Guvera Ltd v C Butler & Ors

A relevant transfer under Transfer of Undertakings (Protection of Employment) Regulations 2006 is assessed by a multi-factorial inquiry. No single factor is decisive, and the significance of a factor depends on the undertaking and the issue in dispute.

A share sale and group membership do not themselves transfer an undertaking. A transfer may nevertheless occur if another group company assumes sufficient day-to-day control of the business. Assuming employer obligations, such as paying wages, may be relevant evidence but is not a necessary condition of a transfer. The assumption of control may itself bring employer liabilities through TUPE.

Guvera appealed against an Employment Tribunal decision that the Blinkbox Music streaming business transferred to it on 12 May 2015 under regulation 3(1)(a) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

The Tribunal found that, after the former director left, Guvera sent personnel to take effective control of the business. They directed financial decisions, selected employees for redundancy, and managed the remaining workforce. The Tribunal held that this went beyond ordinary parental supervision of a subsidiary.

Permission to appeal was confined to alleged errors concerning the Tribunal’s focus on control and its identification of the transfer date. The central issue was whether the Tribunal had erred in law in finding that Guvera assumed day-to-day control on 12 May 2015.

1. Appeal dismissed. Guvera did not pursue the grounds for which permission to appeal had been granted. That alone disposed of both grounds.

2. In any event, the Tribunal correctly treated the question under regulation 3(1)(a) as multi-factorial. The identity of the business was not disputed. In that setting, it was legitimate to concentrate on whether Guvera had assumed control of its day-to-day operations. A share sale and the ordinary influence of a parent company do not amount to a transfer. However, another company in the acquiring group may become the transferee when it assumes control of the undertaking at the requisite level.

3. The Tribunal was entitled to find that Guvera crossed that line on 12 May 2015. Its personnel implemented instructions concerning financial information and payments, exercised employer powers over senior staff, and took effective decisions about redundancies. Those findings supported the conclusion that Guvera had taken over the conduct of the business, rather than merely gathering information or supervising its subsidiary.

4. The contention that a transferee must also have assumed employer obligations, such as paying wages, was rejected. Such conduct can be a relevant factor, but it is not a necessary condition of a transfer. Making it a precondition would contradict the multi-factorial approach and could undermine the protection afforded by the Transfer of Undertakings (Protection of Employment) Regulations 2006. The court accepted the explanation of the apparent reference to employer responsibility in [2005] ICR 1409: responsibility for employment liabilities follows from the transfer; it is not a prerequisite for it.

5. The Tribunal had identified the date of transfer with sufficient precision as 12 May 2015. The appellant’s contrary argument was, in substance, an unpermitted perversity challenge. The findings were in any event capable of supporting the date found.

• Employment Appeal Tribunal: appeal dismissed: [2017] UKEAT 0265_16_2111.
• Employment Tribunal: held that the Blinkbox Music business transferred to Guvera on 12 May 2015 under regulation 3(1)(a) of the Transfer of Undertakings (Protection of Employment) Regulations 2006. Judgment sent to the parties on 20 June 2016.