Football club administrations and pre-transfer dismissals: a good result for the rescue culture

The Court of Appeal judgment in Kavanagh v Crystal Palace FC (2000), in which Walker Morris acted for the successful appellant, the purchaser of a business out of administration, determined an important issue involving the interaction of the law concerning the position of employees on the transfer of the undertakings of their employer and the regime governing companies in administration.

The appeal centred on the interpretation of provisions of the Transfer of Undertakings Regulations 2006 (TUPE). This legislation protects employees’ continuity of employment and terms and conditions of employment when an undertaking is transferred from one owner to another. Employees of the previous owner when the business changes hands automatically become employees of the new employer on the same terms and conditions.

Under Regulation 7(1) of TUPE, the dismissal of an employee with continuous employment of a year or more is automatically unfair where the sole or principal reason for the dismissal is the relevant transfer, or a reason connected with the relevant transfer that is not an ‘economic, technical or organisational reason’ entailing changes in the workforce…

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