TUPE and Share Sales

In ICAP Management Services Limited v Dean Berry and BGC Services (Holdings) LLP [2017] EWHC 1321, the High Court examined the circumstances in which TUPE may apply to a share sale.

Mr Berry was a senior executive at ICAP Management Services (IMS), a brokerage company. In July 2016, he accepted an offer of employment with one of IMS’s main competitors, upon which IMS immediately placed him on garden leave for the duration of his 12-month notice period. A few months into his garden leave, IMS entered into negotiations to sell its shares to another brokerage company, Tullett Prebon (TP). Looking for a quick release from his long garden leave, Mr Berry argued that this share sale triggered a TUPE transfer to which he objected, thereby bringing his employment contract (including the garden leave provision) to an end on the date of the sale in December 2016. IMS brought injunctive proceedings to prevent him from joining the competitor during the garden leave period.

The High Court granted the injunction. It highlighted that a share sale would not of itself amount to a TUPE transfer; it would only do so where the buyer had essentially “stepped into the shoes” of the seller. In short, this meant that the buyer must have (i) become responsible for carrying on the seller’s business, (ii) taken over the running of its day-to-day operations, and (iii) incurred the obligations of the employer of the seller’s employees. Here, no TUPE transfer had taken place as the businesses of IMS and TP remained distinct and functioned on a day-to-day basis as they had before the sale. Furthermore, IMS continued to bear its obligations as employer of its own employees, including Mr Berry. As such, there had been no TUPE transfer to which Mr Berry could have objected.