TUPE and Garden Leave
27 June 2017
A senior executive was placed on garden leave. Were the circumstances such that a TUPE transfer enabled him to object to it and terminate his garden leave?
No, held the High Court in ICAP Management Services Ltd v Berry.
Mr Barry worked for ICAP Management Services Ltd, which was a service company for the ICAP Global Banking Business. He gave notice to leave in order to join a competitor, BGB Services (Holdings) Limited. ICAP put him on garden leave.
During the garden leave ICAP was the subject of a share sale acquisition by Tullett Prebon plc. Mr Berry notified ICAP that he considered there was a TUPE transfer and purported to object to it under Reg 4(7) of TUPE. That would, by virtue of Reg 4(8), have terminated his contract (and his garden leave) forthwith, releasing him to take up his new employment earlier than would otherwise have been the case. ICAP sued to enforce the garden leave.
The High Court rejected Mr Berry's arguments. TUPE requires a change of employer. A share sale does not involve a change of employer. This was not the kind of exceptional case envisaged in Millam v Print Factory (London) 1991 Ltd  where, after a share sale, there had been a de facto TUPE transfer because of the supreme control exercised by the new owner. Here it was business as usual. The operating and service companies carried on in the same way as before the share sale. There was therefore no TUPE transfer, and nothing to object to. ICAP succeeded in its application for an injunction to enforce the garden leave.
For TUPE aficionados there is (at paras 24-102) an excellent discussion of some key legal issues in the law on transfer of undertakings, including 'the concept of the employer', the legal requirement of change of employer, and the indicia of a TUPE transfer.
With thanks to Daniel Barnett’s employment law bulletin for providing this update.