M Ltd, the subsidiary company of MG Ltd, purchased 100% of the shares of J Ltd. J Ltd employed over 400 people.
For commercial reasons to preserve J Ltd’s contracts and to avoid the risk that a re-tendering process would be triggered, the outward appearance to be given was that J Ltd was a separate company in competition with MG Ltd. However it was not really an independent company.
The Tribunal found that, as from 1 October 2010, J Ltd was nothing other than a trading name. The Employees brought a claim for a protective award (failure to consult) against MG arguing that their employment had TUPE transferred to it.
The Employment Tribunal ruled that the transfer had occurred. Following the share purchase by M Ltd, MG Ltd began to operate J Ltd’s business, so as to trigger TUPE.
The case demonstrates the pitfalls of TUPE. While the transfer of ownership of J Ltd was by way of a share sale, the fact that another company effectively took over the running of J’s business was enough to trigger a TUPE transfer of the employees.
See: Jackson Lloyd Ltd and Mears Group PLC (Appellants)
(1) Smith and Others; (2) UCATT; (3) Williams and Others (Respondents)
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