Employers cannot rely on TUPE to avoid liability under employment contracts that have been varied post-transfer. Employees can. Under TUPE, they can choose to reject any ‘transfer-related’ change in contract terms which is to their detriment.
In Power v Regent Security Services the EAT was concerned with an undertaking where, pre-transfer, the contractual retirement age had been 60. Post-transfer, the new employer varied employment contracts to increase the retirement age to 65. The employee was sacked at 60, three months post-transfer. He argued that the post-transfer variation was valid and so the ‘normal retirement age’ was now 65 and he could bring an unfair dismissal claim (At that time, there was no right to claim unfair dismissal if over ‘normal retirement age’ or over 65). The employer argued that, under TUPE, the post-transfer variation was ineffective. The employee had been dismissed at the pre-transfer contractual retirement age of 60 and so could not bring an unfair dismissal claim. The tribunal and the EAT decided that the TUPE regulations were there to protect employees not employers. If the post-transfer variation improved the employee’s position, he could take advantage of it.
Points to note –
- This case arose before the Employment Equality (Age) Regulations 2006 came into force. There is now no upper age limit on the right to claim unfair dismissal but, provided that special statutory procedures are followed, a genuine retirement dismissal will be fair. Advice should be sought at least 6 months before any proposed retirement date if the procedures are to be followed correctly.
- Employers cannot be sure that any post-transfer change in contract terms will be effective, even if all they are trying to achieve is harmonisation of terms throughout the workforce, if the variation is ‘transfer-related’. For this reason, they should make it clear in any new post-transfer contract documentation that employees cannot have the benefit of the new contract terms if they seek to enforce the old pre-transfer contract. We shall be happy to advise on appropriate wording.