14 December 2020

Neither better nor worse – how TUPE protects when employees transfer

employees transfer

How TUPE protects when employees transfer

Thanks to TUPE employment protection regulations, the directors of a property management company were stopped in their tracks when it came to giving their benefits package a boost before they transferred a new employer.

The Transfer of Undertakings (Protection of Employment) Regulations, otherwise known in short-form as TUPE are a set of rules that are in place to help protect jobs and to also safeguard contractual terms for employees whose employer transfers to a new ownership or a new contract is put in place. It’s made clear that an employer shouldn’t change any terms to put the employees at a disadvantage, but now the Employment Tribunal has ruled that the same should be the case vice versa.

The case in question involved that of Lancer Property Asset Management. A company that helps provide estate management service to Berkeley Square Estate. BSE decided to move to a new service provider, which resulted in the directors of Lancer being employees of Astrea Asset Management Ltd. However, just as they were preparing for the transfer, the directors chose to give themselves a salary boost as well as very generous new terms for bonus and termination transactions. On top of that, there was also a 24 month notice period applied to.

The new employer, Astrea disputed these terms and sacked two of the directors as a result of gross misconduct and also for not paying these enhanced benefits to the other remaining directors. The Employment Appeal Tribunal (EAT) handled this dispute with the directors contesting that TUPE regulation in relation to the pre-transfer variations was for scenarios where the change would be damaging to the employee.

“With TUPE, it’s all about creating fairness and continuity. So it comes as no surprise that anything put in place that would make the employee worse off would not be allowed. However, being better off hasn’t been tested before like this.” – as described by employment law expert Jess Buttaci

“According to the Employment Appeal Tribunal, they’ve said all contract variations that have been connected to this transfer are now void. Whatever the outcome will be, TUPE is there to protect and to not enhance. EAT also mentioned that there are no legitimate commercial purposes that could be shown for the changes made. This means that they broke the general abuse principle of EU law and was thus unenforceable.”

Transfer of Undertakings (Protection of Employment) Regulations is intended to protect employees whenever a business transfer or where there’s a change in its service provider. The employees are protected wherever a business is sold and continues to trade the same way it always has done after the transfer has occurred.

When it comes to this case, however, TUPE may also be applied when a service provision change happens. For example, this could be a company ending a long-term contract, taking the supply of services in-house, or perhaps gives the contract to another service provider. If employees have the role of servicing a contract exclusively and the new service delivery remains the same, then TUPE may assert that those employees become employees of the company or new service provider. They continue with the roles that they provided with the original service provider, as it occurred with Lancer Property Asset Management.

Ferguson & Ors v Astrea Asset Management Limited, UKEAT/0139/19/JOJ

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