Mr J Donnelly and others v Ecebs Ltd and Unicard Ltd: 4106799/2023 and others
JUDGMENT
The judgment of the Employment Tribunal is that there was a relevant transfer, in terms of the Transfer of Undertakings (Protection of Employment) Regulations 2006, from the first respondent to the second respondent, which took place on 4 August 2023.REASONS
[1]This hearing was listed to determine the preliminary issue whether there was a relevant transfer in terms of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). At a preliminary hearing on 20 March, these claims, lodged on 1 November 2023, on behalf of nine individual claimants and one group claim which includes the claimant’s trade union Prospect, were combined.[2]The substantive issues raised by these claims relate broadly to unfair dismissal and failure to inform and consult following an alleged TUPE transfer. It is contended by the claimants that there was a TUPE transfer from Ecebs Limited, the first respondent (Ecebs) to Unicard Limited, the second respondent (Unicard). Claims against a third respondent, Visa Europe Limited, were withdrawn and dismissed in a judgment dated 14 March 2024.[3]This hearing was due to take place in person but unfortunately Mr Ross was not able to travel because he had been ill. Although a request by the claimant to convert the hearing to CVP was refused, he attended by video so the hearing was converted to hybrid. Unfortunately, this impacted the smoothrunning of the hearing because of extensive technical issues. Despite that and delays in receiving the file of productions, we were able to conclude the evidence and submissions in three days.[4]At the hearing three claimants, namely Mr Mark Harper, Mr Paul Cairney and Mr John Neeson, gave evidence. For the first and second respondents, Mr Sean Dickinson, CEO of the second respondent, gave evidence. Findings in fact[5]Ecebs is a software company that provides smart electronic ticketing systems for the public transport sector. Prior to 4 August 2023, 100% of its share capital was owned by Visa Europe Limited.[6]Unicard is a software developer of smart tickets for the transport sector. It also owns a subsidiary based in Bulgaria. Peter Verrept is the chairman and Sean Dickinson is its chief executive officer (CEO).[7]On 20 June 2023, all employees of Ecebs were invited by Russell McCullagh, vice president and general manager, to a meeting when employees (of Ecebs) were advised of a pending share purchase agreement (SPA) by Unicard of the share capital of Ecebs from Visa Europe Ltd (1236).[8]A new proposed draft contract setting out intended terms and conditions of employment with Unicard was made available to employees of Ecebs from June 2023 (1070-1082).[9]Russell McCullagh, as general manager, was then the most senior operational person in Ecebs and responsible for the day to day running of the business. Higher level strategic decisions were made by the owner, Visa Europe Ltd.[10]On 4 August 2023, Unicard acquired all of the share capital of Ecebs from Visa Europe Limited (684).[11]Prior to the shares acquisition, Ecebs was Unicard’s “principal competitor”, the two businesses having competed for around 20 years, with similar customers and products. The was a third “principal player” in the market, namely Act, a subsidiary of Fujitsu.[12]By e-mail dated 8 August 2023, Henry Merriweather, an employee of Ecebs, submitted a collective grievance on behalf of 22 employees regarding the proposed changes by Unicard to the terms and conditions of employment of those employed by Ecebs.[13]The collective grievance letter, addressed to Sean Dickinson, CEO of the second respondent, expressed concern about changes to compensation and benefits, working time, holidays, sick leave and job security (790).[14]On 4 July 2023 a so-called “town hall meeting” took place (1237) when representatives of Visa and Unicard met employees of Ecebs to discuss the consequences of the SPA, and in particular the implications for their terms and conditions. A FAQ document had been prepared by both Visa and Unicard dealing with questions about changes to the business, and in particular proposals for changes to terms and conditions of employment (690). The employees of Ecebs were advised of the proposed changes to terms and conditions, set out in a powerpoint presentation (1111).[15]A letter dated 10 August 2024 was sent, on headed notepaper of Ecebs, to all of Ecebs’s employees regarding proposed changes to terms and conditions of employment relating in particular to annual leave, working hours, pension and private health care (700). This letter was signed by Sean Dickinson who designated himself as CEO. The letter advised that a period of formal collective consultation was required because more than 20 employees indicated they do not agree to the proposed change. As well as this collective consultation with appropriate representatives, it was stated that there would be a consultation with individual affected employees (701).[16]The collective grievance was acknowledged in an undated letter from Sean Dickinson CEO to Henry Merriweather on Ecebs’ headed notepaper (795), and in another undated letter from Sean Dickinson CEO on Unicard’s headed notepaper (796).[17]From early August 2023, all e-mail addresses of Ecebs employees were moved from Visa servers to Unicard servers.[18]By e-mail dated 16 August 2023 (840), Ginette Ramsell, HR manager for Unicard wrote to Henry Merriweather providing summary notes of a meeting which took place with Sean Dickinson. This stated that Sean Dickinson had spoken to Henry Merriweather on 10 August 2023 regarding an incident which took place on 9 August 2023. Sean Dickinson had been made aware that Henry Merriweather had behaved in an unacceptable way, and that he did not expect anyone to speak to another colleague in that manner. It was noted that “this behaviour and language is not tolerated at Unicard”.[19]A collective consultation meeting took place on 16 August 2023 and was attended by Kyle Hoban, Henry Merriweather, Ian Atherford and Mark Harper who were Ecebs’ employee representatives, as well as Sean Dickinson, CEO of Unicard, Ginette Ramsell, HR manager for Unicard and Sam Dow, an external HR consultant engaged by Unicard (708).[20]On 18 August 2023, Anthony Breslin, an employee of Ecebs, wrote a resignation letter addressed “to whom it will concern”. The reply was on Ecebs’ headed notepaper and signed by Sean Dickinson CEO, who stated, “I write further to your e-mail of today in which you tendered your resignation, to confirm that I accept your resignation on behalf of the company” (922).