TUPE transfer found after asset sale of insolvent company: managing director's claim succeeds

This case shows that TUPE can apply in unexpected circumstances, particularly when a struggling company's assets are sold off. The managing director of Soda Folk Ltd was told his employment was terminated on the same day AP Drinks Ltd bought the company's intellectual property and goodwill. Despite a six-month gap in production, the tribunal found that the business had transferred as an economic entity that retained its identity.

What the buyer could have done differently

AP Drinks Ltd argued that it had only bought assets, not the business itself. However, the tribunal noted that the buyer intended to resume the same soft drink production and did so in July 2023, albeit with outsourced operations. The key lesson for buyers is that taking over intangible assets like brand names and recipes, with the intention of continuing the same business, can trigger TUPE obligations—even if no staff are taken on initially.

Why this matters for similar claims

For employees of insolvent companies, this decision is a reminder that a TUPE transfer may occur even when the employer appears to have ceased trading. The managing director's claim for unfair dismissal can now proceed against Wellness Capital Ltd, the renamed buyer. The case also highlights the importance of the effective date of termination: the administrator's notification on the sale date was key, not any later date when the employee might have accepted consultancy work.

The tribunal dismissed claims against Windfall Logistics Ltd, which had only purchased stock, confirming that a simple asset purchase without the business's operational structure does not amount to a TUPE transfer.