Mystery shoppers' TUPE claim fails: no transfer of undertaking to new company
Four mystery shoppers who lost their jobs when Douglas Stafford Ltd collapsed failed to prove their contracts transferred to My View Ltd. The tribunal found no transfer of an undertaking, dismissing their claims for unpaid wages and holiday pay.
1 min read · Last updated 18 May 2026
Case details
- #mystery-shopper
- #insolvency
- #transfer-of-undertakings
- #worker-status
- #unpaid-wages
Key facts
- Douglas Stafford Ltd (DSL) ceased trading on 30 December 2019 due to insolvency.
- My View Ltd (MVL) was incorporated on 19 November 2019 by Madelaine Cook, daughter of DSL's director.
- MVL started trading on 2 January 2020, before DSL entered administration on 8 January 2020.
- MVL purchased DSL's trading name, website, customer database, and other assets for £1,500 plus VAT.
- No contracts transferred from DSL to MVL; MVL negotiated new contracts with 8 of DSL's 27 former clients.
- Only 8 of DSL's 48 employees transferred to MVL, and continuity of employment was broken.
Timeline
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Mr Tilley starts work for DSL
Mr Tilley began working for Douglas Stafford Ltd as a mystery shopper for GLH Hotels.
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MVL incorporated
Madelaine Cook incorporated My View Ltd, knowing DSL had financial difficulties.
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Nigel Cook emails clients
Nigel Cook announced DSL would close and that My View Ltd would continue mystery shopping.
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DSL emails workers
DSL announced closure at end of year; no mention of transfer to MVL.
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DSL ceases trading
DSL dismissed its 48 employees due to insolvency; claimants not paid for November-December work.
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MVL starts trading
MVL began operations with three former DSL employees.
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Administrators appointed for DSL
DSL entered administration.
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MVL buys DSL assets
MVL purchased DSL's trading name, website, customer database, and other assets for £1,500.
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Preliminary hearing on worker status
Employment Judge Bax ruled claimants were workers but not employees of DSL.
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Final hearing on TUPE transfer
Employment Judge Smail heard evidence on whether there was a transfer of an undertaking.
The legal issue
The tribunal had to decide whether the business of Douglas Stafford Ltd (DSL) was transferred to My View Ltd (MVL) under TUPE regulations. If so, MVL would be liable for unpaid wages and holiday pay owed by DSL to the mystery shoppers.
The outcome
The tribunal ruled that there was no TUPE transfer. DSL ceased trading due to insolvency, and MVL was a new company that started trading before DSL entered administration. MVL purchased some assets but did not take over the business as a going concern.
Key reasons:
- DSL dismissed all 48 employees and ceased trading on 30 December 2019.
- MVL started trading on 2 January 2020, before DSL's administration on 8 January.
- MVL negotiated new contracts with only 8 of DSL's 27 former clients.
- Only 8 of DSL's 48 employees transferred to MVL, with broken continuity.
- The asset purchase (trading name, website, database) for £1,500 did not amount to a transfer of an undertaking.
No compensation was awarded as the claim failed.
Lessons & takeaways
- TUPE only applies if a business transfers as a going concern; buying assets and rehiring a few staff is not enough.
- If your employer becomes insolvent, you may need to claim from the National Insurance Fund rather than a new company that buys assets.
- Worker status (rather than employee) can still allow TUPE claims, but the transfer itself must be established first.
- A new company that starts trading before the old one enters administration is unlikely to be a transferee under TUPE.
When a business folds but a similar one appears
Four mystery shoppers who worked for Douglas Stafford Ltd (DSL) thought they could recover unpaid wages and holiday pay from My View Ltd (MVL), a company set up by the daughter of DSL's director. But the tribunal ruled that MVL was not a successor under TUPE regulations, leaving the claimants without a remedy from the new company.
What the tribunal considered
The key question was whether MVL had taken over DSL's business as a going concern. The evidence showed that DSL had already ceased trading and dismissed all staff before MVL began operations. MVL bought some assets and rehired a handful of former DSL employees, but it negotiated fresh contracts with clients and started trading independently. The tribunal found that there was no transfer of an economic entity retaining its identity.
Why the result matters
This case highlights the limits of TUPE protection when an employer becomes insolvent. Even where a new company emerges offering similar services, the timing and structure of the transition are critical. If the old business has already stopped trading and the new entity begins before administration, the link may be broken. For workers in similar situations, the practical route for recovering unpaid sums is usually a claim to the National Insurance Fund, not against the new company.
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