Insolvency – Court rule TUPE dismissal unfair

The Court of Appeal has held in the recent case of Spaceright Europe Ltd v Baillavoine and another (2011) that a dismissal can be for “a reason connected with the transfer” under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) even if there is no particular transfer or transferee in existence or contemplation at the time of the dismissal.

In the case Mr Baillavoine, the Chief Executive of Ultralon Holdings Ltd (“Ultralon”), was dismissed on the day Ultralon was placed into administration. The administrators then obtained bank funding in order to continue to trade while undertaking a marketing exercise for the business. A month later, the business and assets of Ultralon were sold as a going concern to Spaceright Europe Ltd. Mr Baillavoine claimed unfair dismissal.

The Court of Appeal upheld the decision of the EAT that Mr Baillavoine had been unfairly dismissed by Ultralon on the basis that the sole or principal reason for the dismissal was connected with the relevant transfer to Spaceright Europe Ltd and was not for an economic, technical or organisational (“ETO”) reason entailing changes in the workforce. Mr Baillavoine was dismissed with the purpose of giving the best prospect of the business being sold as a going concern without the continued employment of its CEO at an annual salary of £120,000.

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