Jeffrey Jupp's TUPE resource

May 14, 2020
by Jeffrey

TUPE & CJRS Update – 14 May 2020

Further guidance has been issued by HM Treasury for employers to assist in identifying those employees for whom an employer is eligible to claim furlough payments.

See latest guidance here

The guidance does not changes the earlier guidance but makes the position clearer. In respect of TUPE it states:

Employee transfers under TUPE and on a change in ownership

A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28 February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

Read more guidance on TUPE rules.

Read more guidance on business succession.”

May 11, 2023
by Jeffrey

New TUPE consultation

In a paper published by the Department for Trade and Business, Smarter Regulation to Grow the Economy the Government has announced that intends to consult over changes to the information and consultation requirements of TUPE. Specifically, it proposes to remove the requirement for the election of employee representatives where a business has fewer than 50 employees and in transfers affecting fewerwer than 10 employees.

October 3, 2022
by Jeffrey

Ponticelli v Gallagher EAT – 12 September 2022

Does a transferee have to provide a substantially equivalent share incentive plan when an employee had no contractual right to participate in a scheme operated by the transferor? In short yes.

The Facts

G was given the opportunity to participate in a share incentive plan (SIP) operated by his employer, T. Participation was voluntary and there was no mention of it in G’s contract of employment. G completed an application and joined the SIPP from August 2018. He contributed 5% of his salary to purchase shares. G was employed by T until 1 May 2020 when his employment transferred to P under TUPE. On the day of the transfer G’s participation in the plan ended and the shares he had purchased were transferred to him. Shortly after the transfer P told G he would receive a compensatory payment of £1,855 as compensation for the fact that P was not going to provide a SIP. G applied to the Tribunal for a declaration under s. 12 of the Employment Rights Act 1996 (ERA) that he was entitled to be provided by P with the right to participate in an equivalent SIP to that which T had provided.

The ET Judgment

The ET held that the right to participate in the SIP was ‘caught’ by the wording of Reg 4(2)(a). G was only entitled to participate in the SIP because he was an employee of T. It was a benefit for employees of T. It was Revenue approved. Looked at broadly it was part of the overall financial ‘package’. It would, in the view of the Tribunal, undermine the purpose [of] the TUPE and possibly encourage attempts to try to avoid transferring financially significant benefits on a transfer if it was not regarded as such.

The EAT Judgment

P appealed on the ground that that the rights and obligations in the SIP did not arise either “under” the contract of employment or “in connection with” that contract. Therefore, Reg. 4(2)(a) did not apply. The ET by using the expression ‘caught by’ had not identified which part of Reg 4(2)(a) applied to the SIP. It was clear that the right to participate did not arise under the contract as the there was nn mention of it in G’s contract with T. The case was therefore distinguishable from the MITIE case. Further P relied on Chapman v. CP Computer Group [1987] IRLR 462 in which it had been held that the right to exercise an option under stock option scheme when an employee did not transfer under TUPE 1981.

G accepted the SIPP did not arise under the contract that he had with T but it did arise in connection with it.

EAT (Lord Fairley) rejected P’s argument. First, at [31], Chapman had not considered the words ‘in connection with’ and that it been subjected to significant academic criticism. Second, at [32], the Stock Option scheme in Chapman was different than the SIP operated by T which was directly connected to the way in which G was remunerated for his services as an employee. It also involved the provision to him of Matching Shares paid for entirely by his employer. As the Tribunal correctly noted, it was part of the claimant’s broader financial package of benefits as an employee. Finally, at [33], “in the absence of any suggestion that the mutual rights and obligations under the Partnership Share Agreement were terminated prior to the transfer, they transferred on 1 May 2020 in precisely the way envisaged by the EAT in MITIE“.

