Millam v The Print Factory (London) 1991 Ltd

For TUPE purposes, a share sale and resulting change in corporate control do not themselves transfer a business. Parent-subsidiary control alone is also insufficient. These principles do not make corporate structure conclusive. The decisive question is factual: whether the business in which the employee works has moved from one company to another. An Employment Tribunal may reach that conclusion from the combined evidence of how the business was managed and operated. A transfer of assets or employees is not an essential precondition. The corporate veil need not be pierced where the tribunal finds that the putative transferee was in fact carrying on the relevant activity. An appellate tribunal must respect those factual findings unless a proper legal basis for interference is shown.

Mr Millam was employed by Fencourt Printers Ltd. After Norwich Union sold Fencourt's shares to McCorquodale Confidential Print Ltd, McCorquodale assumed significant responsibility for the management and operation of Fencourt's business. The Employment Tribunal found that Mr Millam's employment had transferred under the TUPE Regulations on 2 November 1999.

The Employment Appeal Tribunal, in UKEAT/0253/06/DA, reversed that decision. It considered that the Employment Tribunal had impermissibly pierced the corporate veil because Fencourt retained its own corporate identity, assets and employees. The central issue before the Court of Appeal was whether that approach involved an error of law and whether the Employment Appeal Tribunal had a proper basis for disturbing the Employment Tribunal's factual conclusion.

The appeal was allowed unanimously. The Employment Tribunal's finding that a TUPE transfer occurred on 2 November 1999 was restored.

1. The relevant question under the TUPE Regulations was whether the business in which Mr Millam was employed had transferred from one owner to another. A change in the legal control of a corporate employer through a share sale did not, by itself, constitute a transfer. The same principle was recognised in Brookes v Borough Care Services [1998] ICR 1198.
2. The fact that companies belonged to the same group, or that one was the parent of another, did not by itself establish that the parent controlled the subsidiary's business. That was inherent in Allen Case C-234/98, [1999] ECR I-8643. Those propositions were reminders of the factual question, rather than conclusive rules.
3. Lord Justice Buxton held that the Employment Appeal Tribunal had been misdirected by treating the issue as one of piercing the corporate veil. Veil-piercing arose only where activity had first been established as that of company A and it was then sought, for policy reasons, to attribute responsibility to company B. The Employment Tribunal had instead found as a matter of fact that McCorquodale, rather than Fencourt, was carrying on the relevant activity.
4. The corporate structure remained relevant but was not conclusive. No transfer of assets or employees was an indispensable feature of a TUPE transfer. The Employment Tribunal was entitled to assess the combined evidence, including management of workload, payroll, pensions, sales and day-to-day operations. The Employment Appeal Tribunal had identified no proper legal basis for replacing that factual assessment with its own view.
5. Lord Justice Moses emphasised that mere parental control was insufficient, but that a combination of evidential indications could establish that control of the business's day-to-day activities had passed to the parent. Lord Justice Wilson agreed with both judgments.

• Court of Appeal (Civil Division) [2007] EWCA Civ 322: allowed the appeal and restored the Employment Tribunal's finding of a TUPE transfer.
• Employment Appeal Tribunal UKEAT/0253/06/DA: allowed the employer's appeal and reversed the Employment Tribunal's determination.
• Employment Tribunal: determined as a preliminary issue that Mr Millam's employment had transferred from Fencourt Printers Ltd to McCorquodale Confidential Print Ltd on 2 November 1999.