TUPE transfer during liquidation: protective award and unfair dismissal claims fail, but consultation breach succeeds
Former telemarketing employees lose protective award and unfair dismissal claims after a TUPE transfer from a company in creditors' voluntary liquidation, but win compensation for failure to consult.
2 min read · Last updated 19 May 2026
Case details
- #redundancy
- #protective-award
- #tupe
- #failure-to-consult
- #creditors-voluntary-liquidation
- #regulation-8
Key facts
- All claimants were employed by Phonetic Limited, a telemarketing business.
- On 30 June 2020, claimants received a letter terminating employment by reason of redundancy.
- Phonetic Limited entered creditors' voluntary liquidation on 26 August 2020.
- A TUPE transfer from Phonetic Limited to Phonetic Group Limited occurred on 7 September 2020.
- The tribunal found Regulation 8(7) applied, disapplying TUPE Regulations 4 and 7.
- The claim for failure to consult under Regulation 15 succeeded, awarding 13 weeks' pay.
Timeline
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Covid-19 lockdown and furlough
Most employees laid off and placed on furlough due to pandemic.
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Termination letters sent
Claimants received letters stating employment terminated immediately by reason of redundancy.
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Liquidator appointed
Phonetic Limited appointed a liquidator for creditors' voluntary winding up.
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TUPE transfer date
Business transferred from Phonetic Limited to Phonetic Group Limited.
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Phonetic Limited dissolved
Company dissolved after liquidation.
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Preliminary hearing
Employment Judge Butler found a TUPE transfer occurred.
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Substantive hearing
Employment Judge Humble heard the case on liability and remedy.
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Judgment issued
Reserved judgment dismissing protective award and unfair dismissal claims, but upholding failure to consult claim.
The legal issue
The tribunal had to decide whether employees who were dismissed before a TUPE transfer from a company in creditors' voluntary liquidation were entitled to a protective award or unfair dismissal compensation from the transferee, and whether the transferee failed to consult as required by TUPE Regulation 15.
The outcome
The tribunal dismissed the claims for protective awards and unfair dismissal, finding that Regulation 8(7) of TUPE applied because the transferor was in creditors' voluntary liquidation. This disapplied Regulations 4 and 7, meaning the employees could not claim that their dismissals were automatically unfair or that the transferee was liable for a protective award.
However, the tribunal upheld the claims for failure to consult under Regulation 15. The transferee, Phonetic Group Limited, was ordered to pay each claimant 13 weeks' pay. The amounts were quantified in the judgment annex, except for one claimant whose award was subject to a separate order.
Lessons & takeaways
- If a business transfers from a company in creditors' voluntary liquidation, TUPE's normal protections may not apply, so employees cannot bring automatic unfair dismissal or protective award claims against the transferee.
- Even where the transferor is in liquidation, the transferee still has a duty to consult under TUPE Regulation 15, and failure to do so can result in compensation of up to 13 weeks' pay.
- Employees should check whether the transferor is in formal insolvency proceedings, as this significantly affects their rights on transfer.
- Claimants should ensure they have instructions from all parties; claims may be dismissed if individuals do not attend or provide instructions.
This case shows how TUPE protections can be limited when a business is transferred from a company in creditors' voluntary liquidation. The former employees of a telemarketing business were dismissed by the original employer, Phonetic Limited, shortly before it entered liquidation. The business then transferred to Phonetic Group Limited. The employees brought claims for protective awards and unfair dismissal against the new company, arguing that their dismissals were automatically unfair under TUPE.
The tribunal found that because the transferor was in creditors' voluntary liquidation, Regulation 8(7) of TUPE applied. This provision disapplies the normal transfer protections (Regulations 4 and 7), meaning the employees could not claim that their dismissals were automatically unfair or that the transferee was liable for a protective award. The tribunal also noted that the dismissals occurred before the transfer, and the transferee was not the employer at that time.
However, the tribunal upheld the employees' claim for failure to consult under Regulation 15. The transferee had not consulted with the employees or their representatives about the transfer, which is a legal requirement. The tribunal awarded each employee 13 weeks' pay as compensation for this breach. This serves as a reminder that even in insolvency situations, the duty to consult remains.
What could have been done differently
The transferee could have avoided the consultation claim by engaging with employees or their representatives before the transfer. Even if the transferor was in liquidation, the transferee should have taken steps to inform and consult. For the employees, understanding the impact of the liquidation on their TUPE rights was crucial. They might have focused their claims on the consultation failure from the start, rather than pursuing the unsuccessful protective award and unfair dismissal claims.
Why this matters
This case clarifies that TUPE's insolvency exception can significantly limit employee protections, but it does not remove all obligations. The duty to consult remains a key safeguard, and failure to comply can lead to compensation. For employees facing a transfer from an insolvent company, it is important to seek advice on which claims are viable and to ensure consultation rights are enforced.
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