Link to ET Judgment

Link to EAT Judgment

May 5, 2022
by Jeffrey

Federatie Nederlandse Vakbeweging v Heiploeg Seafood International BV ECJ – 28 April 2022

The issue in this case is whether a Dutch pre-pack insolvency process came within Art. 5(1) of the Acquired Rights Directive such that the automatic transfer provisions in Arts. 3 and 4 do not apply and the transferee was not bound to honour the contracts of transferring employees. 

Art. 5(1) provides that these provisions shall not apply: “where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of a competent public authority (which may be an insolvency practitioner authorised by a competent public authority)”. In the UK Art. 5 is implemented in Reg. 8(7) of TUPE.

The Facts

The H Group suffered significant financial losses in 2011 to 2013. In addition, in November 2013, the European Commission imposed a fine of EUR 27 million on four companies in that group for having participated in a cartel. Because of this no bank agreed to finance the payment of that fine. Thus, as soon as the fine was imposed, the possibility of using a pre-pack was examined. To that end, several independent companies were invited to submit an offer for the assets of the H Group. A potential buyer, P, emerged. Insolvency practitioners were appointed and were tasked with monitoring, obtaining information and being informed, giving their opinion and, where appropriate, giving advice. They were to be guided by the interests of all the creditors, as if the insolvency had already been declared and, in the event of subsequent insolvency proceedings, to report on the pre-pack procedure in public reports. On 27 January 2014 an insolvency order was made by the Dutch court. A transfer of assets and a transfer of about two-thirds of the workers occurred on 29 January 2014. Those workers who were transferred were required to accept less favourable terms and conditions.

The trade union FNV challenged this in the Dutch courts on the basis that, the liquidation exception in Art. 5(1) did not apply to pre-pack administrations. 

There was no dispute that the H Group was subject to insolvency proceedings. At issue was whether the pre-pack procedure complied with the two further requirements of Art. 5(1) namely whether it was instituted with a view to the liquidation of the assets of H Group and, secondly, whether it was under the supervision of a competent public authority. Questions on these two issues were referred to the ECJ by the Dutch Supreme Court.  The Dutch Court noted, in relation to the first question, that the insolvency of the transferor was inevitable and that under Dutch law the  objective of the insolvency proceedings was to secure the highest possible return for the joint creditors by liquidating the debtor’s assets. In relation to the second question, it noted that the supervising administrators, despite not being appointed by the court until the insolvency order was made, were required to have regard to the interests of all creditors and their duties did not change after appointment.

The Judgment of the ECJ 

This was the second recent occasion that the ECJ had been required to consider Dutch pre-pack administrations. In the Smallsteps case, it had considered and rejected the argument that Art. 5(1) applied to pre packs.

The ECJ noted at [42] that the first question involved factual and procedural matters which were either not raised or not in issue in Smallsteps and therefore that case was not binding on it. It also noted at [46] that, by contrast with Smallsteps, when the pre-pack procedure at issue was initiated, the insolvency of the transferor was inevitable and both the insolvency proceedings and the pre-pack procedure which preceded them were aimed at liquidating the assets of the transferor, which was, moreover, declared insolvent. 

It held at  [52] “Accordingly, where the main purpose of a pre-pack procedure followed by insolvency proceedings is to obtain, following the declaration of insolvency of the transferor and its liquidation, the highest possible reimbursement of all its creditors, those procedures, taken together, satisfy, in principle, the second condition laid down [in Art. 5(1)]”.

On the second question, the ECJ held that the proceedings were under the supervision of a competent public authority. This was because the ‘prospective insolvency administrator’ and the ‘prospective supervisory judge’ are appointed by the competent court for the pre-pack procedure and that court not only defines their duties but also reviews the exercise of those duties when the insolvency proceedings are subsequently opened. In deciding whether or not to appoint the same persons as insolvency administrator and supervisory judge, there is already, as a result, supervision of the ‘prospective insolvency administrator’ and the ‘prospective supervisory judge’ by a competent public authority.



