ICAP Management Services Ltd v Berry & Anor

For a TUPE transfer to occur after a share sale, the relevant business must in fact pass to another person. A change in ownership, group control, governance, branding or support functions is not enough. The critical inquiry is whether the new party has become responsible for carrying on the business, incurred the obligations of employer and taken over its day-to-day running.

A garden leave injunction must protect a legitimate business interest and extend no further than reasonably necessary. Confidential information may justify protection even where it is not an objectively identifiable trade secret. The court may enforce the balance of a contractual notice period where the employee retains valuable confidential information and remains paid.

Mr Berry was employed by ICAP Management Services Ltd under a contract providing for twelve months’ notice, garden leave and post-termination restrictions. After ICAP’s global broking business was acquired by Tullett Prebon, later renamed TP ICAP, Mr Berry contended that the transaction was a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006. He objected to the transfer and began work for BGC Services (Holdings) LLP.

The claimant sought continuation of injunctions preventing Mr Berry from working for BGC and preventing BGC from inducing or procuring his breach. The central issues were whether TUPE applied, whether garden leave should be enforced until 21 July 2017, and whether BGC was liable for inducement.

1. TUPE. The court rejected the argument that the transaction transferred an economic entity. The claimant was an economic entity, and an economic entity need not be wholly situated in the United Kingdom. However, TUPE requires a change in the person carrying on the business and bearing responsibility as employer. The relevant inquiry was whether the new party had stepped into the employer’s shoes by becoming responsible for the business, incurring the employer’s obligations and taking over its day-to-day running. A share sale, common ownership, changes in governance, strategic oversight, branding, integration plans and back-office rationalisation did not, on the evidence, establish that result.
2. Mr Berry’s contract identified IMSL as his employer. He continued to work in the same role, for the same organisation, from the same premises, with the same clients, staff and immediate management. IMSL remained responsible for its business and employer obligations. There was therefore no relevant transfer, and nothing to which Mr Berry could object under regulations 4(7) and 4(8).
3. Garden leave. Enforcement had to be considered in light of restraint of trade principles. IMSL had to establish a legitimate interest and show that the injunction went no further than reasonably necessary. Client connections and workforce stability were not established sufficiently. Confidential information was different. Clause 11 protected information of a confidential nature or in the nature of a trade secret, and an employer could protect confidential information during employment whether or not it amounted to a trade secret.
4. Mr Berry had held a senior role and had access to strategic, management, client and staff information. He could recall some of it, some remained valuable to competitors, and disclosure would cause significant harm. The agreed twelve-month garden leave period was justified. The court therefore continued the injunction against Mr Berry until 21 July 2017.
5. The claim that BGC induced breach was rejected. BGC had reasonably relied on legal advice and taken a commercial view of the TUPE issue. No injunction was granted against BGC. The precise form of order was reserved for further submissions.