Mr C Bailey and Ms A Lapkiewicz v Secretary of State for Business and Trade and Others: 6025867/2025 and 6031275/2025
JUDGMENT
There was not a relevant transfer pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 from the Second Respondent to the Third Respondent.REASONS
Background, evidence and procedure The background to the claims is set out in the case management order of Employment Judge Yardley, who conducted a case management preliminary hearing on 5 February 2026.[1]This hearing was listed by Employment Judge Yardley to determine whether the Claimants’ employment transferred to the Third Respondent, and to make case management directions as required.[2]At the start of the hearing, I ascertained that none of the parties required any adjustments for the video hearing today.[3]I discussed the issue for consideration with the parties and explained the process of giving evidence and making submissions.[4]Unfortunately, the position regarding documents was not clear and took some time to resolve as the bundle and witness statements had not been uploaded to the hearing documents tab on the portal but the respondents had used the DUC and email. I reminded the parties that they should be using the portal and although the representatives of the First and Third Respondent expressed difficulty in accessing the portal I urged them to liaise with HMCTS.[5]I had witness statements for the First Claimant and Mr. Goldsmith on behalf of the Third Respondent. The Second Claimant relied on box 8.2 of her ET1 as her witness evidence. I had a bundle of 321 pages.[6]Mr. Goldsmith and the Claimants swore their evidence as being true and cross examination took place. All parties gave oral submissions.[7]There was not enough time left for me to deliberate and give my decision orally, so I explained that my decision and reasons would be sent to the parties.[8]For completeness, whilst reviewing the documents I noted that it appeared that there had recently been a change of name for the Third Respondent. The Third Respondents name was changed on 18 May 2026 from Goldsmith Construct Limited to Powder Mill Projects Limited. The parties all agreed to the Third Respondent’s name being changed in these proceedings. Issues[9]Did the employment of the First Claimant and Second Claimant transfer to the Third Respondent by way of a TUPE transfer. Findings of fact[10]The findings of fact are made based on the balance of probability and the evidence presented during this hearing.[11]The Second Respondent was a construction business that worked with large developers, namely Berkeley Homes, Barretts and London Square. The Second Respondent’s work mostly came from Berkeley Homes. The work was large projects that were developer led and involved project management teams and quantity surveyors.[12]The Second Respondent had two directors, Mr. John Goldsmith and his wife, Mrs. Name Goldsmith. Mr. and Mrs. Goldsmith are, and were at the material times, director of a number of companies that were branded together under the name Goldsmith Group. The group companies (including the Third Respondent) are all operated from the same address, at Powder Mill Lane, which comprises some small offices and a storage yard.[13]The Second Respondent had four other employees in addition to the directors, the First Claimant, Second Claimant, Roger (name and role not known) and Sarah Jones, Accounts Manager.[14]The First Claimant was a Quantity Surveyor. He worked from the Second Respondent’s office and worked on various projects[15]The Second Claimant was a Quantity Surveyor. She had been based at the client, Berkeley Homes, Trent Park site for approximately 3 years, but was not contractually obliged to only perform Berkeley Homes work.[16]The Second Respondent had a dispute with Berkeley Homes and did not receive payment of a substantial sum. Berkeley Homes did not pay the Second Respondent from September 2024 and this resulted in severe financial difficulties and the Second Respondent’s auditor advised that the only option available was to make the Second Respondent insolvent. This resulted in a review of business operations. At the time the Second Respondent only had one other project and the Second Respondent informed that client that they were going into administration and pulled out the site.[17]On 21 November 2024 the Second Claimant was told to leave the site at Trent Park Berkeley Home and there was not any other project work to move to. She did not undertake any work for the Respondent after that date and was waiting for information about what would happen.[18]On 13 December 2024 the Second Respondent gave the First Claimant a letter dated 12 December 2024, page 227. In the letter it said: “The organisation is considering making five employees within the company redundant because of the ongoing dispute with Berkeley Homes and no other projects to move onto. Unfortunately, your post is at risk of redundancy.”[19]In a conversation, also on 13 December 2024 Mr. Goldsmith told the First Claimant that he would only be able to pay the First Claimant for a further month.