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New EAT Decision

  • Posted

This decision has just been placed on the EAT website. It is currently unreported, but may be reported in due course.

McLeod & Welsh v Phoenix Taxis & Rainbow Taxis (Lord Johnstone, 22/4/2002)
A surprising TUPE decision from the EAT. Phoenix taxis (a radio-cab company) sold its 'business' to Rainbow taxis. The employment tribunal found as a fact that, despite the description in the contract as a sale of a business:
• no assets had transferred
• no staff had transferred
• no premises had transferred
• the only thing that had transferred was the (temporary) use of the 'Phoenix Taxi' name and the Phoenix Taxi telephone number
The ET also held that the Phoenix Taxi undertaking ceased to retain its identity after the sale. Accordingly, after considering Spijkers, it held there was no transfer of an undertaking.

The EAT held that the ET failed to give sufficient weight to the label in the agreement of 'sale of the business'. Not only did the EAT allow the appeal, but it substituted a finding that a TUPE-transfer had occurred (rather than just remitting the case back to the ET).

This case seems to be authority for the proposition that the label the parties use is conclusive (rather than a balancing of the factors set out in Spijkers). It opens the way for purchasers of businesses to insist on writing into a contract 'there is no transfer of undertaking' and arguing that label is binding. That cannot be right.
• To see the decision, go to