Employment Law and Administration-an interesting mix

Employment Law and Administration-an interesting mix

All Insolvency

In this interesting employment case, the Employment Appeals Tribunal (EAT) found that related claims could continue despite a stay (or suspension) of court proceedings against the employer, being a company in administration.

Basically paragraph 43(6), Schedule B1, Insolvency Act 1986 states that where a company is in administration, no legal proceedings can be brought or continued against it without the consent of either the administrator or the court.

That usually means that claimants wishing to pursue employment tribunal proceedings against a company in administration without prior permission of the court are liable to have their claims stayed, until a decision by the administrators or the court whether to allow the claims to proceed. That was certainly the finding in a case called Unite the Union and others v Nortel Networks (UK) Ltd (in administration) EWHC 826.

What makes the case of Ince Gordon Dadds LLP v Tunstall [2019] UKEAT/0144/19 (19 June 2019) so interesting is that the EAT has considered, for the first time, the approach to be taken by an employment tribunal when proceedings are pursued simultaneously against a company in administration and other respondents.

The claimant in the above case had brought unfair dismissal and discrimination proceedings against her former employer, several individuals and the alleged transferee of part of her former employer’s business. When the claimant’s former employer went into administration, the claims against all respondents were initially stayed. The tribunal partially lifted the stay and allowed the claimant to continue her claims against the respondents that were not in administration.

Dismissing an appeal against the decision, the EAT held that the tribunal had exercised its case management powers and there was nothing wrong in that particular case in doing so. The statutory moratorium did not prevent proceedings being continued in respect of parties that were not in administration. The claimant had freestanding claims against those respondents which were not dependent on her claims against the employer (section 110, Equality Act 2010 or regulation 4, TUPE and regulation 7, TUPE). The EAT acknowledged that the decision gave rise to potential disclosure issues (as relevant documentation was likely to be in the possession of the insolvent employer’s administrators). However, it was open to the employment tribunal to make a third-party disclosure order (under Rule 31 of the Employment Tribunals Rules of Procedure 2013).

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