The claimant in Hyde Housing Association Ltd v Layton worked as a decorator for a company, Martlet, which became a subsidiary of Hyde Housing Association, part of the "Hyde Group", in 2008. Hyde Group did not have a separate legal identity but comprised a number of different companies.  Martlet remained the claimant's employer.

In 2013 there was an internal reorganisation and the claimant was asked to agree to new terms and conditions under which he would be employed on a joint and several basis by the companies in the Hyde Group (including Martlet). He also lost his bonus entitlement. He refused to agree to the change and was dismissed on notice (following which he agreed the new terms).

The kitchen and bathroom maintenance team which the claimant was part of was an "economic entity" for TUPE purposes; the issue for the EAT was whether the change in the identity of the claimant's employer as a result of the reorganisation amounted to a TUPE transfer.

The EAT decided there was no reason in principle why TUPE could not apply to transfer a person's employment to multiple transferees, provided that the economic entity is not so fragmented that it loses its identity. However, where one of the multiple transferees is also the transferor, the situation is less clear cut.

TUPE and the European Directive from which it derives envisage a change in identity between the transferor and transferee. A policy decision has been taken not to extend the protection of the Directive to situations in which there is a change of legal control of the employer by way of share sale, because the identity of the employer does not change. The same principle applies in a situation where the transferor remains the employer after a reorganisation, albeit on a joint and several basis with other companies – the identity of the employer has not changed in a legal way. Martlet had always been the claimant's employer. TUPE therefore did not apply.

However, because there is no previous authority directly on this point, an appeal to the Court of Appeal will be allowed.