Bulletins | November 2, 2023

Supreme Court Decision: Administrator Not an Officer of Company

If an employer intends to make 20 or more employees redundant, at one establishment, within a 90-day period, they must notify the Secretary of State at least 30 days before the first dismissal, as per Section 193(2) of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”). Failure to adhere to this requirement is a criminal offence. This legislation has been of great concern to insolvency practitioners who are often dealing with companies in a precarious position and do not have the luxury of time to comply with Section 193(2) TULRCA.

Under TULRCA any “director, manager, secretary or other similar officer of the body corporate” are subject to the duty to notify the Secretary of state. The question for the Supreme Court in R (on the application of Palmer) v Northern Derbyshire Magistrates’ Court and Another was whether an administrator appointed under the Insolvency Act 1986 (“IA”) falls within the definition of a ‘similar officer of the body corporate’. They held that they do not.

Since TULRCA lacked a specific definition of ‘officer’, the Court looked to the IA, being the legislation that governs administrators, for guidance and determined it clearly distinguishes between an officer of the company and an administrator. The Supreme Court therefore concluded that whether a person is an ‘officer’ of a company is determined by asking whether that person holds an office within the constitutional structure of the company.

This ruling will come as a great relief to insolvency practitioners as it ensures that administrators cannot be criminally liable for the company’s failure to provide notice under TULRCA.