Alno (UK) Ltd v Turner & Anor (Transfer of Undertakings: Transfer)

For a transfer under Transfer of Undertakings (Protection of Employment) Regulations 2006, an intention to transfer an undertaking is insufficient. The tribunal must first identify the relevant economic entity and then make a multi-factorial assessment of whether it actually transferred while retaining its identity.

A temporary closure and the absence of a direct lease transfer do not alone prevent a transfer. They are factors to be weighed with the transfer of assets, staff, goodwill, continuity or resumption of activities, and the duration of any stoppage. A tribunal errs if it treats an intended reopening and employment of a worker as conclusive without assessing those matters.

SJM Kitchens and Bathrooms Ltd operated a franchised kitchen and bathroom showroom. When its franchise ended in December 2014, ALNO (UK) Ltd had intended to take over and refurbish the showroom and employ the claimant after her maternity leave. The proposed arrangement did not occur. ALNO could not obtain occupation because of a structural defect, and the showroom did not reopen until May 2016.

The Employment Tribunal declared that the claimant's employment transferred to ALNO on 24 December 2014 under the Transfer of Undertakings (Protection of Employment) Regulations 2006. It relied principally on the parties' intended reopening. ALNO appealed. The central issue was whether an actual transfer of an economic entity had occurred on that date.

1. Appeal allowed. The Employment Judge erred in holding that the claimant's employment transferred to ALNO on 24 December 2014. It was declared that no such transfer occurred under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

2. Regulation 3(1)(a) requires an actual transfer of an economic entity which retains its identity. An intention to transfer, or an unsuccessful attempt to do so, cannot satisfy that requirement. The tribunal must identify the economic entity and then undertake the multi-factorial assessment described in P Bork International A/S v Foreningen af Arbejdsledere I Danmark [1989] IRLR 41 and Cheesman v R Brewer Contracts Ltd [2001] IRLR 144.

3. Temporary cessation and the absence of a direct lease transfer are relevant but not conclusive. Wood v Caledon Social Club Ltd UKEAT/0528/09 established only that a short interruption did not itself defeat a transfer where the activity resumed in the same way. Its materially different facts did not justify treating the intended reopening here as decisive.

4. The Employment Judge did not assess the relevant factors. She did not address that the business included design and installation, that Mr Mant, tools, equipment and a vehicle were not transferred, that no operations had resumed, or that the stoppage was lengthy and of uncertain duration. Goodwill in the trade name and intellectual property had always remained vested in ALNO; it did not revert on termination of the franchise.

5. On the case advanced, a transfer was alleged only on 24 December 2014. Once intention and supposed goodwill were removed as bases for the conclusion, only one result was possible. Remittal to permit a different case was not appropriate. Appeal fees were ordered against SJM, which had principally advanced the transfer case, but not against the claimant.

• Employment Appeal Tribunal: Allowed ALNO's appeal and declared that the claimant's employment did not transfer to ALNO on 24 December 2014.
• Employment Tribunal: Employment Judge Hyde, sitting at London (South), declared on 28 October 2015 that the claimant's employment had transferred to ALNO under the Transfer of Undertakings (Protection of Employment) Regulations 2006.