Transfer of undertakings: No transfer where transferor in compulsory liquidation

In Perth & Kinross Council v Donaldson and others, the EAT holds:

• Where a company has been the subject of a winding-up order and has entered into compulsory liquidation, the Transfer of Undertakings (Protection of Employment) Regulations 1981 cannot apply when another entity takes it over. In such cases, there is a complete cessation of business, and there is therefore no stable economic entity capable of being the subject of a TUPE transfer.
• In Donaldson itself, even if the previously retained contractor had not gone into liquidation, the mere performance by it of ad hoc tasks was not enough for that contractor to constitute a stable economic entity capable of transfer. So, when the council severed all ties with the contractor and contracted the function performed by it back in, there could not be a TUPE transfer.