[21]A second collective consultation meeting took place on 22 August 2023 and was attended by the employee representatives and Sean Dickinson and Sam Dow (712).[22]A response to a request from Prospect Union for voluntary union recognition by Ecebs was sent to the union on 25 August 2023 (1124). This reply was from Sean Dickinson who stated, “I confirm that we are willing to accept this request for recognition”.[23]A further collective consultation meeting took place on 7 September 2023 attended by the employee representatives as well as Sean Dickinson, Sam Dow, Ginette Ramsell and two representatives from the Prospect Union, John Ferrett and Robbie Young (722). During the course of that meeting Sean Dickinson confirmed that “he would like to retain as many people as possible but that an option available is to dismiss and re-engage” (727).[24]The consultation period was extended by one week (746).[25]By letter dated 14 September 2023 (748), on the headed paper of Unicard, signed by Ginette Ramsell, HR manager for the second respondent, Ecebs’ employees were advised that Unicard was “not in a position to agree the latest collective proposals…due to the current financial situation of the Ecebs business”. It was stated that once the business was in a financially viable position the bonus scheme and sales incentive schemes would be revisited. Employees of Ecebs were advised that collective consultation was closing on 14 September 2023 and all Ecebs’ employees would be invited to attend individual consultation meetings with either Ginette Ramsell or Sam Dow.[26]Russell McCullagh, then general manager of Ecebs, did not attend any of the collective consultation meetings, nor was he involved in any individual ones.[27]An e-mail dated 18 September 2023 from Jenny Tingle, Prospect assistant secretary, to Ginette Ramsell requesting to reschedule some individual consultation meetings, was responded to by Sean Dickinson. He stated that he was not minded to extend the process further. Individual consultation meetings took place in the second half of September and into October 2023 attended by Ginette Ramsell, and/or Sam Dow and/or Sean Dickinson.[28]On 28 September 2023 Ginette Ramsell wrote to Henry Merriweather noting that he was unwilling to agree to proposed changes to the contract of employment and stating, “we have given serious consideration to your views relating to the changes in hours, annual leave and discretionary benefits. We believe that this is a necessary step to align to the rest of the Unicard business and ensure the continued viability of the East Kilbride business” (845).[29]By e-mail dated 4 October 2023 to all employees of Ecebs East Kilbride and Unicard HQ, Sean Dickinson advised that “as part of this ongoing realignment in the business” Russell McCullagh would be leaving Ecebs and his last day with the company was 6 October 2023 (771).[30]On 17 October 2023 Henry Merriweather had a final individual consultation meeting attended by Ginette Ramsell and Sean Dickinson (847). Henry Merriweather was advised that the “changes have been identified as necessary to the business to align to the rest of the Unicard business and ensure the financial viability of the East Kilbride business now that the company is under new ownership and not part of Visa Europe”.[31]He was advised of his right to appeal and an appeal hearing chaired by Peter Verrept took place on 31 October 2023 (867). During the appeal hearing Peter Verrept stated that the purpose of the SPA was “to take over staff, migrate over contracts, look at products and services, consolidate” (871).[32]After 4 August 2023, at the behest of Sean Dickinson, the East Kilbride office was refurbished using the colours and branding of Unicard. The signs on the door were changed to Unicard.[33]On 24 October 2023, Mark Harper was advised by Sean Dickinson (on Unicard headed notepaper) that he was to receive a salary increase (1239).[34]On 31 October 2023, Sean Dickinson sent an e-mail to a group e-mail address allstaff@unicard.com, headed “company strategy” which reads: “Having largely delivered on our previous strategy, I am conscious there are people asking (especially our colleagues in EK) looking to better understand what the years ahead hold in store for Unicard. It is an exciting time for us as we begin to merge more formally the EK business. In doing so I see very much one business (our structure should reflect this) located over three sites. This will mean for some of you, new management who will operate and lead the business functions. It may also mean the opportunity to do your work in different ways – always concerning ourselves with the business as a whole – not as a site/ place of work….” (1126).[35]On 1 November 2023, a serious problem arose with the air conditioning (which would impact on the capability of computer servers) which was intimated to Sean Dickinson. He replied stating, “can you please review the service/maintenance contract we have in place and let me know what the terms are? We should be seeking to have support out of hours for such critical dependencies” (1135).[36]By e-mail dated 30 November 2023 from Sean Dickinson to all staff in Ecebs, Unicard, and the Bulgarian subsidiary, it was announced that Michael Philliben would be joining as general manager of the Ecebs subsidiary on 4 December (1144).[37]All staff were invited to a meeting regarding the 2024 business plan which took place on teams on 19 January 2024 (1152). At that meeting, it was recorded that Sean Dickinson stated that “there’s been a great deal of change and for me, 2024 is very much [going to] be a year about consolidation and organization of the business…consolidation of our activities, particularly our products…collaboration is one of our values as a business and now that we’re working across three sites, it’s really important we…keep in mind that dynamic” (1161).[38]During that meeting, the following contribution from Jan-Erik Anderson, sales manager employed by Ecebs, was noted: “These are some of the key things that we’re [going to] be working on this year to help us deliver the 8.8 [annual sales budget] so the first one is migrating all of the Ecebs customers on HOPS CMS and the other products onto the equivalent Unicard platform and lots of those conversations are already underway….we’ve got a side project to clean and update the CRM and integrate all the ECEBS accounts and customers into that, which again is well on the way and….there’ll be conversations around upgrading the CMS into smart office, moving everybody into the cloud and then moving everybody onto the latest versions of all the various products” (1170/1171). Reference was also made by Sean Dickson about a potential office move for the East Kilbride business (1198).