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Does TUPE always apply to a transfer?

Background

Under the TUPE regulations, a business transfer occurs whether there is a transfer of all or part of an undertaking or business to another person or company. Previously European case law has emphasised the need for there to be a termination of employment by one employer, who is then replaced by the new employer. In the case of Hyde Housing Association Limited and others v Layton, the EAT considered what happens when a sole employer joins a group of companies, and whether TUPE should be followed?

The Facts

The Claimant was employed by Martlet, which  joined a group of companies called the Hyde Group, and became a subsidiary of Hyde Housing Association (HHA). Following the transfer, Martlet continued to employ the claimant, although HHA paid his salary. HHA Group wished to restructure their property services and wanted the Claimant to be employed on a joint basis by all the members of the Hyde Group, engaging him on new terms and conditions. However, the Claimant refused to sign the new terms offered. The restructure went ahead and resulted in the termination of the claimant’s employment and an offer to re-engage him on the new terms and conditions. He accepted but began a claim for unfair dismissal.

The Tribunal first concluded that there had been a TUPE transfer, however on appeal HHA argued that in order for TUPE to apply there must be a transfer to a separate person. Applying the facts of the case, the EAT saw that the day-to-day control of Martlet had not changed following the restructure. The EAT held that there could be no TUPE transfer where the transferor remains the employer. The TUPE regulations require different employers to be carrying out the activities pre and post transfer.

Whilst TUPE may apply to intra group transfers, this decision confirms that this will not be the case where the legal identity of the employer does not change after transfer. This case acts as a reminder to employers that not all “transfer” situations give rise to the need for TUPE. However, employers should seek legal advice on its obligations before embarking on a transfer or restructure, as getting it wrong can have some costly consequences.

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