Supreme Court confirms that an administrator is not an officer of a company

At the start of this month, there was some welcomed news for insolvency practitioners who act as administrators. The Supreme Court handed down judgment in R (on the application of Palmer) v Northern Derbyshire Magistrates Court and Another [2023] UKSC 3013 (Admin) last week.

The court considered whether an administrator of a company appointed under the Insolvency Act 1986 was classified as an ‘officer of the company’ for the purposes of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULCRA”).

TULCRA and Employer Obligations

Where an employer proposes to dismiss at least 20 employees as redundant within 90 days, it is required to give notice to the Secretary of State at least 30 days prior to the dismissals taking effect. If an employer fails to give notice, they commit an offence under Section 194(1) TULCRA. Where the offence is committed by a body corporate with the consent or involvement of, or to be attributable to, neglect on the part of “any director, manager, secretary, or other similar officer of the body corporate”, that person commits an offence under Section 194(3) TULCRA.

Mr Palmer was appointed one of three joint administrators of West Coast Capital (USC) Ltd (the “Company”). On 14 January 2015, he gave a number of employees a letter notifying them they were at risk of redundancy and providing notice that the company would consult with them. Those employees were handed a further letter the same day, dismissing them with effect from that day. Both letters were signed by Mr Palmer. However, Mr Palmer did not give notice of the redundancies to the Secretary of State until 4 February 2015.

Legal Proceedings

Due to failure to provide notice to the Secretary of State, in July 2015, criminal proceedings were commenced against Mr Palmer under Section 194 of TULCRA. Mr Palmer argued that he had not committed an offence due to an administrator appointed under Part II of the Insolvency Act 1986 is not an “officer” of the company. However, Northern Derbyshire Magistrates Court held that he was an “officer”. The Divisional Court dismissed Mr Palmer’s claim for judicial review, and he appealed to the Supreme Court.

Supreme Court’s Decision

The Supreme Court rejected the decision and held that the Insolvency Act 1986 was clear that an administrator is not an officer of the company. It was held that none of the many references to “officer” within the Insolvency Act 1986 suggests that an administrator is an officer of a company; importantly, some of the references clearly show that an administrator is not considered to be an officer of a company. It was, therefore, held that an administrator of a company was not bound by TULCRA, quashing the decision of the District Judge.

We are experts in advising on insolvency matters. For a confidential and no-obligation initial discussion to see how we may help, please contact the Insolvency Team by contacting Kevin Sullivan on 01206 217376 or email kevin.sullivan@birkettlong.co.uk or Charlotte Burkert on 01245 453844 or email charlotte.burkert@birkettlong.co.uk.