[39]Prior to the SPA, Ecebs developed a card management system using the HOPS standard system called Ticketing Hub. Following the SPA the Ticketing Hub product remained within Ecebs, and separately the Smart Office product remained within Unicard. Both Unicard and Ecebs have CMS products. No products were renamed in the period following the SPA.[40]Some Ecebs staff would work on occasion on Unicard products, and for example a member of Ecebs quality assurance team was moved to work mainly on manual testing of the Unicard Smart Office test product.[41]A decision was made by Unicard to consolidate the products from the two companies because there was duplication and no intention to maintain two versions of the same product. The result was that most of the products of Ecebs stopped being supported and were replaced by the second respondent’s products. Customer support therefore largely moved to Unicard rather than be supported by Ecebs, although some customers chose to extend their contracts with Ecebs for commercial reasons.[42]The exception was Ticketing Hub in respect of which development work continued with Ecebs. This product was shortlisted for a transport award in January 2024. That award was accepted by the second respondent, although the product had been developed and retained by the first (1221).Relevant law
[43]The Transfer of Undertakings (Protection of Employment) Regulations 2006 (the Regulations) sets out circumstances where there is a “relevant transfer”.[44]Regulation 3(1) states that a relevant transfer is, either: “(a) A transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer of the UK to another person where there is a transfer of an economic entity which retains its identity, or (b) A service provision change…..”[45]In this case, the transfer alleged is of the regulation 3(1)(a) type. Regulation 3(1)(a) states that a relevant transfer must be to another person. This means that to qualify as a business transfer, the identity of the employer must change.[46]It is clear therefore that the Regulations do not apply to transfers by share take-over because, when a company’s shares are sold to new shareholders, there is no transfer of a business or undertaking: the same company continues to be the employer.[47]This was confirmed in Brookes and others v Borough Care Services Ltd and another 1998 IRLR 636 by the EAT which held that that a transfer of shares, as distinct from the transfer of a business, is outside the scope of TUPE (and the Acquired Rights Directive) because there is no change of employer.[48]That principle was confirmed by the Court of Appeal in Millam v Print Factory (London) 1991 Ltd (2007) IRLR. That case however made it clear that while a share sale will not amount to TUPE, there are circumstances when following such a share sale a relevant transfer takes place. The Court of Appeal gave some guidance about identifying when the latter may occur.[49]In particular, Lord Justice Buxom at [3] stated that: “the question under TUPE is whether the business in which the claimant is employed has been transferred from one owner to another. That question is attended by some legal issues. For instance, it is well established…that a change in the legal control of the original corporate employer, such as occurs on a share sale of the kind that took place in this case, does not itself transfer the business in TUPE terms. That was decided by the EAT in Brookes and others v Borough Care Services Ltd and another 1998 IRLR 636, a decision the correctness of which was not in issue before us. It is also well established that the mere fact that two companies are part of the same group, or that one company is the parent of another, does not of itself mean that the one company controls the business of another. That is inherent in the decision of the Court of Justice in case C-234/98 [2000] IRLR 119 (Allen). However, those rules as to what does not constitute a transfer under the TUPE Regulations are merely reminders that the question is whether as a matter of fact the business in which the claimant is employed has been transferred from one company to another”.[50]Further Lord Justice Moses stated at [12] and [13] that: “The proposition that the transfer of shares in one company to another is not the same as the transfer of the business of the one to the other gives rise to the difficulty apparent in the instant case. Where, following a transfer of shares, a subsidiary is 100% owned by a parent, how can one tell whether the business has been transferred to the parent for the purposes of the TUPE Regulations? It is that, sometimes difficult, question of fact which must be resolved deploying the experience and expertise of the employment tribunal…. The mere fact of control, which will follow from the relationship between parent and subsidiary, will not be sufficient to establish the transfer of the business from subsidiary to parent. There will often be little to distinguish between the case of transfer of control on acquisition by a new parent and transfer of the business to a new parent. …in the instance case the employment tribunal identified a number of evidential indications, which, in combination, established that control of the business, in the sense of how its day-to-day activities were run, had passed from [one company] to [another]”.[51]In that case the CA upheld the decision of the employment tribunal which had found that there had been more than a simple share sale, but that the parent company had taken over the day-to-day running of the other’s business, taking the key management decisions and doing “far more than a simple shareholder would have done following a simple sale, or…a parent company of a subsidiary would have done in similar circumstances”.[52]That decision was followed by the EAT in Smith and others v Jackson Lloyd UKEAT/0127, where the EAT upheld the decision of the employment tribunal that there had been a TUPE transfer in a case where a new company bought 100 per cent shares in the old company. While the share sale did not constitute a relevant transfer, there was a TUPE transfer when day to day control passed to the purchasing company. Control was found to be exercised by the purchasing company who had made changes which “penetrated every aspect of the claimant’s organisation”.