REVIEWING THE CASE LAW

Melanie Tether

TUPE 2006 apply to:

The transfer of an undertaking or part of an undertaking where there is a transfer of an economic entity which retains its identity

a service provision change (SPC)

When do TUPE apply?

A group of workers engaged on short term contracts was not an economic entity

All the workers did different work and worked on different vessels

The fact that all had short term contracts and provided flexibility within the client’s workforce was not sufficient to convert them into an economic entity

Wain v Guernsey Ship Management (CA)

The Directive could apply where some of the management personnel and temporary workers employed by a temporary employment business transferred to another temporary employment business in order to carry out the same business for the same clients

This could be a transfer:­ despite the absence of an organisational structure in the first employment business­ even though the temporary workers were integrated into the organisational structure of the client

Jouini v Princess Personal Service [2007] IRLR 1005 (ECJ)

TUPE do not apply to a share sale

But there may be a transfer if the parent company assumes day to day control over the operations of its new subsidiary

Share transfers

After SCF acquired YBT:

most of YBT’s senior managers were dismissed

directors of SCF took over management of YBT

SCF exercised tight control over YBT’s finances and new business opportunities

Carey v SCF (1)

On the other hand:

YBT operational staff were not integrated into SCF

existing YBT contracts were delivered by YBT staff

SCF had put money into YBT and any investor would have wanted to ensure a a proper investigation of YBT’s finances

Carey v SCF (2)

Employee will not transfer if s/he objects to becoming an employee of the transferee – see regs 4(7) and (8)Contract terminates automatically by operation of law, which means:

­no dismissal­no right to compensation

The right to object

An employee can exercise the right to object before or after the transferIn a case where the employee does not know the identity of the transferee before the date of the transfer, a requirement to notify an objection before the transfer would undermine the employee’s fundamental freedom to choose his own employer

New ISG Ltd v Vernon [2008] IRLR 115

An employer cannot change contracts of employment if the transfer of an undertaking is the reason for the variation

An agreed variation may be void if the transfer of an undertaking is the reason for it – see Daddy’s Dance Hall [1988] IRLR 315

Changes to terms and conditions

A contractual variation for a transfer-related reason is not binding on the employee

But this does not prevent the employee taking the benefit of variations agreed with the transferee i.e. such variations are binding on the employer

Regent Security Services Ltd v Power [2008] IRLR 66

Dismissal of an employee is automatically unfair if the sole or principal reason is a transfer-connected reason which is not an economic, technical or organisational reason entailing changes in the workforce (‘ETO reason’)Dismissal of an employee is potentially fair if the sole or principal reason is a reason connected with transfer that is an ETO reason

Transfer-connected dismissals

The right of an employer to dismiss for an ETO reason only arises where the employer dismisses for a reason of its own, relating to the future conduct of its own business and entailing a change in its own workforce The transferor cannot fairly make employees redundant before the transfer for reasons which relate to the way the transferee intends to run the undertaking

Hynd v Armstrong [2007] IRLR 338

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