TUPE and Garden Leave

ICAP Management Services Ltd v Berry

In this case, the High Court has held that, where a Senior Executive was placed on garden leave, the circumstances were such that a TUPE transfer did not enable him to object to it and terminate his garden leave.

Mr Berry worked for ICAP Management Services Ltd, which was a service company for the ICAP Global Banking Business. He gave notice to leave in order to join a competitor, so ICAP put him on garden leave.

During the garden leave ICAP was the subject of a share sale acquisition. Mr Berry notified ICAP that he considered there was a TUPE transfer and purported to object to it under Regulation 4(7) of TUPE. That would, by virtue of Regulation 4(8), have terminated his contract (and his garden leave) forthwith, releasing him to take up his new employment earlier than would otherwise have been the case. ICAP sued to enforce the garden leave and succeeded in its application for an injunction to enforce the garden leave.

In Practice

TUPE requires a change of employer and a share sale does not involve such a change. Here it was business as usual, the operating and service companies carried on in the same way as before the share sale. There was therefore no TUPE transfer, and nothing to which Mr Berry could object. Also, the court would have been mindful of the public policy issue that, if Mr Berry had won, it would have made restrictive covenants completely useless in a TUPE situation.

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