[53]In contrast, in ICAP Management Services v Berry 2017 IRLR 811, the High Court in England decided on the facts of that case there had not been a TUPE transfer where shares were sold to another company.[54]At [83] Garnham J stated that “the critical elements of the test are whether the new party(i) has become responsible for carrying on the business,(ii) has incurred the obligations of employer and(iii) has taken over day to day running of the business. It seems to me that those elements of the test can be captured in more colloquial terms – ‘Has the new party stepped into the shoes of the employer?’”[55]At [88] Garnham J stated that the share sale: “undoubtedly brought together [one company] and [another] under common ownership at the level of the ultimate parent company. It is common ground that that transfer involved the introduction of oversight and strategic management across the enlarged corporate group. It is accepted by the claimant that measures were introduced with the intention of producing cost-savings from economies of scale and rationalisation of support services. That meant that services such as legal or human resources, which were formerly provided in two separate corporate groups, were not to be provided….”[56]Subsequently in Guvera Limited v Blinkbox Music UKEAT/0265/16 the EAT (Lavender J) said, by reference to the critical elements identified by Garnham J above, that he did “not accept that Garnham J was intending to lay down a rule that any or all of the three “critical elements of the test” which he identified were necessary conditions of a transfer, rather than merely identifying important aspects of the multi-factorial test”.[57]As both counsel recognised, that did not signal any departure from the multifactorial approach, derived from European law, regarding the standard test for identifying a relevant transfer, which remains the correct test to apply.[58]The question whether there is a relevant transfer after a share sale is ultimately a question of fact for the Tribunal, which must decide applying the multi-factorial approach whether as a matter of fact control of the business, in the sense of its day to day running, has transferred. Tribunal deliberations and decision Observations on the witnesses and the evidence[59]Ms Carse argued that the evidence of Mr Dickinson should be preferred over that of the claimants’ witnesses. This is because in his role as CEO of the second respondent he is best placed to give evidence about the motivation for the shares acquisition and what happened at both businesses afterwards. In contrast, she argues, the claimant’s witnesses simply did not have the same strategic oversight of both businesses.[60]Mr Ross relied on the fact that in cross examination Mr Dickinson was unwilling to agree that there was a plan to align terms and conditions, despite many references suggesting otherwise in the documentary evidence lodged. He argued that his unwillingness to agree that was the plan undermines his credibility. He suggested that, unlike the claimants, Mr Dickinson considered the implications and consequences of his answers and failed to give straightforward concessions, instead stressing that the second respondent was a good employer, which is irrelevant.[61]I accept that the claimants’ witnesses’ knowledge and understanding will be more limited than that of Mr Dickinson and that the CEO is best placed to give a high level view on what has happened and the motivations for it. I accept too that the claimants’ knowledge comes mainly from what they have been told by others; and on questions like examples of customers and consolidation of business products, they were not best placed to confirm the position in relation to both businesses.[62]I did however get the impression that Mr Dickinson was seeking to tailor his evidence to what he thought was the right answer to support the respondents’ case that there was no TUPE transfer in this case.[63]Notwithstanding, I did not accept that there was any deliberate decision on the part of Mr Dickinson to bring Mr Philiben on board to try to cover up what would otherwise be a TUPE transfer. This was speculation, as Mr Ross recognised, and as Ms Carse pointed out, that allegation was not put to Mr Dickinson in evidence.[64]Rather, I came to the view that Mr Dickinson had certain plans for the Ecebs business, which were by and large executed, and he simply did not appreciate that those plans might, in law, mean that the way that the second respondent was operating could result in a relevant TUPE transfer. He said in evidence that his intention was to rescue a business which was not in a good shape financially. While I have no doubt that is genuine, it does not mean that what the second respondent did does not amount to a TUPE transfer with the various consequences of that.[65]Even if I were to accept Mr Dickinson’s position that the second respondent had no intention of taking over Ecebs, I agreed with Mr Ross that it is not his view that matters, it is the reality of the situation, as evidenced by the facts found.[66]Accepting that the intention was to streamline the businesses in the interests of financial viability but focusing on what happened at the two businesses, I took the view that Mr Dickinson’s evidence was an attempt at justification after the fact, having now ascertained the implications of the TUPE regulations. In particular, much of Mr Dickinson’s oral evidence was unsupported by documentary evidence, but further in certain regards it was contradicted by the documentary evidence which was lodged, discussed further below.[67]For these different reasons, I have treated the evidence of both Mr Dickinson and the claimants with some hesitation. I have however given considerable weight to the documentary evidence to which I was referred during the course of the hearing. Bearing in mind the facts found above, I turned to consider the relevant legal questions.[68]There was apparently no dispute on the law in this case. It was accepted that the correct approach is the usual multi factorial test and ultimately it is a matter for the Tribunal depending on the facts found. Was there a relevant transfer?