Crossroads Caring Scotland Ltd v McGuire & Ors

An Employment Tribunal must give adequate reasons when deciding whether the insolvency exception in regulation 8(7) of Transfer of Undertakings (Protection of Employment) Regulations 2006 applies. It must address the nature and purpose of the particular insolvency proceedings and explain any conclusion that they are analogous to administration.

Where the parties have proceeded on the agreed basis that further issues remain to be argued, an appellate tribunal may remit the case without determining those issues itself. This preserves a full hearing and avoids deciding the point without proper contradictory submissions.

The claimants had been employed by Crossroads (Edinburgh) Care Attendant Company Ltd. Provisional liquidators were appointed on 1 April 2010, and the appellant began employing the claimants when it took over the care service on 2 April. A winding-up order followed on 27 April.

The Employment Tribunal held that there had been a service provision change under regulation 3(1)(b) of Transfer of Undertakings (Protection of Employment) Regulations 2006, but that regulation 8(7) was not engaged because no relevant bankruptcy or analogous insolvency proceedings had been instituted at the transfer date. The appellant appealed. The central issue was whether the provisional-liquidator proceedings engaged regulation 8(7), and whether the Tribunal had adequately explained its conclusion.

1. Appeal allowed and remitted. The Employment Tribunal erred in law by holding, without explanation, that regulation 8(7) was not engaged. Whether the proceedings concerning the transferor were analogous to administration was a vital issue. The Tribunal gave no reasons for its apparent conclusion on that issue and did not show that it had considered the guidance in Key2Law (Surrey) LLP v De’Antiquis [2012] ICR 881.

2. Regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 disapplies regulations 4 and 7 where the transferor is subject to bankruptcy or analogous insolvency proceedings instituted with a view to liquidation and supervised by an insolvency practitioner. The Tribunal had to analyse the nature of the actual proceedings before it, rather than simply treat them as similar to administration.

3. The Employment Appeal Tribunal did not decide whether regulation 8(7) ultimately applied. The parties had proceeded on the basis that the potential liability of the Secretary of State and related issues would be determined at a further hearing. Determining the substantive issue on appeal would have deprived the parties of a level of decision-making and would have occurred without full contradictory submissions for the claimants.

4. The case was remitted to the same Employment Tribunal. No further evidence was required. It was to hear all arguments on the facts already found and determine the matter according to law.

• Employment Appeal Tribunal: Allowed the appeal and remitted the matter to the same Employment Tribunal: [2014] UKEAT 0005_14_2406.
• Employment Tribunal: Held that there was a relevant service provision change but that regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 was not engaged. Its decision was advised to the parties on 24 July 2013.