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legal alert: TUPE warning for Multi Academy Trusts MATs

21 May 2018

The EAT recently held, in Guvera v Butler and others, that a TUPE transfer had taken place following a share sale. In the ordinary course of events TUPE does not apply to share sales but, in this case, Guvera assumed day to day control of the music streaming service, Blinkbox. That day to day control “went beyond the mere exercise of ordinary supervision or information gathering” by a parent company and TUPE was held to apply.

Facts

In January 2015, Blinkbox’s then owner, Tesco, sold all of its shares in Blinkbox to a subsidiary of Guvera. Blinkbox had 110 employees at the relevant time and the share sale had no immediate impact on them. They continued to be employed by Blinkbox.

A director of Guvera subsequently became the sole director of Blinkbox. At the time Blinkbox was struggling and it was his remit to turn the business around. That director resigned and, the following day (12 May 2015), Guvera sent its chief technical director to Blinkbox with a specific remit from Guvera’s CEO on how the business should be run going forward, including what information should be given to Guvera and what assets should be extracted from the business.

54 Blinkbox employees were dismissed on grounds of redundancy on 15 May 2015. On 18 May 2015 the remaining Blinkbox employees were told that they had become employees of Guvera. Blinkbox went into administration on 11 June 2015, with monies still owed to the employees who had been made redundant.

The Employment Tribunal found that a TUPE transfer occurred at the point when Guvera’s chief technical officer arrived at Blinkbox, on the basis that Guvera had then assumed day-to-day control of the Blinkbox business “in a way that went beyond the mere exercise of ordinary supervision or information gathering between parent and subsidiary”. That meant that employees who were dismissed on 15 May were in fact Guvera employees at the time.

The EAT upheld the decision, confirming that the test to be applied is a multi-factorial one. In their view it was clear that Guvera had effectively "stepped into the shoes" of Blinkbox as the employer.

Implications

This case illustrates how a parent company should take care when it is showing an interest in how a subsidiary business is run, whether following a share purchase or otherwise.

It could also have significant consequences in the education sector for MATs who take control of a school prior to a conversion or transfer into a MAT (as is often the case).

If the MAT is effectively stepping “into the shoes” of the employing school, in terms of the decisions being made and the level of control the MAT has over the business and employees, then an inadvertent TUPE transfer could take place before the date the TUPE transfer is envisaged and whilst the school is still under the control of the local authority.  This could of course have significant financial and other consequences for the MAT if, for example, a dismissal or redundancies take place during the period of the MAT’s involvement but before the official conversion or transfer.

 
 
 

Contacts


Kerry Waters | Associate | Watson Burton LLP

Email:
kerry.waters@watsonburton.com
Tel:
0345 901 2044
 
 

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