| The recent case of Millam v Print Factory (London) | | | | subsidiary's business and that, as a matter of law, it |
| 1991 Ltd [2007], involved a dispute relating to the | | | | was the corporate entity that ran the business. In |
| Transfer of Undertakings (Protection of Employment) | | | | the absence of any sham, the courts were entitled |
| Regulations 1981 ("TUPE"). The employee was | | | | to look no further. The EAT held that the appeal |
| employed by Print Factory Ltd (PF). The holding | | | | succeeded due to the fact that the effect of the |
| company of PF was taken over and subsequently | | | | tribunal's decision was to 'pierce the corporate veil', |
| sold to M Ltd by way of a share sale agreement. | | | | which it was not entitled to do. |
| The employee was informed that the identity of his | | | | The employee appealed. The appeal was dismissed. |
| employer was not changing, but was later told that | | | | The legal structure, although important, could not be |
| his employment had been 'continued' under the TUPE | | | | conclusive in deciding the issue of whether, within |
| Regulations. | | | | that legal structure, control of the business had been |
| Furthermore, the employees of PF were told at the | | | | transferred as a matter of fact. The EAT had |
| time of sale that it was M's intention to fully | | | | misdirected itself. |
| incorporate the business of PF into their own. After | | | | An issue of 'piercing the corporate veil' only arose |
| the takeover, the PAYE documents showed that M | | | | when it was established that activity x was carried |
| was the company which now paid the employee's | | | | on by company A, but for policy reasons it was |
| wages. M also managed the contributory pension | | | | sought to show that in reality the activity was the |
| scheme. Even so, the companies were registered as | | | | responsibility of the owner of company A. |
| being separate, and were being run as two separate | | | | In this case, the tribunal did not find that the activity |
| companies with M controlling PF's activities. | | | | was being carried on by PF, and then 'pierced the veil' |
| The employee was dismissed and so complained to | | | | to attribute the activity as a matter of law to M. It |
| the Employment Tribunal. | | | | was held that, as a matter of fact, the activity was |
| Subsequent to that dismissal, PF bought the business | | | | being carried on by M, and not by PF. That |
| of M and became the respondent to the complaint. A | | | | concentration on the issue of corporate structure led |
| preliminary issue was ordered to be tried as to | | | | the EAT not to give proper weight to the findings of |
| whether the employee's employment had by | | | | the tribunal. |
| operation of the TUPE Regulations transferred from | | | | Furthermore, despite the fact that the EAT was |
| PF to M at the time PF was sold by its parent | | | | correct in saying that a subsidiary's lack of |
| company to M. | | | | independence did not demonstrate that the holding |
| The tribunal duly concluded that there was indeed a | | | | company owned the business, that observation did |
| TUPE transfer from PF to M. PF then appealed to the | | | | not give weight to the fact that the tribunal found |
| Employment Appeals Tribunal ("EAT"). The grounds | | | | the arrangements in this case were not typical, to |
| for the appeal by PF were that the tribunal had erred | | | | the extent that the business was that of M. |
| in law in that it had 'pierced the corporate veil' in | | | | If you require further information please contact us |
| reaching its conclusion, which was not permissible. | | | | at or Visit |
| The EAT determined that the companies were, as a | | | | © RT COOPERS, 2007. This Briefing Note does |
| matter of law, run independently. It was therefore | | | | not provide a comprehensive or complete statement |
| plain that PF retained its own assets and its own | | | | of the law relating to the issues discussed nor does it |
| employees. | | | | constitute legal advice. It is intended only to highlight |
| The EAT decided that the lack of independence, | | | | general issues. Specialist legal advice should always be |
| which was typical of a subsidiary, did not | | | | sought in relation to particular circumstances. |
| demonstrate that the holding company owned the | | | | |