EAT upholds ET: TUPE disapplied after provisional liquidator appointment
EAT upholds ET finding that the business transfer occurred on 21 March 2023 and that TUPE regulation 8(7) applied after a provisional liquidator was appointed, allowing employees to seek fund payments.
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EAT upholds tribunal: TUPE disapplied where provisional liquidator appointed
Summary
The Employment Appeal Tribunal (EAT) has rejected an appeal by the Secretary of State for Business and Trade, affirming that a bakery business transfer took effect on 21 March 2023 and that regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) applied. The result is that contracts and dismissal protections under regulations 4 and 7 were disapplied and former employees may pursue payments from the National Insurance Fund.
Key facts
Morton’s Rolls Ltd entered a conditional business transfer agreement with Phoenix Volt Ltd on 3 March 2023, but Morton stopped trading that day. A creditor presented a winding‑up petition and a provisional liquidator was appointed on 7 March 2023. Phoenix recommenced bakery production on 21 March 2023 and a winding‑up order was made on 31 March 2023.
The legal issues
The appeal raised two issues: (1) whether the Employment Tribunal erred in finding the date of the relevant TUPE transfer was 21 March 2023 rather than 3 March 2023; and (2) whether regulation 8(7) applied so as to disapply regulations 4 and 7 because insolvency proceedings had been instituted with a view to liquidation and were under the supervision of an insolvency practitioner.
EAT findings
On the date of transfer, the EAT agreed with the tribunal that identifying when responsibility for carrying on the business passed is a fact‑sensitive exercise. The conditional agreement dated 3 March was relevant but not dispositive; the tribunal reasonably concluded Phoenix only assumed employer responsibility when production recommenced on 21 March 2023.
On regulation 8(7), the EAT held the tribunal rightly found the statutory test met. The appointment of a provisional liquidator on 7 March 2023—by court order under compulsory winding‑up proceedings initiated by a creditor—amounted to insolvency proceedings instituted with a view to liquidation and under the supervision of an insolvency practitioner. As a result, regulations 4 and 7 did not apply to the relevant transfer.
Practical implications
This decision emphasises that (i) the effective date of a TUPE transfer is determined by the substance of events, not solely by a written completion date; and (ii) where court‑ordered insolvency steps (including provisional liquidation) are in place with a view to liquidation, TUPE protection for transferring employees may be limited by regulation 8(7). Employers, insolvency practitioners and purchasers should therefore assess the timing and nature of insolvency steps carefully when planning rescues or acquisitions.
Next steps
The EAT has remitted the matter to the Employment Tribunal to determine substantive claims by former Morton employees against the Secretary of State for payments from the National Insurance Fund under the Employment Rights Act 1996.
Read the entire judgement here: Secretary of State for Business and Trade v Sahonta and others [2025] EAT 166