English case law has taken an absolutist approach looking at the character of the insolvency proceedings rather than the underlying intention (see Key2Law).   It is possible, that this case may lead to a challenge to that approach, although that is unlikely because Key2Law held that Reg 8(7) will never apply to administration proceedings. In addition, this decision to a significant degree depends on the intricacies of Dutch insolvency law and of course, ECJ cases post-dating the end of the translon period following Brexit are not binding

March 31, 2022
by Jeffrey

Clark v (1) Middleton (2) Black Dog Hydrotherapy Limited EAT – 21 March 2022

The Background

M operated an animal hydrotherapy business as a sole trader until 30 September 2019. She decided to retire and on 1 October 2019 M transferred the business to BDHL a company operated by an individual, SA, who was an employee of M. Prior to the transfer, there had been some discussion about the retirement of C and of SA taking over the business but SA had not mentioned to C that BDHL would be intending to make contractual changes following the transfer. When this became known after the transfer C resigned. 

The Employment Tribunal Decision

In early 2020, C brought a claim against M, the transferor, under Reg 15 for compensation for a failure to consult as required by Reg 13. She brought claims for wages, unpaid holiday pay and unfair dismissal against BDHL. M’s defence to the failure to consult claim was that BDHL had not informed her of the measures it envisaged and that any liability should be that of BDHL. On 13 July 2020 C settled her claims against BDHL. At the hearing against M, C’s claim under Reg 15 was dismissed. The ET held that M did not know and was not told by BDHL of the measures it proposed as these had been deliberately kept from her. M did not know that there would be a transfer to a limited company and the ET held that she ought to have informed C about this. The ET regarded this as a technical breach because there was a late incorporation of BDHL and C probably knew about it in any event.  It therefore made no award against M. The ET further observed that the claim could have been brought against BDHL but as claims against BDHL had been withdrawn it was not appropriate to make an award against it.

C appealed on the following grounds:

  • The ET was wrong in stating that the Reg 15 claim could have been brought against BDHL.
  • That just because claims against BDHL had been withdrawn did not mean compensation under Reg 15(8)(b) could not be made against it.
  • The ET erred because it failed to make proper findings as to whether there had been a failure to inform C of the legal, social and economic implications of the transfer pursuant to Reg 13(2)(b).
  • The ET erred in its decision to award no compensation at all in respect of the failure of M to notify C pre-transfer of the identity of the transferee.

The Employment Appeal Tribunal Decision

The EAT (HHJ Auerbach) held:

  • That a claim that a transferor failed to consult under Reg 13(1) before the transfer, can only be brought against the transferor.  No freestanding claim can be brought against the transferee because of a failure by it to provide information to the transferor as required by Reg 13(2)(d). As C was an employee of M at the relevant time, it was only M who had a duty to comply with Reg 13 in respect of her; and it was Reg 15(8), not Reg  15(7), that provided for C’s potential remedies in respect of that complaint.
  • The ET was correct to find that because BDHL had been released from the proceedings by the dismissal of C’s claims against it on withdrawal no award could be made under Reg 15(8)(b).
  • C had not advanced specific matters before the ET as to any legal, social, or economic implications of the transfer and could not complain that this had not been addressed by the ET.
  • As the identity of the transferor is of fundamental importance to an employee, the ET had erred in making no award.

Link to EAT decision

Link to ET decision

March 11, 2021
by Jeffrey

Greater Glasgow Health Board v Nielson EAT – 16 February 2021

In a TUPE case, can an order for re-engagement be made against a transferee who is not joined in the proceedings? (Err? No!)  Could a compensation order also be made against a transferor when all liability passed to the transferee? (Again, No!)

The Background

Dr N was a partner in a GP practice (NMP). NMP provided GP services at the Dumbarton Health Centre. Separately from his position of partnership Dr N also held positions of employment with NMP. It had a contract to do so with the  Health Board. NMP was dissolved on 23 March 2017. The Health Board took over the provision of the GP Services whilst it secured another provider for the services. Employees transferred to it. Partners did not. Dr N was however given a fixed-term contract with the Health Board this expired on 31 July 2017. LP were appointed by the Health Board to take over the service with effect from 1 August 2017. All former employees of NMP transferred to LP. Dr N did not.  

