In an important decision for the insolvency world SNR Denton announced today they have succeeded in the Employment Appeal Tribunal (EAT) in overturning the decision in SNR Denton v Kirwan.
The claim arose out of the Administration of the Jarvis Group of Companies which went into administration in March 2010. Four partners of Deloitte were appointed as joint Administrators. They instructed SNR Denton (then Denton Wilde Sapte) in anticipation of their appointment as administrators, and subsequently retained it after their appointment. The Claimant was a solicitor employed by Jarvis plc but assigned to work for Jarvis Accommodation Services Limited. She was dismissed on 31 March 2010.
The Claimant said that there had been a service provision change (SPC) under Regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). She claimed that following the appointment of the Administrators and their retention of SNR Denton, SNR Denton carried out legal work in connection with the disposal of PFI contracts which the Claimant had previously been doing. Consequently her employment contract should have transferred to SNR Denton under TUPE.
Despite the fact that SNR Denton provided its services to the Administrators, and not Jarvis, the Employment Tribunal held, surprisingly, that there had been an SPC and consequently a relevant transfer. The Employment Tribunal also decided that it was not "in connection with a single specific event or task of short-term duration".
SNR Denton was successful in arguing that the Employment Tribunal decision was wrong. Mr Justice Langstaff, President of the EAT, was persuaded to follow the reasoning in an earlier case (Hunter v McCarrick) and find that for there to be an SPC, the activities carried out must be carried out for the same client. Accordingly the need to identify that one client was paramount. The Employment Tribunal had essentially treated Jarvis and the Administrators as a single client, on the basis that the Administrators acted as agent for Jarvis.
Commenting on the EAT decision, Pauline McArdle, Partner at SNR Denton UK LLP said: “The decision of the EAT is a welcome confirmation of the approach taken by the EAT previously in Hunter. The decision is of particular significance to administrators. Had the original decision been upheld it would have hampered greatly the ability of administrators to instruct their own service providers. We are delighted with the outcome. However, it also highlights that there may well be circumstances where administrators do, or should be taken to, contract on behalf of the company. It will be a question of fact in each particular case. This underlines the need for clarity in the retainer letter between the parties and any other relevant contractual documents.”