Ward Brothers (Malton) Ltd v Middleton & Ors (Transfer of Undertakings : Insolvency)

For the exception in Regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 to apply, the transferor must be under the supervision of an insolvency practitioner. A person qualified to act as an insolvency practitioner, but engaged only to advise and never appointed in an insolvency role, does not provide that supervision.

The question calls for a clear and principled line. An appointment may be formal or informal, but there must be an appointment to an office or role recognised by section 388(1) of the Insolvency Act 1986. Where that condition is absent, Regulations 4 and 7 remain applicable.

Bulmers Transport Ltd ceased trading while a winding-up petition was pending. Ward Brothers took over its principal haulage contracts and engaged many former Bulmers employees on the following working day.

The Leeds Employment Tribunal held that there had been a relevant transfer and that Regulations 4 and 7 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 applied. It found that Begbies Traynor, who had attended before the cessation of trade, had acted only in an advisory capacity and had not been appointed as administrators or otherwise.

Ward Brothers appealed on the sole permitted issue: whether Bulmers had been under the supervision of an insolvency practitioner for Regulation 8(7).

1. Appeal dismissed. The Tribunal was entitled to find that Bulmers was not under the supervision of an insolvency practitioner when the transfer occurred. Begbies Traynor had acted only as advisers, decided not to accept an appointment, and no other insolvency practitioner had been appointed until after the transfer.
2. Although the same result followed on a factual assessment, the EAT held that the statutory phrase should have a clear, principled application. It respectfully followed Secretary of State for Trade and Industry v Slater, [2007] IRLR 928. A person is not acting as an insolvency practitioner in relation to a company merely because that person is qualified or has been asked to assist it.
3. The necessary line is an appointment, whether formal or capable on the facts of being informal, to act in a capacity identified by section 388(1) of the Insolvency Act 1986, such as liquidator, provisional liquidator, administrator or administrative receiver. Attendance at the company’s premises and advisory involvement do not suffice.
4. Accordingly, the supervision condition in Regulation 8(7) was not met. Regulations 4 and 7 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 applied to the transfer, and the employees’ claims could continue before the Employment Tribunal.

• Employment Appeal Tribunal Dismissed Ward Brothers’ appeal and upheld the conclusion that Regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 did not apply.
• Employment Tribunal at Leeds Held that there was a relevant transfer from Bulmers Transport Ltd to Ward Brothers and that Regulations 4 and 7 applied. Its decision was sent to the parties on 3 July 2012.