TUPE may apply on share sale if purchaser “steps into the shoes” of the employer
30 June 2017 #TUPE
On a share sale, it is easy to presume that TUPE will not apply as the employer remains the same and it is just the ownership that changes. In the recent case of ICAP Management Services Limited v Berry & BGC, the High Court looked at the circumstances in which a transfer could arise.
The share sale in question took place in ICAP as part of a restructure. Before the sale, Mr Berry resigned. He sought to argue that there had been a TUPE transfer, to which he had objected, and could therefore be freed from his garden leave obligations.
The High Court disagreed and held that no TUPE transfer had taken place. Unfortunately for Mr Berry, this meant that the garden obligations were enforceable for the entirety of his notice period.
The Court held that the “critical elements” of the test are whether the new party:
(i) has become responsible for carrying on the business;
(ii) has incurred the obligations of employer; and
(iii) has taken over day to day running of the business
Summarising, it said that the above could be captured in “more colloquial terms – Has the new party stepped into the shoes of the employer?”
Mr Berry’s TUPE claim failed as the High Court found that no new owner had done this. However, the case serves as a reminder that TUPE may apply if the purchaser takes over the management of day-to-day operations and “steps into the shoes” of the employer.
For further advice on TUPE please contact the Employment team.
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