Mr J Taylor v Aspire Bifolds Ltd (in voluntary liquidation) and Others: 2303440/2024 Mr J Taylor v Aspire Bifolds Ltd (in voluntary liquidation) and Others: 2303440/2024
JUDGMENT
The decision of the tribunal is that there was a relevant transfer of a business from the First Respondent to the Second Respondent on or around 17 January 2024.REASONS
[1]The Claimant Mr John Taylor brings a claim for unfair dismissal against the First and Second Respondents. This matter was listed for an open preliminary hearing to decide whether there had been a relevant transfer under the TUPE Regulations 2006 between the First Respondent, Aspire Bifolds Limited (in voluntary liquidation) (‘Aspire’) and Chigwell Window Centre Limited (‘Chigwell’).[2]I heard evidence from the Claimant Mr John Taylor; Mr John Small, a former director of Aspire, now working for Chigwell; and from Mr Dean Floyd, a director of Chigwell.[3]Mr Taylor started work for Aspire on 11 November 2018 as operations manager at their shop in Epsom.[4]Mr Taylor and Mr Small agree that the business of Aspire was the purchase and installation of windows, bifold doors and other items. Windows were purchased from suppliers and not manufactured by Aspire.[5]Mr Taylor’s tasks involved processing orders, booking jobs in, supervising the staff and dealing with remedial jobs.[6]As at December 2023 there were around 9 people working in the business. Mr Small was a director. There was a team of 4-5 installers, a service engineer and a surveyor.[7]Mr Small’s evidence is that only he and Mr Taylor were PAYE employees and that everyone else was engaged on a selfemployed basis. I have seen no evidence to either confirm or deny that was the case. For reasons set out below I have concluded that the exact status of the staff is not relevant.[8]Chigwell is a much larger business with a turnover I am told of around £60m. Chigwelll both manufacture and install windows. They were looking for a base in Surrey to exand their business. Mr Floyd told me that he had acquired a number of failing businesses as the operations of Chigwell expanded.[9]It seems that the business of Aspire was in financial difficulties. Mr Taylor has produced some evidence dated 11 December 2023 from Mr Small suggesting that Chigwell were initially looking at investing in the business. Mr Floyd’s evidence is that a decision was reached that they were not interested in the business as it had too much debt. But he was interested in the premises.[10]Mr Taylor’s evidence which Mr Small agrees with is that customers had ordered windows from Aspire which they were not in a position to fulfil. Suppliers were not prepared to release windows until they had been paid for and Aspire did not have the funds to purchase them.[11]Mr Taylor’s evidence is that Chigwell made a payment to get the goods released. He says he was involved in this process. He has produced a copy of a message stating that Mr Small was going to make the payment and collect the windows as evidence to back this up. The message does not confirm that a payment had been made by Chigwell and Mr Small and Mr Floyd say that it did not happen quite like that. However of greater significance is that both Mr Small and Mr Floyd agree that Chigwell offered to take over and fulfil existing customer orders. Mr Floyd says that Aspire had about £70K worth of business outstanding which he agreed to take over (although ultimately he says it cost more to fulfil the jobs than they took in).[12]Mr Taylor also says that on 14 December 2023 he was told to send all orders made with Aspire to Chigwell. This is not challenged and indeed Mr Small and Mr Floyd agree that Chigwell took over the order book. I have been shown a copy of a message from Mr Small containing this instruction to Mr Taylor. I accept his evidence on this point.[13]On 15 December Mr Taylor received a telephone call to say that he was being made redundant. He received a letter confirming this and stating that he would have 4 weeks’ notice expiring 12 January 2024. He was not paid his December salary, his notice pay or his redundancy pay.[14]Mr Small’s evidence which I accept is that Aspire ceased to trade around 15 December 2023 when the shop shut its doors.[15]On 17 January 2024 Aspire assigned the lease of the shop to Chigwell which reopened its doors on 20 January 2024. Mr Floyd’s evidence is that the shop was ready to go and Chigwell was able to move in and commence business from that date.[16]Mr Floyd told me that there were some window ‘profiles’ used for display purposes that were in the shop at the point at which Aspire ceased business. They were in the shop when Chigwell took it over. They are still in the shop today and used for the same purpose. No other stock was acquired and Chigwell did not take over the leases of any of Aspire’s vans.[17]Mr Floyd tells me that there was no cash consideration for the assignment of the lease but that Chigwell paid the outstanding rent on the property to the landlord (about £3000), acquired the window displays and also took over the benefit of the order book.[18]Mr Taylor asserts that a number of people who had been working for Aspire prior to the collapse of their business started working for Chigwell after the shop reopened. This included an assistant, members of the installation team and the service engineer. The surveyor was not taken on and nor was Mr Taylor. Mr Small does not dispute this. He says that he is working for Chigwell on a self-employed basis, as are the others who were previously engaged by Aspire. Again, I have not evidence about the basis of engagement of these people.[19]I have however seen some messages from a Matt Stiles who was part of the Aspire installation team, who said that he did go and work for Chigwell and has produced bank statements showing payments into his bank account first from Aspire and then later from Chigwell.