In this article...

• The background
• Objecting to a transfer
• Rejecting an employee prior to transfer
• What does this mean for me?

The background

Under the Transfer of Undertakings (Protection of Employment) Regulations (‘TUPE’), employees have the right to object to their transfer to a new employer, with the effect that their contract of employment with the transferor is treated as terminated from the transfer date.

In Celtec Ltd v Astley and others (2005) the House of Lords confirmed that it was not possible for parties to agree on a date for the transfer other than the actual date on which the transfer was to take place.

The effect of a TUPE transfer is that there is a statutory novation of employment contracts, so that the transferee “stands in the place of” the transferor in respect of all the transferring employees. All of the transferor's rights, powers, duties and liabilities under or in connection with the transferring employees' contracts pass to the transferee, and anything done (or not done) by the transferor before the transfer is treated as having been done (or not done) by the transferee.

The usual rules relating to unfair dismissal also overlap with the TUPE Regulations. Only employees with at least one year's service qualify for the right to bring a claim for unfair dismissal. However, there is an exception to this rule where an employee considers that they have been dismissed for asserting a statutory right against their employer. In these circumstances, there is no service requirement and any resulting dismissal will be automatically unfair.

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Objecting to a transfer

In Capita Health Solutions v the British Broadcasting Corporation and McLean, the EAT looked at what amounts to a valid objection on a TUPE transfer.

Mrs McLean had worked for the BBC as an occupational health nurse since May 1988. When the BBC announced that Capita would be taking over its occupational health services, Mrs McLean objected to transferring to Capita’s employment. However, Mrs McLean said that due to ‘professional commitments’ she would work her six week notice period, post transfer, with Capita. The parties agreed that this period would be treated as a ‘secondment’ from the BBC, which continued to pay Mrs McLean and make contributions to her pension scheme.

The EAT held that this did not amount to a valid objection under TUPE, and that Mrs McLean’s employment had transferred to Capita, for 6 weeks. As in Celtec v Astley (set out above) the parties’ intentions (whilst a relevant consideration in deciding if there has been a valid objection) are not determinative.

Mrs McLean’s statement of her objection to transferring to Capita could only be taken as an objection to working for Capita for more than 6 weeks.

There was no need for Mrs McLean to work any ‘notice period’ because, if she had validly objected to the transfer, then her contract of employment with the BBC would have automatically terminated on the date of the transfer.

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Rejecting an employee prior to transfer

In Perry’s Motor Sales Limited and Perry’s Burnley Limited v Lindley, Mrs Lindley had been employed by Perry’s Motor Sales Limited (‘PMS’), but resigned in 2006 and claimed that she had been constructively unfairly dismissed. Mrs Lindley brought employment tribunal proceedings against the company, and terms of settlement were reached. But that was not to be the last that Mrs Lindley would hear from PMS.

Mrs Lindley’s new employer was Vantage Garages (Burnley) Limited, and its parent company was later taken over by Mrs Lindley’s previous employers, PMS. Vantage Garages had its name changed to Perry’s Burnley Limited (PB) in March 2007. On 27 March 2007, PMS instructed PB to dismiss Mrs Lindley, prior to the TUPE transfer of PB to PMS on 27 April 2007.

PB did dismiss Mrs Lindley, as instructed, and Mrs Lindley argued that her:

		dismissal was automatically unfair because the dismissal was linked to the previous employment tribunal proceedings brought by Mrs Lindley against PMS; and
		liability for that dismissal transferred to PMS.

The EAT agreed with Mrs Lindley: liability for the dismissal transferred to PMS, and the dismissal was automatically unfair, notwithstanding that Mrs Lindley had less than a year’s employment with PB.

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What does this means for me?

This decision suggests that:

		On a TUPE transfer, liability may be acquired for staff unfairly dismissed for asserting a statutory right, even if the statutory right was not asserted against the transferor.
		The facts of Perry Motor Sales are unusual, but this case indicates that, where there may be a grey area in interpreting the Regulations, then tribunals are likely to take an approach that gives effect to their purpose, i.e. to protect employees’ rights on a transfer.
		The Capita decision confirms that, regardless of the intention of the parties, an objection to a TUPE transfer must be a true objection; agreeing to go ‘on secondment’ with the transferor will not circumvent this rule.
		Both these cases are a reminder of the importance of proper due diligence prior to a TUPE transfer, and ensuring that you negotiate a watertight set of warranties and indemnities from the transferor.

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