Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Employment lawTUPE

Case of the Week – TUPE

by Personnel Today 6 May 2008
by Personnel Today 6 May 2008

Dynamex Friction Ltd & another v Amicus and others

Facts

Mr Smith was the sole director of Friction Dynamics Limited (Friction). Following an application by Mr Smith, joint administrators were appointed. They immediately dismissed the entire workforce as there was no money to pay them.

Subsequently, Friction’s production line and customers were taken over by Dynamex Friction Limited (Dynamex) which also took on 60 of Friction’s former employees. Dynamex was set up by an ex-Friction employee with support from Mr Smith who later acquired a controlling shareholding. Friction’s parts and machinery were sold to Ferotec Realty Limited (Ferotec).

Ferotec was controlled by Mr Smith and already owned Friction’s premises. Claims were brought by employees fired by Friction’s administrators, for unfair dismissal and failure to conduct collective redundancy consultation.

Decision

The key issue was the reason for the dismissals. Had Mr Smith involved administrators in Friction just to free himself of employment liabilities, having arranged for the business to continue under another name? If so, the dismissals (which automatically followed the appointment of the administrators) were transfer-related and the timing and order of events were stage-managed to by-pass the operation of the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).

Alternatively, were the dismissals unconnected with the transfer, and made simply because the administrator had no money to pay wages? If so, neither the employees nor any connected liabilities transferred to Dynamex or Ferotec.

The Employment Tribunal (ET) decided that there was no collusion between the administrator and Mr Smith and the employees had been dismissed for an economic reason. Liability for the employees’ claims therefore fell to the DTI (now the Department for Business, Enterprise and Regulatory Reform) as Friction was insolvent liability did not pass under TUPE to the new employer.

The Employment Appeal Tribunal (EAT) disagreed, but the Court of Appeal has now restored the ET’s decision. It held that when an ET is determining the reason for a dismissal, what counts is the thought process of the decision maker. Here, the decision maker was the administrator, who had dismissed the employees because there was no money. The reason for the dismissals was therefore not the prospective TUPE transfer, but a straightforward lack of cash. The Court of Appeal saw nothing to suggest that the dismissals were designed to make the business more saleable, nor that they were engineered specifically to avoid employee liabilities. The administrator had not acted at the behest of or in collusion with Mr Smith or Dynamex.

Implications

Where employees are dismissed before a TUPE transfer, the reason for dismissal is crucial as it determines whether the transferor is liable, or whether the employment liabilities pass to the transferee. This judgment confirms that it is the thought process of the person who makes the dismissal decision which must be analysed.

In this case, the new employer was not held liable. But remember that in TUPE transfers, the transferee employer can find itself liable for dismissals made before the transfer, for a reason connected with the transfer, even if the transferee played no part.

Jonathan Hearn, legal director, DLA Piper

Personnel Today
Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

previous post
Prejudice rife over people with facial disfigurements
next post
British Energy signs £10m deal with Flagship Training

You may also like

AI in employment: the pitfalls and laws on...

21 Sep 2023

CIPD publishes manifesto for good work

20 Sep 2023

Right to predictable working hours receives Royal Assent

19 Sep 2023

TUPE: Share plan transferred to new employer, judge...

7 Sep 2023

Personnel Today Awards 2023 shortlist: Employment Law Firm...

7 Sep 2023

AI taskforce launched to address gaps in law

4 Sep 2023

Strikes Act consultation aims to establish minimum service...

25 Aug 2023

25 years of employment tribunals – a system...

25 Aug 2023

Bank holidays: six things employers need to know

25 Aug 2023

Flexible working legislation: what will the new rules...

16 Aug 2023

  • Almost a fifth of UK workers feel undervalued – we need to solve this PROMOTED | A new report has found...Read more
  • Discover the value of CIPD accreditation PROMOTED | See how the CIPD can increase your earning potential...Read more
  • What does it mean to be an HR professional in 2024? (survey) PROMOTED | The world of HR is changing rapidly...Read more
  • The Contractor Management Mastery Pack: Everything you need to manage and pay global contractors PROMOTED | Answers to cross-border...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2023

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2023 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+