Dr N brought a claim for unfair dismissal against the Health Board (the transferor). He did not bring a claim against LP for unfair dismissal. After a preliminary hearing at which it was determined that Dr N had sufficient continuity of service to bring the claim, the Health Board admitted liability and the matter was set down for a remedy hearing.

The Employment Tribunal Decision

Although set down for remedy, the issues canvassed at the hearing included such questions as whether: Dr N was assigned to the organised grouping; whether the employment was temporary i.e. of short term duration, whether or not LP was a “successor employer” under sections 115(1), 116(3)(b) and 235 of the Employment Rights Act 1996, and; whether the Tribunal should make an award for re-engagement against LP (who were not a party to the proceedings). In the event, the Tribunal made two orders: (i) that LP was required to reengage Dr N on a permanent contract and (ii) that the Health Board should pay the Dr N’s loss of earnings between the date of dismissal and date of reengagement.

The Employment Appeal Tribunal Decision

There were various grounds of appeal, but of particular interest, are not the grounds of appeal but two preliminary issues raised by the EAT itself. These were:

  • Having regard to (a) Litster v Forth Dry Dock & Engineering Co. Ltd, was it competent for the Employment Tribunal to make any remedies order against the Health Board for a dismissal of Dr N that was unfair – as conceded by the Health Board – by virtue of Reg 7(1) of TUPE, 2006?
  • In any event, was it competent for the Employment Tribunal to order the re-engagement of Dr N as an employee of a legal entity that was neither a Respondent to the proceedings before it, nor independently represented at the remedies hearing?

On the first issue, the EAT held, unsurprisingly, that any liability for unfair dismissal transferred under Reg 4(1) and Reg 7(1) from the transferor (the Health Board) to the transferee (LP). Having determined that Dr N was assigned to the organised grouping that transferred to LP, there was simply no basis for a finding that the Health Board was liable for the loss of earnings arising from the admitted unfair dismissal.

The “successor employer” provisions which Dr N claimed had the effect that the re-engagement order could be made against LP, had no application to the case at all. The EAT observed that where a dismissal of an employee is automatically unfair by virtue of Reg 7, liability for the remedy of re-engagement will either pass solely to the transferee by virtue of Reg 4(1) or will remain solely with the transferor where the conditions in Regulation 4(1) are not met (e.g if the Claimant was not “assigned” to the relevant grouping). In either scenario, the “successor employer” provisions of sections 115, 116 and 235 ERA will not be relevant except perhaps (as was the position in Dafiaghor-Olomu v Community Integrated Care) where there is later a transfer of the ownership of the business of the party which originally bore the sole liability for the unfair dismissal.

On the second issue, no order for re-engagement could be made against LP unless and until it was joined as a party.

In addition, the Tribunal had only considered whether it was reasonably practicable for LP to reengage Dr N and not whether it was reasonably practicable for the Health Board to do so and it was the Health Board who was the only employer before the Tribunal.

Link to EAT decision

March 9, 2021
by Jeffrey

Lewis v Dow Silicones UK Limited EAT – 4 March 2021

This case illustrates the difference between what amounts to a fundamental breach of contract for the purposes of unfair constructive dismissal and what amounts to a “substantial change to working conditions to working conditions to the material detriment of [the employee]” for the purposes of Reg 4(9).

The Background

L worked at a power plant in South Wales as an operations technician. He was transferred to D, the transferee, on 1 March 2018. The terms of his contract (which was by way of an incorporated Npower collective agreement) provided for the following: (i) a 37 hour working week; (ii) a management power to determine work patterns by reference to operational requirements; (iii) payment of a shift and unsocial hours allowance; (iv) a requirement that employees would “undertake duties and responsibilities commensurate with their grade and competency”, supplemented by an Npower “Contribution statement” that a key accountability was the “application of safe systems of work … which may include taking on the duties of Safety Controller/Safety Co-ordinator as required by the location manager”.

