Secretary of State for Employment v Spence: CA 1986

The employers went into receivership in November 1983. A number of the employees were made redundant but the receiver hoped to carry on with the remaining workforce until February. However, a major customer threatened to withdraw its custom unless the undertaking had been sold as a going concern by 24 November. Negotiations for a sale could not be completed in the time available and on 28 November, the remaining workforce was dismissed with immediate effect at 11 am. They were, however, told to return at 2 p.m. when it was hoped that an agreement might be reached with the purchaser. At 2 p.m. the workforce were told to report for work the following morning when they were re-employed, being given fresh contracts of employment. The employees claimed redundancy payments. The Industrial Tribunal held that there had been no transfer of an undertaking within the meaning of Regulation 3 of TUPE and no continuity of employment. Alternatively the regulations did not apply because the workforce were not employed ‘immediately before the transfer’ within the meaning of Regulation 5(3). The Secretary of State appealed. The appeal was dismissed by the EAT.
Held: The SS appeal was again dismissed. Employees who are subject to a Continuation Order remain ex-employees, whose contracts have terminated, and there is no subsisting contract of employment upon which Regulation 5(1) can have any effect. The court construed the regulations with the EEC Directive. As the applicants’ contracts of employment did not subsist at the moment of transfer, they had been dismissed before the relevant transfer and were entitled to redundancy payments.
Lord Justice Balcombe said: ‘If a person is dismissed because of the transfer, either the impending transfer or one which has already taken place, then he is given specific rights under Regulation 8. Applying that construction of Regulation 5 to the facts of the present case, it is clear that the applicants were dismissed before the relevant transfer. Their contracts of employment were not existing at the moment of the transfer. There was nothing on which Regulation 5 could bite and accordingly the Secretary of State is liable for redundancy payments.’


Lord Justice Balcombe


[1986] ICR 651, [1987] QB 179


Transfer of Undertakings (Protection of Employment) Regulations 1981 5(1), EEC Directive No. 77/187


England and Wales

Cited by:

CitedM Dowling v M E Ilic Haulage, Berkeley Logistics Ltd EAT 19-Feb-2004
EAT Procedural Issues – Employment Tribunal
EAT Trade Union Rights – Action short of dismissal
It had been found that the claimant had been dismissed for an . .
CitedLassman and Others v Secretary of State for Trade and Industry CA 19-Apr-2000
The claimants worked for Rotaprint when it went into receivership in 1988, and then for the receiver before being transferred to Pan Graphics. Statutory redundany payments were made on the receivership of Rotaprint. The claimants sought further . .
CitedBrook Lane Finance Co Ltd v Bradley EAT 1988
Popplewell J said: ‘We are however faced with what, at any rate, appear to be two conflicting Court of Appeal decisions. It is clear to us that ‘the time of transfer’ must be construed in the same way in relation to the Employment Protection . .
Lists of cited by and citing cases may be incomplete.

Employment, European, Insolvency

Updated: 31 July 2022; Ref: scu.195720