It is common ground that a share sale acquisition is not covered by TUPE. TUPE requires a change of employer and upon the acquisition of the shares in a private limited company, there is no change in the identity of the employer, simply of the shareholders. The company remains the same. This was most recently confirmed by the High Court in the case of ICAP Management Services Ltd v Berry  EWHC 1321.
However, in exceptional circumstances, where, following a share sale acquisition, the acquiring company assumes supreme control over the acquired company, a de facto TUPE transfer may occur. The main authority for this is the decision in Millam v Print Factory (London) 1991 Limited  ICR 1331. In Guvera Limited v (1) Butler (2) Blinkbox Music Limited (in liquidation) (3) BB Music Holdings Limited (in administration) UKEAT/0256/16 Lavender J had the opportunity to consider these principles.
In this case, Blinkbox was a music streaming service. It was acquired by Tesco in 2012; but by January 2015 Tesco wanted to sell it. On 23rd January 2015 Guvera UK bought the shares in Blinkbox. This was orchestrated by a Mr Michael De Vere, a director of Guvera. Apparently this was without the authority of Guvera and its CEO and Chairman, Mr Herft.
In considering the facts, the employment tribunal divided events into three time periods.
(1) From January until the end of April 2015, the business remained with Blinkbox. Mr De Vere became a Director, having been given 90 days by Mr Herft to turn the business around.
(2) From April to 11th May 2015. During this period Mr De Vere resigned as a Director of Blinkbox. Insolvency was a prospect for Blinkbox and Guvera was considering its options and was interested in acquiring Blinkbox’s assets and about 20 employees. But the tribunal found that there was no transfer in this period as the business remained under the control of the Blinkbox Company.
(3) But on 12th May 2015, Mr King, Guvera’s Chief Technical Officer, arrived at Blinkbox following Mr De Vere’s departure and he continued there until Blinkbox went into administration on 11th June 2015. The tribunal found there was a transfer of an undertaking to Guvera at the start of this period because it assumed day to day control of the business in a way that went beyond the mere exercise of ordinary supervision or information gathering, between a parent and subsidiary.
Mr Herft, on behalf of Guvera, now took control of the Company and the tribunal found that he exercised influence over a number of key business decisions, redundancies were implemented and decisions were effectively now made by Guvera. According to the employment tribunal “standing back and looking at the bigger picture these features did, it seems to me, reflect the reality in which, from the start of the deferred period, Guvera did assume day to day control of the business of Blinkbox, crossing a line beyond the element of de facto control and information acquisition which comes with being a corporate parent in a way that amounted to taking over conduct of its day to day activities”. Guvera was therefore held liable for claims made by employees who had been dismissed.
Guvera appealed. First, it appealed against the transfer of undertakings point. But the EAT considered that the employment tribunal had focused on the correct test. One of the factors relied upon by Guvera, was that it had not taken on the responsibility of an employer by paying employees’ wages. The EAT found this argument unattractive. If the law was as Guvera intended, a company which took control of an undertaking, exercised the powers of an employer over the employees and in particular chose to make them redundant, could say that the Regulations did not apply to it because it did not pay the employees’ wages due. This would be too easy a way around TUPE. The EAT has previously pointed out in Housing Maintenance Solutions limited v McAteer  ICR 87 that it is undoubtedly one of the consequences of a transfer that the transferee assumes the obligation of an employer. One relevant factor in – 6 – deciding whether there has been a transfer may consist of action taken by a transferee, such as payment of wages. But the key test is whether there has been a change in the legal or natural person who is responsible for carrying on the business and who by virtue of that fact incurs the obligations of an employer vis-à-vis employees of an undertaking (Landsorganisationen Denmark v Ny Mølle Kro Case C-287/96  ICR 330).
Nor did the employment tribunal go wrong in pinpointing the date of the transfer itself. There was a clear finding of fact that the assumption of control by Guvera was on 12th May 2015 when Mr King, Guvera’s Chief Technical Officer arrived at Blinkbox and took control of matters following Mr De Vere’s departure.