[69]As noted above, a share sale is not a relevant TUPE transfer but in particular circumstances the facts may otherwise indicate that a relevant TUPE transfer has taken place on the same date as the share sale or at a subsequent date. Whether there has been a TUPE transfer is therefore a question of fact for the Tribunal to determine. There is no check-list of factors or particular factors which will be determinative because a multi-factorial approach is to be taken.[70]Was this a case , as Mr Ross argued, where the facts meant that the “line had been crossed”? When assessing if that was correct, I gave consideration to whether control - in the sense of both the day to day running and higher level decision-making - of the first respondent’s business had transfered to the second respondent’s business. Specifically, I asked, did the second respondent take over control of the first respondent in a way that was not appropriate as between a parent and a subsidiary, such that there was a relevant transfer? Standardising terms and conditions[71]The claimants relied on the fact that there was a plan prior to the SPA to harmonise terms and conditions and that the plan was subsequently implemented.[72]Ms Carse relied on the evidence of Mr Dickinson that it was not his intention to harmonise the terms and conditions. Ms Carse argued in any event that evidence of an alignment of terms and conditions between a parent and a subsidiary is not necessarily evidence of a parent company take over. Rather alignment may make commercial sense and should be viewed as a strategic decision and above the level of day to day running. She argued that the changes to terms and conditions was a strategic matter, done to keep the business viable. This, she argued, involved keeping productivity at a sustainable level and that included the need to make changes to terms and conditions because Unicard does not have the financial resources available to Visa to maintain benefits at the same level.[73]Mr Ross argued that it was clear that it was the intention of the second respondent and specifically its CEO Mr Dickinson to align and standarise the terms and conditions of Ecebs’ employees with Unicard’s, which is what employees were advised before the SPA. The second respondent started to implement that plan within days of the purchase, as confirmed in the letter of 10 August 2023. Mr Ross stressed that the claimants do not rely on the fact that there were changes to the terms and conditions, but rather on the way the changes to the terms and conditions were planned and implemented. He argued that the plan was in place before the SPA and implemented by Mr Dickinson and that it was thrust on the first respondent by the second. With regard to the argument that alignment made commercial sense, he argued that it does not matter why the terms and conditions changed, it matters how the changes were achieved.[74]I have found as a matter of fact that there was a plan prior to the implementation of the SPA to harmonise or align to a significant extent the terms and conditions of the employees of Ecebs with that of Unicard. I noted that proposed contracts of employment had been sent to employees of Ecebs in the June prior to the share acquisition on 4 August 2023. This indicates that this was the second respondent’s intention from at least June 2023.[75]I take the point that the fact of aligning terms and conditions is not necessarily an indicator that there was a TUPE transfer, but I took particular account of the way that the changes to terms and conditions were implemented when assessing whether or not a transfer had taken place.[76]Although in cross examination Mr Dickinson was unwilling to agree that there was a plan to align terms and conditions, I took account of the following documentary evidence to support the conclusion that this was the intention, and that the plan was implemented without any recourse to the management of the first respondent:a. the draft contracts of employment circulated June 2023;b. references in the initial powerpoint presentation to Ecebs staff relating to the proposal, specifically “we plan to align Ecebs benefits with Unicard benefits”;c. references in the FAQ documents in which it was stated that “we intend to consult on aligning Ecebs terms and conditions with Unicard’s terms and conditions and enter into new contracts of employment. We will discuss any changes to your terms and conditions in due course”;d. in the letters to staff following the consultation, concerns regarding the proposed changes were not accepted, because: i. “we believe that this is a necessary step to align the rest of the Unicard business and ensure the continued viability of the East Kilbride business”; and ii. “these changes have been identified as necessary to the business to align to the rest of the Unicard business and ensure the financial viability of the East Kilbride business”.e. Further the appeal outcome letters state that “The rationale for the changes remain whereby they are necessary to the business to align to the rest of the Unicard business”. Day to day control[77]It is clear that the plan to harmonise was a necessary part of the acquisition by the second respondent. I also take into account, in considering whether the requisite control of the business was assumed by the second respondent, the role that Mr Dickinson played in the collective and individual consultations:a. initial letters relating to changes to terms and conditions were sent on Ecebs headed paper and signed by Mr Dickinson, who designated himself CEO;b. Mr Dickinson attended each of the consultation meetings with elected representatives and a number of the individual consultation meetings (and Mr McCullagh did not, discussed further below);c. the letter of 10 August 2023 proposing changes to the terms and conditions was on Ecebs’ headed notepaper and signed by Mr Dickinson designated as CEO;d. Ms Ramsell sent a letter dated 14 September 2023 (on the second respondent’s headed notepaper) to Ecebs’ employees informing them that the collective consultation had closed and they were not in a position to agree the latest proposals.[78]Further, I accepted the unchallenged evidence of Mr Harper that before the SPA Mr McCullagh, described as vice president and general manager of Ecebs, was responsible for the day to day running of the business, including allocating resources, tasks, hosting all staff meetings and was the last point of escalation within Ecebs. Visa took the higher level strategic decisions and communicated them to Mr McCullagh.