Supreme Court confirms insolvency administrator was not company officer
The Supreme Court has handed down an important judgment, confirming a company administrator was not an 'officer' for the purposes of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
Background
Where an employer proposes to dismiss 20 or more staff as redundant within 90 days, it must give notice to the Secretary of State at least 30 days before the first dismissal takes effect. An employer who fails to give this notice commits an offence, if the failure can be attributed to particular people associated with the employer, including its "officers".
In the case of R (on the application of Palmer) v Northern Derbyshire Magistrates' Court, Mr Palmer was appointed as a company administrator for West Coast Capital (USC) Ltd, a company that was being placed into administration. The sole director of the company was Mr Forsey.
The day after the company went into administration, Mr Palmer gave the company's warehouse employees a letter informing them they were at risk of redundancy. Shortly afterwards, they received a further letter signed by Mr Palmer informing them they were dismissed with immediate effect.
No prior warning of the redundancies was given to the Secretary of State, as required under TULRCA. Both Mr Palmer and Mr Forsey were charged with an offence in respect of this failure to serve notice. This Supreme Court appeal deals with the status of Mr Palmer in the context of whether he committed the offence.
Mr Palmer argued that he had not committed an offence. He argued that as an administrator he was not an "officer" of the company within the meaning of TULRCA. The Magistrates Court held Mr Palmer was an officer, and his claim for judicial review was dismissed. Mr Palmer appealed to the Supreme Court.
Supreme Court judgment
The Supreme Court allowed Mr Palmer's appeal. It is not the intention of the insolvency legislative framework for an administrator to be an officer of a company, and nor is there any caselaw authority for this proposition. An 'officer' for these purposes under TULRCA is restricted to individuals similar to directors, managers or secretaries. The Supreme Court did not consider there to be any policy reason that would justify a departure from this approach.
Learning points
This judgment will be welcomed by company administrators. It also provides a useful reminder of the potential criminal consequences of a failure to serve notice on the Secretary of State of proposed mass redundancies.
In practical terms, the requisite notice is served using form HR1 and this must be factored into any collective consultation timetable.
It is also important to be mindful that this judgment concerns just one of the obligations set out in TULRCA. There are other obligations that govern how employees must be consulted with in advance of group redundancies, and failure to comply with those obligations can potentially lead to a protective award of up to 90 days' pay per affected employee.