[20]On 23 January 2025 Mr. Goldsmith gave the First Claimant a letter, page 228. Within the letter is states: “It is with much sadness that I am writing to you to advise you that Goldsmith (London) Ltd will be going into liquidation by the end of January 2025. You will be receiving a letter from the liquidator giving you a “CN” (case reference number to use, to enable you to claim from the government.”[21]In a conversation at the same time Mr. Goldsmith told the First Claimant to gather his belongings and leave work. The 23rd January 2025 is the last date the First Claimant did any work for the Second Respondent. The First Claimant understood his employment had ended on that date because of redundancy and he started looking for jobs.[22]In January 2025 the First Claimant liaised with the Second Respondent regarding nonpayment of January wages.[23]The First Claimant attended a job interview on 6 February 2025 and started his new role on 24 February 2025. The delay between interview and start date was for kit to be arranged.[24]The Second Respondent produced P45s for the First Claimant and Second Claimant on 25 February 2025. The P45 forms state the date employment ended was 7 February 2025. Mr. Goldsmith stated this was the date the Insolvency Practitioner advised. The First Claimant did not receive his P45 until 21 March 2025. The Second Claimant did not receive her P45 until April 2025.[25]Mr. Goldsmith, Mrs. Goldsmith and Ms. Jones all submitted applications for payment by the NIF and within the forms it was stated that they started work for the Third Respondent on 8 February 2025. Ms. Jones was an Accounts Manager and managed other Goldsmith Group companies including Goldsmith Electrical Ltd and Goldsmith Investments Ltd.[26]In relation to the business of the Third Respondent, it undertakes different work to that previously undertaken by the Second Respondent which dealt with large developers. The Third Respondent works with private clients and their architects on direct projects. No projects run by the Second Respondent were taken over by the Third Respondent. It took approximately a year to build up the business of the Third Respondent and was done by reaching out to architect contacts. The Third Respondent does not employ any quantity surveyors or project managers.[27]The Third Respondent was incorporated on 9 August 2024.[28]Turpin Barker Armstrong wrote to the First Claimant on 20 March 2025. The letter explained that the Board of the Second Respondent had decided to commence liquidation proceedings. It said the trading ceased on 7 February 2025 and “your employment is terminated.” The letter enclosed the First Claimant’s P45 which stated that it had been completed on 25 February 2025 and that employment ended on 7 February 2025.[29]The Third Respondent officially entered into creditors voluntarily liquidation on 31 March 2025.[30]Applications were made to the RPS for payments as set out below. Ms. Jones – 22 April 2025, Mr. and Mrs. Goldsmith - 24 April 2025, the First Claimant – 24 April 2025, the Second Claimant – 5 May 2025.[31]On 14 May 2025 the RPS wrote to the Insolvency Practitioner seeking some additional information. In an email response the Insolvency Practitioner replied on the same day and within the email said: “The Director has made an offer of £6,000 plus VAT to acquire the Company’s assets, comprised of vehicles, computer and office equipment. We have accepted this and our agents are in the process of formalising the sale which I anticipate will be finalised shortly. It is currently unclear whether the Director is acquiring these personally, or via another company, but I can forward the relevant documents in due course. However, I am unable to complete part B of the RP18 until then.”[32]The above-mentioned assets were purchased at an unknown later date.[33]On 23 May 2025 the RPS wrote to the First and Second Claimants stating the application had been rejected as it believed a TUPE transfer took place prior to liquidation.[34]Further correspondence between the parties and the RPS followed. Law[35]The Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘the TUPE Regulations’) apply to a ‘relevant transfer’, which so far as is relevant to these proceedings means “a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity” (Regulation 3(1) of TUPE).[36]Regulation 3 is set out below. I have underlined the sections relevant to this claim. 3.—(1) These Regulations apply to— (a) a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity; (b ) a service provision change, that is a situation in which— (i ) activities cease to be carried out by a person (“a client”) on his own behalf and are carried out instead by another person on the client’s behalf (“a contractor”); (ii)activities cease to be carried out by a contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person (“a subsequent contractor”) on the client’s behalf; or (iii)activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by the client on his own behalf, and in which the conditions set out in paragraph (3) are satisfied. (2) In this regulation “economic entity” means an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary. (2A) References in paragraph (1)(b) to activities being carried out instead by another person (including the