[79]However, and significantly, Mr McCullagh remained in post from 4 August to 6 October 2023 but apparently had no input into the contractual change process. I was not referred to any evidence or any documentation which indicated that he had any involvement at all in the collective or individual consultation process. Given that he was the general manager, the absence of any reference to him from the date of the sale acquisition until the termination of his employment with the first respondent is an evidential indicator of a fundamental change in the way that the first respondent was operating.[80]In contrast, following the SPA, letters on Ecebs headed notepaper were signed by Mr Dickinson, CEO of the second respondent. Further, all of the new contracts of employment were signed by Mr Dickinson, who designated himself CEO. It was Mr Dickinson who responded on behalf of Ecebs to the request from Prospect for union recognition.[81]Mr Dickinson appeared to be under the impression that because he was CEO of the parent company, it would naturally follow that he was the CEO of Ecebs as well. That of course is not self-evident as a matter of company law in regard to the relationship between a parent and a subsidiary.[82]I therefore accepted Mr Ross’s submission that Mr Dickinson took the executive decisions because he thought that he had the right to do so by virtue of his position with the second respondent. I accepted Mr Ross’ submission that while it is apparent that Mr Dickinson had taken over the running of Ecebs following the SPA, there is nothing to suggest (from board minutes or otherwise) that he was authorised to act as its CEO from that time, or if he was simply assuming that he was entitled to do so.[83]I came to the view that the facts support the conclusion Mr Dickinson was not acting as the CEO of a parent company vis-à-vis Ecebs as a subsidiary, but rather as if he was CEO also of Ecebs.[84]There were a number of other more incidental facts which I have taken into account as indicators in regard to the question of whether there was a transfer of day to day control. Of significance is the fact that there were many minor day to day decisions that were made by Mr Dickinson while Mr McCullagh was still employed as general manager, apparently without recourse to him. These facts include:a. Mr Dickinson’s involvement in the disciplinary meeting with Henry Merriweather on 10 August 2023 (and Mr McCullagh’s absence);b. A resignation letter addressed to “to whom it will concern” from Anthony Breslin was acknowledged and signed by Mr Dickinson as CEO on Ecebs’ note paper (922); andc. Mr Dickinson responded to the collective consultation correspondence on behalf of both the first and the second respondent in two different letters (795 and 796).[85]These facts indicate that Mr McCullagh apparently had no involvement at all in the day to day running of the organisation after the share acquisition but before he left. Mr Dickinson’s explanation about his inconsistent use of headed notepaper for both companies in the same correspondence, which apparently related to costs, was unconvincing. I noted too that the e-mail server and e-mail addresses were transferred from early August from Visa not to Ecebs addresses, but to Unicard addresses, which Mr Dickinson also explained was for cost reasons.[86]This significant involvement of Mr Dickinson in the day to day running of Ecebs continued after Mr McCullagh left, with Mr Dickinson making decisions about day to day running and no-one in the acting general manager role. As Mr Ross pointed out, Mr Dickinson was being copied into e-mails showing that he was exercising significant supervisory control as at October 2023. He advised Mark Harper (on Unicard headed notepaper) that he was to receive a salary increase. He got involved in the detail of responding to a problem with the air conditioning.[87]In explaining Mr Dickinson’s role, Ms Carse stressed that it was important to take account of the context in this case. In particular, she stressed that the second respondent bought Ecebs, as a subsidiary, when the company was not in good financial circumstances. Consequently it made commercial sense for Mr Dickinson to be involved in the decision making to keep the business running; and it made sense for him to fill the gap between Mr McCullagh leaving and Mr Philliben being recruited. These, she argued, were necessary cost saving measures to save the business. This she argued was a strategic decision and does not show that he was involved in the day to day running of the business.[88]It was thus argued on behalf of the second respondent that Mr Dickinson was “holding the fort” until a replacement could be engaged. However, I accept that this is inconsistent with Mr McCullagh’s complete lack of involvement in decision-making between 4 August and 6 October 2023. Further, as Mr Ross pointed out, when announcing the departure of Mr McCullagh in an e-mail on 4 October 2023, Mr Dickinson makes no mention of any search for a replacement. Indeed there was no mention of another general manager until the end of November, three working days before Mr Philliben started.[89]While Mr Ross accepted that what happened after the claim forms were presented is of tangential relevance (because the claimants say that by then it was clear there had been a TUPE transfer, if not before), he pointed out that the respondent had chosen to produce no documents at all in relation to the hiring of Mr Philliben. There is no contract of employment; no board minutes giving him decision-making power; and no job description that was mentioned. While Mr Dickinson’s rationale was that these were commercially confidential documents, these are documents which may well have supported the respondent’s position that Mr Philliben took over as the general manager and senior decision maker for Ecebs.[90]Mr Dickinson in evidence gave an outline of the kinds of decisions and responsibilities that Mr Philliben had, which were stated to be: health and wellbeing of staff; organization structure; product testing and development, information technology; leasing of the Ecebs building; delivering sales targets, visiting customers; recruitment; staff holidays and salaries. However, no examples of any of these decisions being made by Mr Philliben were given in oral evidence and no documentary evidence to confirm the scope of his responsibilities was lodged.[91]Although of tangential relevance I did consider that what happened in regard to the appointment of Mr Philliben supported the conclusion that it was the second respondent, in the role of Mr Dickinson, who was making day to day decisions for Ecebs, and not just while there was no general manager in place.