We come to the time of year, when many organisations are reviewing their books and planning for the new year ahead. This invariably involves a review of the staff, and their contribution to the business, which may lead to redundancies taking place. For those businesses unable to survive, it may involve the appointment of an insolvency practitioner. The case we refer to R (on the application of Palmer) (Appellant) v Northern Derbyshire Magistrates’ Court and another (Respondents) [2021] EWHC 3013 is a reminder for business owners to ensure they receive guidance on their obligations if they anticipate making their employees redundant.
S.193(2) of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) provides that, where an employer proposes to dismiss at least 20 employees as redundant at one establishment within 90 days, it is required to give notice to the Secretary of State at least 30 days before the first of those dismissals takes effect. Criminal proceedings can be brought under S.194 TULR(C)A, which provides that any director, manager, secretary or ‘other similar officer of the body corporate’ is guilty of an offence if that person consents to, connives in, or negligently fails to prevent the company’s failure to give the notice required’ under S.193.
On 13 January 2015, the Insolvency Practitioner was appointed as one of three joint administrators of WCC Ltd. The following day, 84 employees of WCC Ltd were handed a letter, signed by one of the administrators, stating that the staff were at risk of redundancy and giving notice of WCC’s Ltd intention to consult with them at a staff meeting that day. Later the same day, the staff were handed a further letter, signed by the same administrator, dismissing them with effect from that day. Notice was given on the relevant form, signed by the administrator, and emailed to the secretary of State on 4 February 2015 several weeks later. In July 2015, criminal proceedings were commenced against the administrator under S.194 TULR(C)A as the correct notice had not been given.
In the Court’s view, what was meant by an ‘officer’ in the context of provisions such as S.194 was clear: whether a person is an ‘officer’ is to be determined by asking whether that person holds an office within the constitutional structure of the body corporate. That was the normal meaning of an officer of a company, which was emphasised by the prior reference to directors, managers, and secretaries in S.194(3), all of whom were officers in the conventional sense, together with the words ‘other similar’ before ‘officer’.
In this case an administrator of a company appointed under the IA was not an ‘officer’ of the company within the meaning of S.194(3). A district judge’s decision that the administrator who signed the form could be prosecuted as an officer of the company, was found to be wrong. The administrators judicial review of this decision was rejected by the Divisional Court. He appealed to the Supreme Court. He argued that he had not committed an offence because an administrator appointed under Part II of the Insolvency Act 1986 (IA) is not an ‘officer’ within the meaning of S.194(3) TULR(C)A. The Supreme Court allowed the appeal, holding that an administrator of a company appointed under the IA is not an ‘officer’ of the company within the meaning of S.194(3) TULR(C)A.
The clear warning to officers is to notify the Secretary of State as early as possible before notifying staff of redundancies.
If you would like to discuss anything in this article, are looking at making redundancies as an employer, or have been made redundant as an employee, get in touch with our highly regarded Employment Law team now on 01603 677077 or email info@spiresolicitors.co.uk.
