Phoenix jiggery-pokery

It’s a cynical view that all you do when your company goes bust is put it into administration and buy it back, but would seem to be amply demonstrated by this case.

Company goes into administration, administrator has no money for wages so sacks all the staff, then duly sells business back to original owner. Is dismissal for a reason connected with the transfer, thus giving TUPE protection? No. The dismissal’s because the administrator didn’t have any money. The allegation that this is exactly what was planned by the owner all along isn’t relevant once you establish the motivation and mind of the actual dismissing officer.

This is a real kick in the balls for employees in this situation. Although I think the decision’s probably correct, the morals of it are amply spelled out by the court:

As counsel have identified, the critical question is whose decision was it? Once the answer is that it was the administrator’s decision, then nothing done by Craig Smith before that decision was taken nor after it could have any bearing on the reasons why Mr Rutherford acted as he did. The facts may give rise to the inevitable conclusion that Craig Smith cynically manipulated the insolvency of Friction, saw the opportunity of the August holidays as the best time to place the company in administration and did so not simply with a hope but with every expectation that by reason of Realty’s close association with Dynamex, Dynamex itself would soon fall into his palm. That is what happened. It is not an attractive story. It brings no credit to Craig Smith. But Craig Smith did not decide to dismiss the employees even though he knew that would happen and wanted it to happen. Mr Rutherford dismissed them. He did so for economic reasons.

Having decided as it seems to be to me inevitable that the reasons have to be discerned from the actions of the administrator whose actions were unsullied by Smith’s scheming, then there is only one conclusion for any tribunal to reach: the reason for dismissal was an economic one. As Mr Ralls recognised, if the focus is on Mr Rutherford’s state of mind, then he is “a shot fox”. Unsporting as shooting a fox may be and as lacking in fair play as Craig Smith’s machinations were, I am compelled to allow the appeal and restore the decision of the Shrewsbury Employment Tribunal.

This is not an uncommon situation, and there may well be some argument for legislation providing for extra accountability by those who purchase a business they owned until a few weeks before. Will this happen though? No.

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