Over the years a practice had grown up whereby the operations technicians worked 168 hours over a 5 week shift pattern. Over the year this meant they were working less than the contracted 37 hours per week (1747 hours rather than 1924 hours). Further any work over the 168 hours was voluntary overtime and not accounted by reducing this shortfall. L worked 400 hours voluntary overtime 2017. 

D intended to change the callout arrangements. Each employee would be paid £9,000 for up to 150 hours irrespective of the actual hours worked  when called out. This was no longer voluntary. Previously L had earned £10,354 for the shift and unsocial hours allowance.

D also wished to introduce a system where operations technicians would issue “Safe Work Permits” relating to machine safety. This had previously been the responsibility of engineers. This was to involve training over a period of six months.

L’s case was that the transfer would involve substantial changes to his material detriment for the purposes of Reg 4(9). He also alleged the proposed changes were a fundamental breach of contract and resigned claiming constructive dismissal.

Employment Tribunal Decision

The ET held rejected his claims finding that: (a) that under his existing contract the employer was entitled to introduce the changes, and; (b) that the changes were not substantial change(s) in working conditions to L’s material detriment. In relation to the new standby/call out duties the ET held L was contracted to work 37 hours per week and that the proposed 150 hours per year cover was well within this number of hours calculated annually and also that the management had the right to determine work patterns by reference to operational requirements. In relation to the new safety responsibilities the ET held that the new duties were commensurate with L’s grade and competency and were within the key accountabilities mentioned in the Contribution Statement.

Employment Appeal Tribunal decision

The EAT (HHJ Shanks) rejected L’s appeal on the constructive dismissal issue but upheld his appeal under Reg 4(9). In doing so it restated the following principles established in Tapere v South London and Maudsley NHS Trust:

  • The regulation can apply even where there is no breach of the employee’s contract of employment;
  • Whether there is a change in working conditions and whether it is substantial are questions of fact;
  • The nature as well as the degree of any change needs to be considered in deciding whether it is substantial; and the nature (or “character”) of the change is likely to be the most important aspect in determining this;
  • The question whether a change in working conditions is to the “material detriment” of an employee involves two questions: (a) whether the employee subjectively regarded the change as detrimental and, if so, (b) whether that was a reasonable position for the employee to adopt.

In relation to the standby hours, even though these were within the terms of the contract, the change was a substantial and detrimental change because previously overtime had been entirely voluntary, now the employee was generally compelled to undertake it. In relation the new Safety Permit arrangements, again even if D was permitted to extend L’s duties within the terms of the contract, this was irrelevant to Reg 4(9) claim, and the fact training was being offered was also not determinative and did not mean there was not a substantial change to L’s detriment.

Employment Appeal Judgment

Employment Tribunal Decision

March 3, 2021
by Jeffrey

McTear Contracts Ltd v Bennett EAT -2 March 2021

This is the first appellate case to apply the ECJ decision in Govaerts. It did so in the context of a service provision change (SPC) under Reg 3(1)(b) of TUPE.

The Background

Amey, the transferor, had a contract with NLC to install kitchens in social housing. The claimant employees worked on this contract. From March 2017 Amey split its workforce into two teams made up of the trades necessary to fit kitchens. Each team worked across the NLC geographical area. Most of the employees were allocated to one or other of the teams.

NLC retendered its contract. In doing so it split the contract into Lots defined by geographical areas, north and south. It did not want the same contractor to undertake both Lots. Lot 1 was awarded to McTear and Lot 2 was awarded to Mitie. Amey undertook an analysis of the geographical area in which team had operated in the previous 12 months. After undertaking detailed analysis it took the view that team 1 corresponded to Lot 1 and team 2 corresponded to Lot 2. The evidence in support of this analysis was geographical split was not strong. After awarding the tender, NLC swapped the geographical areas for each Lot because apparently they corresponded more closely to the Head Office or each transferee. 

