Can administrators be held criminally liable for redundancy failures?

15th March 2023

Why is this case of interest?

The ongoing litigation between Mr Palmer and Northern Derbyshire Magistrates Court relates to the guilty verdict handed to Mr Palmer who was acting as an administrator and charged with an offence contrary to the Trade Union and Labour Relations Consolidation Act 1992 (TULRCA).

TULRCA requires employers to notify BIS when they are proposing 20 or more redundancies at one establishment within a 90-day period. Notification must take place at least 30 days before the first dismissal takes effect if the employer is proposing between 20 and 99 redundancies, and at least 45 days before if there are 100 or more proposed redundancies. Failure to provide the requisite notification is a criminal offence, and if this is attributable to a director, manager, secretary or “other similar officer” of the company, that person can be personally guilty of the offence and liable to a fine. It has long been a concern of administrators that they could be considered to be “other similar officers”.

What practical advice arises?

Given the timings involved when businesses are going into administration, it can be difficult for administrators to comply with the requirements under TULRCA. This case will decide whether an administrator appointed under the Insolvency Act 1986 is to be regarded as an officer of a company and therefore whether they are capable of being guilty of an offence under TULCRA.

How we can help

Our Restructuring & Insolvency and Employment teams regularly advise businesses and administrators on the requirements under TULRCA, their obligations and how to mitigate risk. For more information, please contact Lucy or Gawain.