Transfer case law

Rulings this month look at transferred employees’ entitlement to improved terms and conditions.

The key developments

• A change to an employee’s terms and conditions resulting from a TUPE transfer can be enforceable if it benefits the employee (case 1).

• An employee’s objection to a transfer is valid, even if it is made after the transfer takes place, in cases where s/he did not know the identity of the new employer beforehand (case 2).

• Refurbishing a business and replacing old equipment with new cannot create an unstable economic entity (case 3).

• Although an employee was entitled to an enhanced redundancy package following a TUPE transfer, her entitlement ran only from the date when she transferred (case 4).

The basic legal rules

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) state that, when a business is transferred from one employer to another, the employees doing the work should also transfer on their existing terms and conditions. To come within TUPE, there has to be a relevant transfer of an activity that amounts to a “stable economic entity”.

The employer before the transfer is referred to as the “transferor”, and the employer to whom the business transfers is the “transferee”.

Under TUPE, most legal liabilities (such as outstanding legal cases being taken against the transferor) transfer to the transferee.

An employee covered by TUPE has the right to continued terms and conditions, including redundancy terms. Additionally, there is no time limit after which TUPE protection no longer applies. However, this does not mean that changes to transferred employees’ terms and conditions can never occur.