It's no news that the economy is in a  bad way and although there are reports that the number of businesses going into Administration has reduced since the beginning of the recession in 2008, we still seem to hear plenty about Administration. For example, this week there was news that Scottish football club Rangers was suffering and heading towards Administration. So what happens to the employees in this situation, is redundancy the only option?

An Administration differs to some other kinds of procedure when a company is insolvent. It is still trying to save the company in the hope that it can carry on. This is perhaps one of the reasons redundancies seem so commonplace in an Administration. The company is hoping that by reducing its out-goings it can appear more attractive to someone who may wish to buy them out. This might seem like a common sense approach, however, the case of Spaceright Europe Limited -v- Baillavoine and another [2011], considered whether the dismissal of an employee by a company in Administration could be automatically unfair under The Transfer of Undertakings (Protection of Employment) Regulations 2006 ('TUPE'), if no interested company had yet been found. So if the Administrator decides to make employees redundant in the hope that it will be more attractive to buyers this could be unfair.

In an asset sale of a company TUPE serves to protect the rights of the employees of the seller company. It ensures that they are employed with the same conditions as they were originally when the buyer steps into their original employer's shoes, so to speak. The Spaceright case appears to suggest that making employees redundant before a buyer is found could still be connected to a sale when it does later happen. If this is the case then it could be automatically unfair. This protects the rights of employees and in this way allows them some security in these bleak times. Recourse will therefore be available should employees be made redundant then a buyer be found. It will still be viewed as redundancy in connection with the transfer, which is not allowed.

Unfortunately, there is a downside to the decision also. The fact is that a company with employees and perhaps associated liabilities such as HR disputes, is unlikely to be as attractive to a prospective buyer than if it were to buy free of them. The new buyer would have to take the company with the employees and manage any issues itself after the purchase. Some people are concerned that this will put buyers off so that in the long term more people lose their jobs. If a company in Administration does not get bought out it's chances for survival may be significantly reduced and so too would the prospect of keeping your job as an employee.

As a relatively recent decision, its full effects are yet to be witnessed. High street store La Senza was bought out by a Kuwait retailing investment company in January and in so doing saved around 1,100 jobs in 60 UK stores. There was also news last month that sports retailer JD Sports had rescued the outdoor wear shop Blacks. Hopefully these examples can prove that despite the worries over the attractiveness of buy-outs following the Spaceright case, there can still be good news for ailing businesses and their employees.