The recent holder of Millam v Print Factory (London) 1991 Ltd [2007], involved a dispute relating to the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). The employee was employed by Print Factory Ltd (PF). The holding corporation of PF was taken over with subsequently sold to M Ltd by way of a contribute to sale agreement. The employee was informed that the identity of his employer was not changing, but was later told that his employment had been continued in the TUPE Regulations.

Furthermore, the employees of PF were told at the time of sale that it was M’s intention to fully incorporate the business of PF into their own. After the takeover, the PAYE documents showed that M was the corporation which at this time paid the employees wages. M also managed the contributory retirement fund scheme. Still so, the companies were registered as being separate, with were being rush as 2 part companies by M controlling PF’s activities.

The employee was dismissed with subsequently complained to the Employment Tribunal.

Subsequent to that dismissal, PF bought the business of M with became the respondent to the complaint. A preliminary issue was ordered to be tried as to whether the employee’s employment had by operation of the TUPE Regulations transferred from PF to M at the time PF was sold by its parent corporation to M.

The tribunal duly concluded that there was really a TUPE transfer from PF to M. PF then appealed to the Employment Appeals Tribunal (EAT). The grounds for the appeal by PF were that the tribunal had erred in law in that it had pierced the corporate veil in reaching its conclusion, which was not permissible. The EAT determined that the companies were, as a matter of law, rush independently. It was as a result plain that PF retained its have assets with its have employees.

The EAT decided that the lack of independence, which was typical of a subsidiary, did not demonstrate that the holding corporation owned the subsidiary’s business with that, as a matter of law, it was the corporate entity that ran the business. In the absence of every sham, the courts were entitled to come across no further. The EAT held that the appeal succeeded due to the information that the effect of the tribunal’s pick was to pierce the corporate veil, which it was not entitled to do.

The employee appealed. The appeal was dismissed.

The legal structure, although important, could not be conclusive in deciding the issue of whether, within that legal structure, manage of the business had been transferred as a matter of fact. The EAT had misdirected itself.

An issue of piercing the corporate veil barely arose when it was established that activity x was carried on by corporation A, but for guidelines reasons it was sought to show that in reality the activity was the responsibility of the owner of corporation A.

In this case, the tribunal did not discover that the activity was being carried on by PF, with then pierced the veil to attribute the activity as a matter of law to M. It was held that, as a matter of fact, the activity was being carried on by M, with not by PF. That concentration on the issue of corporate structure led the EAT not to donate proper weight to the findings of the tribunal.

Furthermore, despite the information that the EAT was exact in saying that a subsidiary’s lack of independence did not demonstrate that the holding corporation owned the business, that observation did not donate weight to the information that the tribunal found the arrangements in this holder were not typical, to the extent that the business was that of M.

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RT COOPERS, 2007. This Briefing Message does not offer a comprehensive or whole statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended barely to highlight universal issues. Specialist legal advice ought to always be sought in relation to particular circumstances.

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