REVIEWING THE CASE LAW Melanie Tether When do

REVIEWING THE CASE LAW Melanie Tether

When do TUPE apply? 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) § §

Wain v Guernsey Ship Management (CA) §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

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

Share transfers §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

Carey v SCF (1) 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 (2) 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 § § §

The right to object §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 dismissal no right to compensation §

New ISG Ltd v Vernon [2008] IRLR 115 §An employee can exercise the right to object before or after the transfer §In 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

Changes to terms and conditions §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 §

Regent Security Services Ltd v Power [2008] IRLR 66 §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

Transfer-connected dismissals §Dismissal of an employee is automatically unfair if the sole or principal reason is a transferconnected 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 §

Hynd v Armstrong [2007] IRLR 338 §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 §

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