Employment Tribunal decision

The Tribunal held that there had been transfers under Reg 3(1)(b) to each of McTear (team 1) and Mitie (team 2). In doing so it purported to apply Kimberley Group Housing v Hambley. Both transferees appealed.

There were numerous grounds of appeal relating to the manner in which the Tribunal had assessed the evidence and determined there was an SPC in accordance with Amey’s split into teams. However, of particular significance is that Govaerts was decided after the Tribunal decision and as a consequence Mitie’s Grounds of Appeal were amended.  A new ground of appeal was added; to the effect that following Govaerts it was not necessary for the transferred employee to transfer to only one employer but an employee could transfer to two employers in proportion to the tasks performed.

The Employment Appeal Tribunal decisions

It has been held that SPCs are a purely domestic construct and there is no obligation to apply EU law principles to them.

Nevertheless, Mitie advanced 4 reasons why Govaerts should be applied: (i) Reg 4 applies to both types of transfer, those under Reg 3(1)(a) and those under Reg 3(1)(b) and Reg 4 should have the same meaning for both transfers.  (ii) many transfers will meet the criteria for both kinds of transfer. (iii) the SPC provisions were introduced under powers under s. 38 of the Employment Relations Act 1999 provides the Secretary of State to make regulations with the same or similar provisions to the Directive. (iv) In Kimberley, it was held there was no principled reason for distinguishing between SPCs (Reg 3(1)(b)) and business transfers (Reg 3(1)(a))

The EAT allowed the appeal and remitted the case for the Tribunal, in doing so it held (para 41): “There is no reason in principle why an employee may not, following such a transfer, hold two or more contracts of employment with different employers at the same time, provided the work attributable to each contract is clearly separate from the work of the other(s) and is identifiable as such. The division along geographical lines, of work previously carried out under a signal contract into two new contract is, in principle, a situation where there could properly be found to be different employees on different jobs”.

Link to EAT decision


This case has the potential to cause serious difficulty in multi party SPC cases. There is no obvious mechanism for determining how employment contracts should be divided between employers. This is something which English law has generally sought to avoid (no servant can have two masters). There exceptions to this principle, see paras 39 and 40, but these are limited in scope.

July 9, 2020
by Jeffrey

ISS Facility Services NV v Govaerts ECJ – 20 March 2020

G was employed by ISS from 2002. ISS is a cleaning and maintenance service provider to the local authority in Ghent, Belgium. It had a contract consisting of 3 lots. Lot 1: museums and historic buildings; Lot 2: libraries and community buildings; Lot 3: administrative buildings.  G was the project manager for all three areas of work.  Her time was therefore split between the three Lots. The contract was retendered. ISS were unsuccessful. Lots 1 and 3 were awarded to A and Lot 2 was awarded to CM. ISS told G she would transfer to A.  A refused, arguing there was no transfer. The Belgian labour court held there was no transfer and ISS were liable to G.  ISS appealed and the Belgian appeal court held there was a transfer to both A and CM. The matter was referred to the ECJ to consider three issues:

  1. Was there a transfer to both transferees in proportion to the extent the employee worked in each part of the undertaking transferred? Or
  2. Did the worker transfer to the part of the entity in which the worker was principally employed? Or
  3. Is there no transfer at all?

Judgment of the ECJ

The ECJ held that the option of there being no transfer could not apply as that would amount to excluding the safeguarding of rights on transfer and deprive the Directive of its effectiveness.

As to the option of the worker transferring to the transferee of the part of the undertaking in which the worker was principally employed, the ECJ held this would disregard the interests of the transferee who would be required to employ the worker on a full time basis when they worked only part time in the part of the business acquired by the transferee.

