In the recent reported case of SNR Denton UK LLP v Kirwan, the Claimant employee worked as an in-house solicitor for a facilities management company. During the last few years of her employment the company ran into significant financial difficulties and as a result the Claimant spent the majority of her time disposing of service contracts to third parties. The company’s finances failed to improve and subsequently administrators were appointed. The administrators appointed a firm of solicitors to act on their behalf and the Claimant was made redundant. The disposal of the service contracts continued to be carried out by the administrator’s solicitors. The Claimant sought to argue that this constituted a service provision change and therefore a relevant transfer under Transfer of Undertaking (Protection of Employees) Regulations 2010 had taken place.
At appeal, the Employment Appeal Tribunal held that the Employment Tribunal had been correct in finding that the activity of disposal of the Company’s contracts was essentially the same as that which has been previously carried out by the Claimant while she worked in-house. However, the tribunal should have considered that the services that had previously been carried out by the company were, upon administration, carried out by SNR Denton on behalf of the administrators, not the company. Consequently the “client” had not remained the same and the requirements of Regulation 3(1)(b) were not met.
It was noted that although the Insolvency Act stated that in exercising functions under the Act the administrator acted as the company’s agent; a finding that solicitors engaged to act for the administrators were acting on behalf of the company could potentially bring those solicitors into a situation of conflict. Although the administrator and the company would often have a common purpose, the administrator owed his duty to the creditors of the company.