TUPE claim against alleged phoenix company fails: no transfer of undertaking
A chief technical officer who claimed his employment transferred to a new company when his employer ran into difficulties has lost his TUPE claim. The tribunal found no assets, employees or IP had moved.
1 min read · Last updated 18 May 2026
Case details
- #tupe
- #phoenix-company
- #intellectual-property-dispute
- #no-assets-transferred
- #speculative-claim
Key facts
- The claimant was employed by Environmental Control Coatings Ltd (ECC) as Chief Technical Officer from 2 October 2018.
- ECC was formed in 2018 to develop photocatalytic coatings to reduce air pollution.
- By mid-2020, the claimant had stopped working for ECC and devoted time to another company, Whylabs.
- A dispute arose over intellectual property (the formula for the PCO coating) which the claimant withheld from ECC.
- Lyte Coatings Ltd was incorporated on 26 July 2021 with Mark Cusack as sole director; it never traded.
- The tribunal found no evidence of any transfer of assets, employees, customers, or IP from ECC to Lyte.
Timeline
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Claimant starts employment
Claimant commenced employment with ECC as Chief Technical Officer.
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Claimant appointed director
Claimant became a director of ECC along with Di Booth, David McLoughlin, and Giles Wilson.
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Whylabs incorporated
Claimant incorporated Whylabs Ltd, a PPE company, with Mark Cusack and Di Booth.
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Whylabs collapses
Whylabs collapsed after a falling out between claimant and Di Booth.
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Gross misconduct allegations
Giles Wilson emailed claimant accusing him of gross misconduct regarding personal expenses.
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Recorded phone call
Claimant recorded a call with Giles Wilson discussing possible closure of ECC and a new company.
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Lyte Coatings incorporated
Lyte Coatings Ltd (originally Mcavidson Ltd) incorporated with Mark Cusack as sole director.
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McLoughlin and Wilson join Lyte
David McLoughlin and Giles Wilson appointed as directors of Lyte.
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Claimant resigns
Claimant resigned from ECC, claiming constructive dismissal.
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TUPE preliminary hearing
Two-day hearing to determine whether a TUPE transfer occurred from ECC to Lyte.
The legal issue
The tribunal had to decide whether a 'relevant transfer' had occurred under TUPE regulations when a new company (Lyte Coatings Ltd) was set up while the original employer (Environmental Control Coatings Ltd) was still trading. The claimant argued that the new company was a 'phoenix' entity that had taken over the business.
The outcome
The tribunal dismissed the claimant's TUPE claim, ruling that no transfer of an undertaking had taken place.
Key reasons:
- Lyte Coatings Ltd never traded and had no assets, employees, customers or intellectual property.
- The claimant continued to be employed by Environmental Control Coatings Ltd for months after the alleged transfer date.
- There was no evidence of any transfer of the PCO coating formula or other IP.
The claim against Lyte Coatings Ltd was dismissed in full. No compensation was awarded.
Lessons & takeaways
- A TUPE transfer requires a transfer of an economic entity that retains its identity — simply setting up a new company is not enough if nothing of value moves across.
- If you believe your employment has transferred to a new employer, you need evidence that assets, staff, customers or IP actually moved — suspicion or timing alone is unlikely to succeed.
- Continuing to work for your original employer for months after the alleged transfer date will weaken any TUPE claim significantly.
- If you are bringing a TUPE claim, it is essential to identify a specific date of transfer and show that you were assigned to the organised grouping immediately before that date.
When a TUPE claim fails for lack of evidence
This case shows the difficulty of proving a TUPE transfer when a company appears to have set up a 'phoenix' entity but nothing of value actually moves. The claimant, a chief technical officer, argued that his employment should have transferred to Lyte Coatings Ltd because it was set up by the same individuals who were involved with his original employer, Environmental Control Coatings Ltd. He pointed to a recorded phone call where the possibility of closing the old company and starting a new one was discussed.
However, the tribunal found that Lyte Coatings Ltd never traded, had no employees, no customers, and no assets. Crucially, the intellectual property that the claimant himself had developed — the PCO coating formula — remained with him and was never transferred to Lyte. Without any transfer of an economic entity that retained its identity, the TUPE claim could not succeed.
What the employer did right
Environmental Control Coatings Ltd and Lyte Coatings Ltd were able to show that the new company was a shell that never operated. They also pointed out that the claimant continued to work for the original company for months after the alleged transfer, which is inconsistent with a TUPE transfer. The tribunal accepted that there was no organised grouping of employees or resources that moved from one company to the other.
What this means for similar claims
For employees who suspect a phoenix company has taken over their employer's business, this case is a reminder that TUPE requires concrete evidence of a transfer. A mere change of company name or directors is not enough. If you are considering a TUPE claim, gather evidence of assets, staff, contracts or intellectual property moving from the old employer to the new one. Without that, the claim is likely to fail.
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