This left the option of there being a transfer to both transferees. As to this the ECJ held that

  • it was for the “[national] court to determine how any distribution of the contract of employment might take place. In that regard, [it] may take into consideration the economic value of the lots to which the worker is assigned, as suggested by ISS, or the time that the worker actually devotes to each lot…”.
  • Further, “to the extent that such a possibility amounts to dividing one full-time employment contract into a number of part-time employment contracts, it must be borne in mind that, under [Art. 2(2)(a) of the Directive], the Member States may not exclude from the scope of that directive contracts of employment or employment relationships solely because of the number of working hours performed or to be performed. Consequently, such a division cannot be excluded merely because it involves the transfer to one of the transferees of a contract of employment that covers a small number of hours of work”.
  • And; “such a transfer of the rights and obligations arising from a contract of employment to each of the transferees, in proportion to the tasks performed by the worker, makes it possible, in principle, to ensure a fair balance between protection of interests of workers and protection of the interests of transferees, since the worker obtains the safeguarding of the rights arising from his or her contract of employment, while the transferees do not have imposed on them obligations that are greater than those entailed by the transfer to them of the undertaking concerned…. However, it is for the referring court to take account of the practical implications of that division of the contract of employment in the light of the objectives pursued by Directive 2001/23”.

By way of conclusion the ECJ held; “where a transfer of undertaking involves a number of transferees, [Art 3(1) of the Directive] must be interpreted as meaning that the rights and obligations arising from a contract of employment are transferred to each of the transferees, in proportion to the tasks performed by the worker concerned, provided that the division of the contract of employment as a result of the transfer is possible and neither causes a worsening of working conditions nor adversely affects the safeguarding of the rights of workers guaranteed by that directive, which it is for the referring court to determine. If such a division were impossible to carry out or would adversely affect the rights of that worker, the transferee(s) would be regarded as being responsible for any consequent termination of the employment relationship, under Article 4 of that directive, even if that termination were to be initiated by the worker”.

Link to Judgment


On any view this is remarkable departure from the orthodox understanding of TUPE. In order for TUPE to apply the employee must be assigned to the organised grouping resources subject to the relevant transfer (Reg 4(1)). Although this is not expressly specified in the Directive it was the test developed in Botzen and others v Rotterdamsche Droogdok Maatschappij BV which held: “An employment relationship is essentially characterized by the link existing between the employee and part of the undertaking or business to which he is assigned to carry out his duties. In order to decide whether the rights and obligations under an employment relationship are transferred under [the  Directive] … it is… sufficient to establish to which part of the undertaking or business the employee was assigned”. It is difficult to see how the test for assignment can be met with an employee in the position of G in this case. Is the ECJ to be taken to have overruled Botzen?  Furthermore, the practical suggestion that the employment contract be split raises a number of practical issues. Is it legally possible to split the contract in this way?  Is the employee to be contracted part time by both transferees? Whilst, it can be argued that Service Provision Changes under Reg 3(1)(b) are a purely domestic creation and therefore this decision has no application to SPCs, this is not the case for Reg 3(1)(a) transfers.


The EAT in McTear Contracts Ltd v Bennett has applied this case to SPCs.

May 22, 2020
by Jeffrey

TUPE & CJRS Further update 22 May 2020

A new Treasury Direction (No. 2) has been issued. This makes a small but significant change to the eligibility to include employees in a CJRS claim if they are transferred after 28 February 2020.

A new employer (i.e. the transferee) can now make a CJRS claim if the employee’s employment transferred after 28 February 2020. This is whether or not an RTI PAYE submission was made before 19 March 2020 (i.e. whether or not the new employer put the transferred worker through its payroll before the 19 March 2020).

The requirements to be a “relevant employee” are in §9.4 of the new Treasury Direction and are (in summary):

(a) on 28 February 2020 the employee was employed by the transferor.

(b) After 28 February 2020 the business transferred to the transferee and the employee remained employed.

(c) The transferor had a qualifying PAYE scheme at the time of the transfer.

