The Print Factory (London) 1991 Ltd v Millam: [2007] EWCA Civ 322

CA: Buxton, Wilson and Moses LJJ: 19 April 2007

The claimant was employed by a company which, in 1999, was sold by its parent company by way of a share sale agreement to M Ltd. The claimant was told that the identity of his employer was not changing, but also that his employment had continued under the Transfer of Undertakings (Protection of Employment) Regulations 1981 and that it was the purchaser's intention fully to incorporate the business of the employer into its own business. In 2005 M Ltd went into administration and the claimant was dismissed. The following day the business was acquired by respondent company. The claimant brought proceedings against the respondent claiming, inter alia, unfair dismissal and breach of contract. On a preliminary issue to determine whether the claimant's employment had, by operation of the 1981 Regulations, been transferred from the original employer to M Ltd, the employment tribunal found that on the sale by the holding company there was a relevant transfer under the Regulations to M Ltd. The Employment Appeal Tribunal, allowing an appeal by the respondent company, held that the effect of the employment tribunal's decision was to pierce the corporate veil, by concluding that after the first sale the real business had not been in the hands of the legal entity in whose name it was ostensibly run, namely the original employer, but in the hands of M Ltd, and that none of the limited circumstances in which it was permissible to pierce the corporate veil applied.

The claimant appealed.

The Court of Appeal held:
A change in the legal control of the original corporate employer, such as occurred on a share sale of the kind that took place in the present case, did not of itself constitute a relevant transfer of the business for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981. The question was whether as a matter of fact the business in which the claimant was employed had been transferred from one company to another. The employment tribunal so understood its task and duly reviewed the facts, concluding that there was such a transfer, and the appeal tribunal misdirected itself in referring to the issue in terms of piercing the corporate veil. Such an issue only arose when it was established that activity x was carried on by one company, but for policy reasons it was sought to show that in reality the activity was the responsibility of the corporate owner of that company, whereas what the employment tribunal found was not that the activity was being carried on by the claimant's original employer but that as a matter of fact the activity was being carried on by M Ltd. Therefore, no judicial effort was required in order to render M Ltd liable for what was done by the original employer because the employment tribunal had already found that it was M Ltd which was performing the activity.

The appeal was allowed.

Appearances: Marc Living (Coole & Haddock, Worthing) for the claimant; Timothy Pitt-Payne (The AP Partnership, Peterborough) for the respondent company.