client) are to activities which are fundamentally the same as the activities carried out by the person who has ceased to carry them out. (3) The conditions referred to in paragraph (1)(b) are that— (a)immediately before the service provision change— (i)there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client; (ii)the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; and (b)the activities concerned do not consist wholly or mainly of the supply of goods for the client’s use. (4) Subject to paragraph (1), these Regulations apply to— (a)public and private undertakings engaged in economic activities whether or not they are operating for gain; (b)a transfer or service provision change howsoever effected notwithstanding— (i)that the transfer of an undertaking, business or part of an undertaking or business is governed or effected by the law of a country or territory outside the United Kingdom or that the service provision change is governed or effected by the law of a country or territory outside Great Britain; (ii)that the employment of persons employed in the undertaking, business or part transferred or, in the case of a service provision change, persons employed in the organised grouping of employees, is governed by any such law; (c)a transfer of an undertaking, business or part of an undertaking or business (which may also be a service provision change) where persons employed in the undertaking, business or part transferred ordinarily work outside the United Kingdom. (5) An administrative reorganisation of public administrative authorities or the transfer of administrative functions between public administrative authorities is not a relevant transfer. (6) A relevant transfer— (a)may be effected by a series of two or more transactions; and (b)may take place whether or not any property is transferred to the transferee by the transferor. (7) Where, in consequence (whether directly or indirectly) of the transfer of an undertaking, business or part of an undertaking or business which was situated immediately before the transfer in the United Kingdom, a ship within the meaning of the Merchant Shipping Act 1995(1) registered in the United Kingdom ceases to be so registered, these Regulations shall not affect the right conferred by section 29 of that Act (right of seamen to be discharged when ship ceases to be registered in the United Kingdom) on a seaman employed in the ship.[37]Guidance on when an economic entity retains its identity for the purposes of Regulation 3 of the TUPE Regulations was provided by the Employment Appeals Tribunal in Cheeseman v R Brewer Contracts Ltd [2001] IRLR 144 (‘the Cheeseman guidelines’) as set out below: - there needs to be a stable economic entity, which is an organised grouping of persons and of assets enabling (or facilitating) the exercise of an economic activity that pursues a specific objective. There will not be such an entity if its activity is limited to performing one specific works contract. - in order to be such an undertaking, it must be sufficiently structured and autonomous but will not necessarily have significant tangible or intangible assets. - in certain sectors, such as cleaning and surveillance, the assets are often reduced to their most basic and the activity is essentially based on manpower. - an organised grouping of wage-earners who are specifically and permanently assigned to a common task may, in the absence of other factors of production, amount to an economic entity; and - an activity is not of itself an entity; the identity of an entity emerges from other factors, such as its workforce, management staff, the way in which its work is organised, its operating methods and, where appropriate, the operational resources available to it.[38]In Whitewater Leisure Management Ltd v Barnes and ors 2000 ICR 1049, EAT, the EAT suggested that ‘it will normally be best and clearest for an employment tribunal to deal first with the question of whether there was a relevant and sufficiently identifiable economic entity, and then proceed, whatever be the answer to that question, to ask and answer whether there was… a relevant transfer of any such entity’. The EAT in Cheesman and ors v R Brewer Contracts Ltd 2001 IRLR 144, EAT, agreed, adding that ‘whilst we do not say that it is invariably an error of law not to raise those two questions as separate questions or to fail to deal with them in that order, a tribunal which so fails runs a real risk of error’.[39]Spijkers v Gebroeders Benedik Abattoir CV and anor 1986 2 CMLR 296, ECJ, is the case from which the phrase ‘retains its identity’ originates. In that case, the ECJ stated: ‘The decisive criterion for establishing the existence of a transfer within the meaning of the Directive is whether the entity in question retains its identity.’ In its view, ‘it is necessary to consider whether, having regard to all the facts characterising the transaction, the business was disposed of as a going concern’. This ‘will be apparent from the fact that its operation is actually being continued or has been taken over by the new employer with the same economic or similar activity’.