[20]Mr Floyd said he did not recognise some of the names that Mr Taylor said transferred to Chigwell, but I prefer the evidence of Mr Taylor and of Mr Small on this point which is broadly similar. Mr Small of course may have a clearer idea than Mr Floyd of who is working in the business since he continues to work in the same shop.[21]Aspire Bifolds Limited went into voluntary liquidation on 26 September 2024. Mr Taylor was paid his redundancy money and arrears of pay by the National Insurance Fund. However he wishes to continue with his claim for unfair dismissal, arguing that there was a TUPE transfer between Aspire and Chigwell. That is the point that I need to decide today.[22]Regulation 3 of the TUPE regulations 2006 defines a relevant transfer as ‘a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingom to another person where there is a transfer of an economic entity which retains its identity’.[23]An ‘economic entity’ is defined as ‘an organised grouping of resources which has the objective of pursuing an economic activity whether or not that activity is central or ancillary’.[24]Case law tells us that in order to decide if there has been a TUPE transfer, all the circumstances must be taken into account. A holistic approach must be adopted, as made clear from cases such as Spijkers [1986] 2 CMLR 296. Cheesman and others v R Brewers Contracts Limited [2001] IRLR 144 provides helpful guidance on the question of what is an ‘economic entity’.[25]A number of cases have also held that the transfer or assignment of a lease can amount to a TUPE transfer when accompanied by the transfer of a business. See for example the guidance of the EAT in LOM Management v Sweeney EATS/0588/11/B1.[26]The relevant factors here are:[27]Both Aspire and Chigwell accept orders for the installation of windows and bifold doors.[28]The business of Aspire ceased on 15 December, but the shop reopened offering the same or very similar services just over a month later.[29]Aspire assigned their lease to Chigwell.[30]Aspire was not in liquidation at that time.[31]Chigwell acquired a minimal amount of stock from Aspire (the display windows).[32]Chigwell paid some outstanding rent to the Landlord as a condition of the assignment.[33]Of most significance is the fact that Chigwell took over the order book of Aspire and fulfilled the outstanding orders, even if they did so at a loss.[34]Most of the staff who had been working for Aspire before they ceased to trade started to work for Chigwell, in whatever capacity, after the shop reopened. This included Mr Small who had been an employee and director of Aspire, albeit he says that he is now self-employed.[35]If I stand back and look at the matter simplistically, before Aspire ceased to trade they were in the business of supplying and installing windows. After Chigwell took over the shop they were in the business of supplying and installing windows. I find that it makes little difference that Aspire used to buy in the products from suppliers whereas Chigwell manufactured their own. The ‘economic activity’ is very similar. To anyone observing from outside, the name above the door might have changed but the shop stayed pretty much the same offering the same services. Mr Floyd says that the shop was ready for him to move in and start trading from in January 2024 and they even kept the same display windows. Chigwell took over the customer order book and fulfilled the outstanding orders. They acquired a small amount of stock. They paid the outstanding rent. And for a time at least since the reopening, the operations and installation are being carried out by the same people: including Mr Small, the installation team and the service engineer. (I understand that some of those staff may now have been let go or moved on).[36]I find that it was not relevant if the installers and other staff were engaged on a self-employed basis prior to the business of Aspire ceasing. They were clearly part of the staffing resources working in the business for Aspire; and they continued to perform very similar functions after Chigwell started operating from the shop. If indeed they operated on the same contractual basis before and after the transfer, this adds to the impression of a business that has retained its identity. There would be no material change in this regard between how Aspire was organising its business and how Chigwell operated.[37]I conclude that the ‘organised grouping of resources’ dedicated to the business prior to the collapse of Aspire (which includes the personnel, the order book, the shop and a small amount of stock) is almost identical to the ‘organised grouping of resources’ that is involved in Chigwell’s business following the assignment of the lease. I find that in fact this economic entity has retained its identity to a very high degree.[38]I therefore find that there was a relevant transfer of the business under regulation 3 of the TUPE Regulations 2006.[39]That is of course not the end of the matter. Mr Taylor brings a claim of unfair dismissal. He was dismissed by Aspire prior to the assignment of the lease to Chigwell, and their commencing business at the shop. A decision will need to be made as to whether he was dismissed because of the relevant transfer; or whether it was otherwise unfair. (There is for example no evidence of any consultation having taken place prior to transfer). If unfairly dismissed, the tribunal will need to decide what compensation he should receive and over what period. I have suggested that the parties may wish to try to resolve these matters between themselves, now that the position in relation to TUPE is clear. The case will however be relisted for a further one day hearing in the event that is not possible.