason, employees should always transfer in pre-pack situations.

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Updates: For employers: Buying or selling a business | TUPE |
Tagged with: TUPE |

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