[40]In order to decide if an economic identity retained its identity ‘it is necessary to take account of all the factual circumstances of the transaction in question’, including: - the type of business or undertaking - the transfer or otherwise of tangible assets such as buildings and stocks - the value of intangible assets at the date of transfer - whether the majority of the staff are taken over by the new employer - the transfer or otherwise of customers - the degree of similarity of activities before and after the transfer, and the duration of any interruption in these activities[41]Further guidance about retention of identity was provided in Chesseman, as set out below: -the decisive criterion for establishing the existence of a transfer is whether the entity in question retains its identity, as indicated, among other things, by the fact that its operation is actually continued or resumed - in a labour-intensive sector it is to be recognised that an entity is capable of maintaining its identity after it has been transferred where the new employer does not merely pursue the activity in question but also takes over a major part, in terms of their numbers and skills, of the employees specially assigned by its predecessors to that task. That follows from the fact that in certain labour-intensive sectors a group of workers engaged in the joint activity on a permanent basis may constitute an economic entity - in determining whether the conditions for the existence of a transfer are met, it is necessary to consider all the factors characterising the transaction in question, but each is a single factor and none is to be considered in isolation - among the matters falling for consideration are the type of undertaking, whether or not its tangible assets are transferred, the value of its intangible assets at the time of transfer, whether or not the majority of its employees are taken over by the new company, whether or not its customers are transferred, the degree of similarity between the activities carried on before and after the transfer, and the period, if any, in which they were suspended - in determining whether there has been a transfer, account must be taken of, among other things, the type of undertaking or business in issue, and the degree of importance to be attached to the several criteria will necessarily vary according to the activity carried on - where an economic entity is able to function without any significant tangible or intangible assets, the maintenance of its identity following the transaction being examined cannot logically depend on the transfer of such assets even where assets are owned and are required to run the undertaking, the fact that they do not pass does not preclude a transfer where maintenance work is first carried out by a cleaning firm and then by the owner of the premises concerned, that mere fact does not justify the conclusion that there has been a transfer more broadly, the mere fact that the service provided by the old and new undertaking providing a contracted-out service or the old and new contract holder are similar does not justify the conclusion that there has been a transfer of an economic entity between predecessor and successor the absence of any contractual link between transferor and transferee may be evidence that there has been no relevant transfer but is certainly not conclusive as there is no need for any such direct contractual relationship - when no employees are transferred, the reasons why that is the case can be relevant as to whether there was a transfer; and - the fact that the work is performed continuously with no interruption or change in the manner of performance is a normal feature of transfers of undertakings but there is no particular importance to be attached to a gap between the end of work by one subcontractor and the start of work by the successor.[42]It is important to note that no single factor is decisive, there may be other factors, but it is an error of law if the tribunal does not apply a multi-factorial approach or ignores potentially relevant factors.[43]When there is a relevant transfer, Regulation 4 of the TUPE Regulations sets out the impact upon those who are party to the transfer and those employed by the transferor. In particular, it provides for continuity of employment and the transfer of the employment contracts for those employees who are subject to the said relevant transfer.[44]The transfer of employee under TUPE takes place as a matter of legal operation.[45]For completeness, the First Respondent had included a number of case law authorities in the bundle. The principles of which were noted and considered. Conclusions[46]I reached my conclusions by applying the law to my findings of fact. Breaking Regulation 3(1)(a) into simple parts, there are four questions that must be answered in the affirmative in order for there to be a ‘business transfer’ under that provision: - was there a transfer ‘to another person’? - did an ‘economic entity’ transfer? - did the economic entity ‘retain its identity’ after the transfer? And - was that entity ‘situated immediately before the transfer in the United Kingdom’.[47]I sought to deal with each question, but there is naturally some overlap.