(d) Any of the following applies: (i) The change of employer is one that for the purposes of PAYE is not treated as a cessation of employment (i.e no P45 is issued); (ii) the transfer did not operate to terminate the employee’s contract of employment (iii) the transfer did not break the continuity of employment.

Link to Treasury Direction (No.2)

May 15, 2020
by Jeffrey

Ferguson & Others v Astrea Asset Management Ltd EAT – 15 May 2020

The most interesting issue in this case is concerned with what happens when senior employees of the transferor substantially improve the terms and conditions of their employment just before the transfer so as to seek to fix the transferee with these enhanced terms.

Are such changes void under Reg 4(4) or for some other reason.

The Background

L Ltd is a property asset a management company managing  a substantial property portfolio in Mayfair, London on behalf of BSE.  The claimants were the directors and senior employees of L Ltd.  K was the CEO, F was head of Asset Management. Other claimants held senior positions. In September 2016 BSE gave the required 12 months’ notice to terminate L’s management agreement.  AAM was to take over management of BSE’s portfolio from the end of September 2017.  In July 2017 the claimants decided to ‘update’ Ls’ staff contracts. These updated contracts gave:

  • new rights to guaranteed bonuses of 50% of salary;
  • New entitlements to termination payments of a months’ salary for each year worked;
  • in some cases, enhanced notice periods.

These updated contracts were supplied to AAM after the employee liability information was supplied in August 2017. In an email sent to other directors of L Ltd, K said that if any of them did not transfer to AAM then they would revert to their previous terms, and all agreed to this.  When the changes came to light around the time of the transfer all the claimants were dismissed for gross misconduct by AAM. They brought claims for unfair dismissal, notice pay, and unauthorised deduction from wages and reserved the right to bring further claims in the civil courts.

The Employment Tribunal Decision

There were various findings in relation to unfair dismissal and failure to consult but the significant feature of this case concerns the contractual change implemented shortly before the transfer.

The ET held that two of the claimants had not transferred to AAM and in respect of F and K, who had transferred, the terms of the new contracts were void under Reg. 4(4) because they were varied by reason of the transfer.

The Employment Appeal Tribunal Decision

The claimants appealed on the contract issue on  the following grounds that Reg 4(4) only applies to changes adverse to the employee (having particular regard to Power v Regent Security Services Limited [2008] ICR 442). Further insofar as AAM sought to rely on the EU ‘abuse principle’, (on which there were unclear findings by the ET), this had no application on the facts.

The EAT (HHJ Shanks) held 

That Reg 4(4) applies to any change and not just those adverse to employees. This interpretation is: (i) Consistent with the Directive which is to safeguard employee’s rights; (ii) Not contrary to English of EU case law, (Regent was distinguished on the basis that the contractual variation occurred after the transfer and Reg 4(4) was not in force at that time and reg 12 of the 1981 TUPE regs was not the same wording, and nothing said by the Court of Appeal suggest that advantageous changes cannot be deemed to be void); (iii) Avoids difficult questions about whether a change is or is not advantageous; (iv) Does not prevent the employee enjoys other protections within TUPE; (v) Consistent with purpose of TUPE and; (vi) the literal wording of Reg 4(4).

Turning to the EU abuse principle, this is the principle in EU law that EU law cannot be relied on for abusive or fraudulent ends. It was not disputed that this principle could apply to TUPE claims but the claimants’ case was that it did not apply on the facts. 

There are essentially two requirements for the abuse principle to apply. First there must be objective circumstances which show that, despite formal observance of EU rules, the purpose of the rules had not been achieved, and; secondly, a subjective element consisting of an intent to obtain an advantage from the EU rules by artificially creating the conditions necessary for their application.

The EAT held that both of these requirements applied.  The contractual changes did not in fact safeguard the employees rights but enhanced them therefore the purpose of TUPE had not been achieved rather some other purpose had (namely to enhance terms and conditions). Further, there was ample material to satisfy the second condition that there was an intent to obtain an advantage.

Link to EAT Judgment 

Link to ET judgment