[92]As noted elsewhere I did not accept that Mr Philliben’s appointment was a cynical attempt to disprove a TUPE transfer after the claimants made that assertion. I do however take account of the fact that despite evidence that Mr McCullagh was the senior decision-maker prior to the SPA there is no evidence of any decisions that he made thereafter; and there is no evidence, oral or documentary, of any operational decision made by Mr Philliben.[93]Mr Ross also relied on evidence that Mr Dickinson continued to be involved in the day to day running after December 2023, including cancelling recruitment for a software engineer; and although denied by Mr Dickinson, according to Mr Harper he instructed Stuart Williamson to remind staff to be in the office three days per week. These he argued were not what a parent company would tell a subsidiary.[94]Ms Carse in submissions argued that this case has a number of similarities with the ICAP case, where the High Court found that there was no relevant transfer following a shares acquisition. In particular, she submitted that following the shares acquisition, Ecebs and Unicard continued to run as before it had taken place. She argued that while there were changes above the level of day to day management, the day to day running of the Ecebs business remained within that business with the general manager. To the extent that Mr Dickinson had to fill the gap between the employment of Mr McCullagh and Mr Philliben, she argued that did not demonstrate a parent company intending to take over the management of day-to-day operations. The rationale, she argued, was consistent with a parent company asking its subsidiary to make cost savings.[95]In my view, Ms Carse’s argument involves elevating decisions, which were clearly related to the day to day management of the business, to the level of strategic decisions. She categorises the decisions which Mr Dickinson makes as strategic because the rationale for them was to keep the business financially viable and ultimately to save the business.[96]Her argument therefore it seemed to me involved her categorising decisions which would normally be understood to be day-to-day management as strategic decisions. I do not accept however that the level of involvement which Mr Dickinson clearly had meant that such decisions should be categorised as strategic, simply because of the financial difficulties within Ecebs. I noted too that in the Guvera case, it was clear that decisions were being made because of concerns of a parent company about the financial viability of the company employed by the claimants in that case pre transfer. That did not however preclude the decision of the Employment Tribunal that there was a transfer following a share sale being upheld by the EAT. Products, branding and competition[97]On the question of the continuing business of Ecebs, it is instructive also to consider the position regarding products; and the extent to which the first and second respondent remain competitors, which was confirmed as the position prior to the SPA.[98]Ms Carse relied on Mr Dickinson’s evidence to support the submission that there had been no transfer, specifically by reference to products and competition. Mr Dickinson’s evidence was that there was a conscious decision not to merge the two companies, but for Ecebs to become a subsidiary of Unicard, and to remain a “stand-alone entity”, with its own general manager and profit and loss accounts. He explained that the accounts for Ecebs and Unicard are separate and only rolled up together for the purpose of consolidated management accounts, along with the Unicard Bulgarian business. Mr Dickinson’s evidence that there was no intention to purchase Ecebs with a view to taking it out of the market and eliminate it as a competitor.[99]As discussed above, while Mr Dickinson’s evidence was that the intention was to keep the two companies separate, his rationale does not appear to be supported by the facts. He gave three reasons. He explained that the principal product which would remain in Ecebs is Ticketing Hub, although that has been branded Unicard, as discussed further below. He said that thought has been given to turning this into a payments business which would require separate accreditations and standards and keeping the businesses separate would make this process more convenient, but there was no further evidence to support such a move. He also relied on the fact that since Ecebs is underperforming financially, if it is necessary to close the business then this can be done without any detriment to the Unicard brand.[100]However I found his evidence unconvincing as I did not agree that the facts supported his assertion of any advantage in keeping the two separate, or the rationale for that.[101]I have found that there was an alignment of products and of customers and a consolidation of the Unicard brand, effectively eliminating the Ecebs brand. The evidence (confirmed by the transcript of the meeting which took place on 19 January 2024) was that all of the Ecebs customers on HOPS CMS and the other products were to be migrated onto the equivalent Unicard platform; and that when updating their CRM they would integrate all the ECEBS accounts and customers into that; and they would be upgrading the CMS into Smart Office, which meant moving all into the cloud and onto the latest versions of all the various products.[102]There was some dispute about whether Ecebs customers were encouraged to migrate to the Unicard products, and whether it was a genuine choice, but this rationale suggests integration, and that it was already underway. Mr Dickinson did suggest that some have customers extended their contracts with Ecebs apparently “for commercial reasons”, although the precise rationale for that or implications of that was unclear from the evidence.[103]Not least because of that, it is not at all apparent that the two companies remain in competition. Ms Carse relied on the fact that Mr Dickinson’s evidence was that the first and second respondent remained in competition “to an extent”. As Mr Ross pointed out, he had however elsewhere in his evidence said that they were not in competition. This was one clear example of Mr Dickinson not being sure what the correct answer was to support his position that there was no TUPE transfer.