[48]Dealing with the last question first, noting the First Respondent submit that the transfer took place on 8 February 2025 and the Claimants and the Third Respondent submit that no transfer took place at all. It is plain that the Second Respondent was an economic entity situated in the United Kingdom. It stopped trading on 7 February 2025, although the work the business had undertaken had largely ceased from 21 November 2024, it did not go into liquidation until 31 March 2025.[49]The next question is to determine if was there an economic entity (before the alleged transfer), i.e., “an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary”?[50]Based on the facts as set out above, I concluded that prior to 8 February 2025 there was an economic entity that had an organised grouping of resources with the objective of pursuing an economic activity.[51]The Second Respondent employed staff, including the Claimants, to work on large construction projects with developers. The employees could be required to work on any project, with any developer. The aim was to make a profit. The business of the Second Respondent reduced significantly from 21 November 2024 due to a developer dispute, but that does not change the conclusion there was an economic entity with an organised grouping of resources, namely staff providing quantity surveying and project management services.[52]The next consideration is whether that economic entity retained its identity and transferred to the Third Respondent. I have considered all the facts and a range of factors.[53]It is important to note there was, at 8 February 2025, no contract of sale between the Second Respondent and the Third Respondent, but that is not necessary for a transfer to have taken place. The substance of the situation must be looked at. I acknowledge, that some weeks, potentially some months, after the alleged transfer dates the directors purchased some low value assets, understood mainly to be vehicles. Given the directors operated in a number of group companies I do not see that any such subsequent purchase from liquidators points towards a transfer of the economic entity with the same identity.[54]It is apparent that from November 2024 onwards the Second Respondent envisaged that a large proportion of the work would be ending following a dispute with a developer and there would be a need for redundancies. As set out in the findings of fact the Second Respondent undertook work with large developers. It was decided that, following a trade dispute with Berkeley Homes, this work would not continue. I do not consider there to be any evidence that there was any intention for the business operations that were undertaken by the Second Respondent to be taken over by the Third Respondent. I do not consider that the Third Respondent actually undertook work of the same or similar nature. It is not enough to simply rely on the fact that both businesses fall under the heading of construction. Indeed, a further important factor is that it took a year for the Third Respondent to build up its work.[55]The Second Respondent had no ongoing work. No work that was previously done by the Third Respondent was carried over to the Third Respondent.[56]I considered the fact that the two directors and Sarah Jones started working for Third Respondent on 8 February 2025. In view of the facts, that Sarah Jones worked on accounts across group companies, and the directors worked across other group companies and were involved in building the profile and work of the Third Respondent I do not consider the fact those staff worked for the Third Respondent indicates a transfer.[57]It is noted that the Third Respondent was run from the same office as where the Second Respondent was based. All the Goldsmith Group businesses were run from the same location. Noting the small family run nature of the businesses I do think the same address indicates a transfer of the same economic entity.[58]In relation to the former website, it is noted there is reference to group companies. I do not consider this indicates a transfer of the same economic entity.[59]I did not consider there was any evidence that an economic entity (the Second Respondent) retained its identity and transferred to the Third Respondent.[60]There was no TUPE transfer. Approved by: Employment Judge Cawthray Date: 16 June 2026 Date: 17 June 2026 Notes All judgments (apart from judgments under Rule 51) and any written full reasons for judgments are published, in full, online at https://www.gov.uk/employment-tribunal-decisions shortly after a copy has been sent to the claimant(s) and respondent(s). If a Tribunal hearing has been recorded, you may request a transcript of the recording. Unless there are exceptional circumstances, you will have to pay for it. If a transcript is produced it will not include any oral judgment or reasons given at the hearing. The transcript will not be checked, approved or verified by a judge. There is more information in the joint Presidential Practice Direction on the Recording and Transcription of Hearings and accompanying Guidance, which can be found here: www.judiciary.uk/guidance-and-resources/employment-rules-and-legislation-practice-directions/