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REVIEWING THE CASE LAW Melanie Tether

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).

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REVIEWING THE CASE LAW Melanie Tether

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  1. REVIEWING THE CASE LAW Melanie Tether

  2. 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)

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. Transfer-connected dismissals • 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

  13. 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

  14. Contact London 10 - 11 Bedford Row London WC1R 4BU DX 1046 London / Chancery Lane T +44 (0) 20 7269 0300 F +44 (0) 20 7405 1387 Bristol 3 Orchard Court, St Augustines Yard Bristol BS1 5DP DX 78229 Bristol 1 T +44 (0) 117 930 5100 F +44 (0) 117 927 3478 E clerks@oldsquare.co.uk W www.oldsquare.co.uk

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