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An Officer and an Administrator? The Supreme Court Weighs in on the role of Administrators in the Companies they administrate

Posted on 14 December 2023

In R (on the application of Palmer) v Northern Derbyshire Magistrates' Court [2023] UKSC 38, the Supreme Court has ruled that an administrator appointed under the Insolvency Act 1986 is not an "officer" of the company.

This case considered this issue within the meaning of section 194 of the Trade Union and Labour Relations (Consolidation) Act 1992 (the TULRCA). As a result of the Supreme Court's decision, administrators  will not be exposed to potential criminal liability for failing to notify the Secretary of State of collective redundancies.

However, the Supreme Court's reasoning is based on its interpretation of the provisions of the Insolvency Act 1986 itself. As such, it will be of wider applicability. This decision will therefore give significant comfort to insolvency practitioners and clarity as to the nature of the role they play in administrations.

The facts

On 13 January 2015, Robert Palmer was appointed as one of three joint administrators of West Coat Capital (USC) Ltd (the Company).  Mr Palmer was the joint administrator responsible for employees and preferential claims.

On the day after the joint administrators' appointment, a significant number of employees of the Company were handed a letter signed by Mr Palmer stating that they were at risk of redundancy and giving them notice of the Company's intention to consult with them at a staff meeting that day.  Shortly afterwards the employees were handed another letter (also signed by Mr Palmer) dismissing them with immediate effect.

However, the Company did not give notice of the redundancies to the Secretary of State until 4 February 2015 – i.e. three weeks after the redundancies.

Relevant provisions of TULRCA

The TULRCA imposes certain consultation and notification duties on employers who are contemplating making 20 or more employees redundant within a period of 90 days or less, including:

  • a duty to consult with representatives of the affected employees (section 188, TULRCA); and
  • a duty to notify the Secretary of State of the proposed redundancies (section 193, TULRCA).

Failure to give the requisite notice to the Secretary of State constitutes a criminal offence under section 194 of TULRCA.  Importantly, it is not just the employer who can face criminal liability in these circumstances.  Section 194(3) of TULRCA extends the criminal offence as follows:

"Where an offence under this section committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity, he as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly."

The issue in this case was whether an administrator falls within the definition of "other similar officer of the body corporate" within the meaning of section 194(3) of TULRCA.

The proceedings

In July 2015, criminal proceedings were brought against Mr Palmer on the basis that: (i) he was an "officer" within the meaning of section 194(3) of TULRCA; and (ii) the Company's failure to notify the Secretary of State of the proposed redundancies had taken place with his consent or connivance, or as a result of his neglect.

In May 2018, the Northern Derbyshire Magistrates' Court held that an administrator is (and, therefore, Mr Palmer was) an "officer" of a company within the meaning of section 194(3) of TULRCA.   

Mr Palmer obtained permission for judicial review but, in November 2021, the Divisional Court upheld the lower court's decision.  The Divisional Court adopted a functional test for determining who came within the category of "other similar officers".  In his judgment, Andrews LJ said that:

"An administrator would naturally be understood to be a 'similar officer' to a director or manager, as he is responsible for conducting or managing the business of the company as a whole and the functions he undertakes are similar".  

On that basis, the Divisional Court concluded that an administrator was an "officer" of the company.

The Divisional Court's decision was also informed by policy considerations: the Court was concerned that if an administrator was not an "officer", the criminal sanction would be rendered meaningless in the case of a company in administration, therefore removing the protection in one of the situations where collective redundancies are most likely to take place.

The Supreme Court's decision

In a unanimous decision, the Supreme Court allowed Mr Palmer's appeal and held that an administrator was not an "officer" of the company for the purposes of section 194(3) of TULRCA.

Given that the term "officer" is not defined for the purposes of section 194(3) TULRCA, the Supreme Court considered the provisions of the Insolvency Act 1986 to determine whether, as a matter of statutory interpretation, an administrator of a company should be classified as an officer of that company generally.  The Supreme Court noted that none of the many references to "officer" in the Insolvency Act 1986 suggest that an administrator is an officer of the company; in fact, some of the references clearly show that an administrator is not considered such an officer.  The Supreme Court was persuaded that the provisions of the Insolvency Act 1986 "provide a clear picture that the legislation, in creating the process of administration, did not classify an administrator as an officer of the company in administration."

The Supreme Court went on to reject the Divisional Court's 'functional test' in favour of a 'constitutional test'.  The Supreme Court held that, on the proper construction of the statute, the correct question to ask is: "does the person hold an office within the constitutional structure of the body corporate, as is the case with directors, managers and secretaries?"  On that basis, administrators fall outside the scope of the offence created by section 194(3) TULRCA.


Redundancies are often a necessary evil in the early days of an administration process.  An administrator has a duty to act in the best interests of creditors, which may involve making redundancies immediately or shortly after their appointment.  

The Supreme Court's judgment provides welcome clarity – and peace of mind – for insolvency practitioners.  Administrators can rest reassured that in the course of carrying out their statutory duties, they are not at risk of committing a criminal offence under the provisions of TULRCA. Further, the Supreme Court's focus on the Insolvency Act as the basis for its conclusions means it will also provide clarity to the use of similar provisions in other circumstances.

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