[104]While the evidence was that the Ticketing hub product, which was developed by Eceb’s quality assurance team, has remained within Ecebs, reference was made to various documents which showed that it is marketed under Unicard branding. Significantly the newsposts show that the product is now branded under the second respondent.[105]Mr Dickinson gave an explanation why that should be, namely because of the strong reputation of the Unicard brand and to avoid giving a confusing message to customers. Ms Carse argued that the fact that Unicard branding has been deployed on the Ticketing Hub product for commercial reasons is not an indicator of a TUPE transfer, since any revenue from the Ticketing Hub product goes into the Ecebs business. However, it seems to me that if Ecebs was truly a competitor of Unicard, then there would be an expectation that their products would continue to be branded separately.[106]Other evidence which would support an integration of products (and staff) included evidence that one Ecebs employee engaged in the quality assurance team was allocated to work on the second respondent’s products and that this was a substantial part of his work.[107]Further, in the e-mail to all staff dated 31 October 2023, the clear implication is that by then the position was effectively that one company was operating over three sites.[108]Mr Ross also relied on evidence of the intention to move from headquarters in East Kilbride, although that has not happened and the lease of the building remains with Ecebs. It does appear that it was the intention to transfer the location of the business, since it was Mr Dickinson’s evidence that he had forgotten that the lease was about to end and that was the reason they had not moved. I considered it to be significant that on reflection he said that neither he nor Mr Philliben had noticed that the lease was due to expire.[109]Other evidence relied on by the claimants was the changes to the Unicard signage at the building. The rationale for that, relating to customer support and customer confusion, may well make sense, but the absence of any external branding tends to confirm the conclusion that in reality there was no intention to run Ecebs as a subsidiary business in competition with Unicard. The reality was, as observed by the claimant Mark Harper, that the second respondent “saw East Kilbride and Bulgaria as just offices of Unicard’s business”.[110]The purpose of the acquisition was summarised by Paul Verrept during the appeal hearings, namely “to take over staff, migrate over contracts, look at products and services, consolidate”. I agreed with Mr Ross that this was inconsistent with continuing Ecebs as a separate corporate entity, and that the second respondent has “stepped into the shoes” of the claimants’ employer.[111]Taking account of all of the indicators discussed above in combination, I have concluded that in this particular case the business in which the claimants were employed transferred from one company, the first respondent, to another, the second respondent, following the share purchase agreement, amounting to a relevant transfer for the purposes of the TUPE Regulations. When did the TUPE transfer take place?[112]It will be apparent from the findings in fact and the discussion above that I have come to the view that in this case the facts support the finding that a TUPE transfer occurred on the same date as the share sale.[113]The reasons I have come to that conclusion are, as indicated above, that it was clear even before the share acquisition that it was the intention of the second respondent to harmonise at least the terms and conditions of employment, even if there was no evidence at that point of harmonising products or branding. While the fact of the changes to terms and conditions is not the pivotal one, it is the way that those changes were achieved that points in particular to the transfer having taken on the day of the share acquisition. In particular, all decisions and direction relating to this issue were undertaken by Mr Dickinson, the CEO of the second respondent, as if he were the CEO of the first. Significantly, Mr McCullagh, the general manager of Ecebs, still employed as at 4 August 2023, had apparently no involvement at all in that process and indeed he appears to completely disappear from any management role from 4 August 2023 until he leaves, there being no evidence of a single management decision having been made by him.[114]Other involvement of Mr Dickinson indicating direct contribution to the day to day running of the business is illustrated for example by his involvement in a disciplinary matter as early as 10 August 2023. Again, there is no reference to Mr McCullagh and he is not copied into the relevant e-mail (or any other emails for that matter after 4 August 2023, apart from the one announcing he is leaving).[115]It is apparent that this is a case where the one company, that is the second respondent, entirely controls the business of another, that is the first respondent. The facts found indicate that control of the business was taken over by the second respondent on the very day that the shares were acquired, or immediately after.[116]I accordingly conclude that the TUPE transfer took place on 4 August 2023.[117]Finally, I wish to record that I am grateful for the helpful approach which Ms Carse took to the evidence and submissions in this case, and for her forbearance in the Tribunal room given the excessive heat; and to Mr Ross who for whatever reason had to endure extensive technical difficulties to ensure that we had a comprehensive hearing of the evidence and submissions in this case. M. Robison Employment Judge 7 January 2025 Date Multiple Schedule Multiple: 4100569 - ECEBS LIMITED Case Number Case Name 4106799/2023 Mr Josh Donnelly -v- ECEBS Ltd & Others 4106800/2023 Mr Brian Chapple -v- ECEBS Ltd & Others 4106801/2023 Mr Kyle Hoban -v- ECEBS Limited & Others 4106804/2023 Mr Edward Gourley -v- ECEBS Ltd & Others Mr Henry Merriweather -v- ECEBS Ltd & 4106806/2023 Others 4106807/2023 Mr Mark Harper -v- ECEBS Ltd & Others 4106808/2023 Mr Manwai So -v- ECEBS Ltd & Others 4106809/2023 Mr Paul Cairney -v- ECEBS Ltd & Others 4106810/2023 Mr Henry Imarhiagbe -v- ECEBS Ltd & Others 4106811/2023 Ms Marion Lightbody -v- ECEBS Ltd & Others Mr Jonathan Amery-Behr -v- ECEBS Ltd & 4106812/2023 Others 4106813/2023 Ms Prospect Prospect -v- ECEBS Ltd & Others 4106827/2023 Mr Daniel Abson -v- ECEBS Ltd & Others 4106828/2023 Mr Anthony Breslin -v- ECEBS Ltd & Others 4106829/2023 Mr David Jenkins -v- ECEBS Ltd & Others 4106830/2023 Mr John Neeson -v- ECEBS Limited & Others