• Regulations are to protect employees where there has been a transfer

• They should transfer to the new owner of the undertaking

• They should keep the original terms and conditions of their contracts

For this legislation to apply, the identity of the employer must change, such as;

• There must be a transfer from one person to another; there must be a change in the employer, not merely in the ownership

• A merger

• A sale of assets of a going concern

• Changes of franchise

• Sale of a sole traders business

• Sale of a partnership

• Regulations can apply where the ownership of a company is transferred to a company operating outside the UK

NOT:

• If a person buys the controlling shares of a company, this is not a transfer of the business since the company itself has a legal identity and IT is the entity that employs the staff.

• Neither does it apply to a transfer of assets only-e.g. upon insolvency, the receiver breaks up the business and sells off its assets to various buyers.

• No transfer of liability of any person to be prosecuted for, convicted of and sentenced for any criminal offence

Is this a business transfer?

‘We must consider whether there is a relevant transfer. Under Reg 3(1)(a) a business transfer is a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the UK to another person where there is a transfer of an economic entity which retains its identity. [TRANSFEROR] is transferring their business that is situated in the UK to [TRANSFEREE] therefore this a business transfer under reg 3(1)(a)’.

• Whole or part of a business

• Economic entity

• Retains its identity

Part 1 test: Is there an economic entity comprising an organised group of resources?

Under Reg 3(2) an economic entity is an “organised grouping of resources which has the objective of pursuing an economic activity”. On the facts, [TRANSFEROR] has an organised grouping of resources including…

1. Dedicated workforce

2. Management structure

3. How autonomous the entity from the rest of the business

4. Equipment separate from the business

5. Premises separate from the business

(Cheesman V R Brewer Contracts [2001]) – lack of transfer of assets does not preclude a transfer

Cheesman V R Brewer Contracts factors:

1. Needs to be a stable and discrete entity whose activity is not limited to performing one specific work contract.

2. Entity needs to be sufficiently structured and autonomous

3. Can be essentially based on manpower

4. Identity emerges from factors such as workforce, management staff, and way the work is organised and operating methods

Transfer can apply to part of an undertaking (Fairhurst Ward Abbotts Limited v Bates Building Limited (2004))

integration of transferor’s business into transferee’s business and the employees being integrated into [department ] still constitute a relevant transfer (Klarenberg v Ferrotron Technologies GmbH)

PARTT 2 Test: Does that entity retain its identity after the transfer?

• Consider Reg 3(1)(a) specifically ‘which retains its identity’

• Apply Spijkers Gebroeder Benedik Abbatoir CV [1986]

• Necessary to look at all circumstances of the transaction including:

All factors need to be taken into account:

1. Type of business in question

2. Whether there has been a transfer of tangible assets (Vans, remaining stock)

3. Whether there has been a transfer of intangible assets (e.g. goodwill, databases)

4. Whether staff taken over by new owner (how many – link to ECM v Cox)

5. Whether customers transferred over to new owner (transferred customer database)

6. Similarity between old and new operation (same merely incorporated into it)

7. Duration of interruption to activity over the period of the transfer (straightforward takeover)

• If relevant consider motive (ECM v Cox) tribunal entitled to look at reason why employees were not transferred – could be majority of staff in terms of skill set (ie all the chefs)

  1. Only need to consider if the majority of the employees have not transferred over (less than half)

     1. Motive – was it to avoid TUPE? On the facts… no, the reason the majority are not going over is because PFL have enough workers not because they want to avoid TUPE. You would need to good evidence to show that they were trying to avoid it.

Conclude – there is/is not a relevant TUPE transfeR