This case in the Employment Appeal Tribunal concerns the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) to a business transfer where the transferee (the acquiring company) hasn’t specified that TUPE applies to the transfer.
The facts in Gabriel v Peninsula Business Services Ltd & Anor
Ms Gabriel (“the Claimant”) commenced employment with Peninsula Business Services (“the First Respondent”) in March 2007. In January 2007 the First Respondent had purchased the shares of a company called Qudos Consulting Ltd and changed its name to QDOS Taxwise Ltd. In December 2007 the Claimant started working in the First Respondent’s Taxwise department. She remained employed with the First Respondent.
On 26 February 2009 the First Respondent notified its employees by email that were working in the Taxwise department that QDOS Taxwise Ltd had changed its name to Taxwise Services Ltd (“the Second Respondent”) and that from 1 April 2009 the trade and assets of the Taxwise business would transfer to the Second Respondent. The Claimant did not receive this email. She was therefore unaware that her employment had transferred. She remained on her existing terms and conditions and did not receive any notification that the identity of her employer had changed. However, her payslip did change to identify the Second Respondent as her employer and she received a P60 indicating that her employment had changed.
The Claimant argued at the Employment Tribunal that Peninsula had not argued that TUPE applied at the time of the transfer or afterwards. Her contract of employment could therefore not have automatically transferred to the Second Respondent. The Employment Tribunal rejected this argument and stated that TUPE did in fact apply and the Claimant had therefore transferred to the Second Respondent. The Claimant appealed on the grounds that:
– Neither of the Respondents had stated that TUPE applied to the transfer of the Claimant’s contract of employment. In the absence of statutory guidance the position relied on was therefore that of common law – the House of Lords’ decision in Nokes v Doncaster Amalgamated Colleries Ltd (1940)
The law relating to the transfer of employment
If TUPE applies to the transfer of an employee’s contract of employment from a transferor business to a transferee business then under TUPE the transferee assumes all assets and liabilities of the transferring business. This includes the contract of employment of employees of the transferor. However, the transferor must inform its employees that TUPE applies to the transfer of their employment. If the transferor fails to do so then TUPE will not necessarily apply to the transfer and the employee’s contract of employment may not transfer automatically to the transferee.
The Employment Appeal Tribunal’s decision in Gabriel v Peninsula Business Services Ltd & Anor
The Employment Appeal Tribunal considered that TUPE did not apply in this instance. The fallback position was therefore to consider the binding decision of the House of Lords in Nokes v Doncaster Amalgamated Colleries Ltd. In Nokes the House of Lords considered that the contract of employment of an employee cannot be automatically transferred to another employer without his or her consent. The Claimant had not consented to the transfer and her employment therefore remained with Peninsula Business Services.
Our specialist employment lawyers’ thoughts on Gabriel v Peninsula Business Services Ltd & Anor
Our guidance for employers in this case would be:
- In the appropriate circumstances make sure that you inform all employees subject to the transfer that the transfer of their employment will be subject to TUPE
- Make sure that all employees have been informed. This is crucial. Failure to inform may mean that TUPE does not apply to that employee’s transfer.
- To dot the I’s and cross the t’s make sure that employees either have a clause in their contract giving explicit consent to any potential transfer or make sure that all employees consent to the transfer
Our guidance for employees in this case would be:
- Check your contract of employment to determine what your rights and obligations in the case of a TUPE transfer are
- Carefully consider your position if you’re informed that you’re going to be subjected to a TUPE transfer. It is advisable to obtain specialist employment law advice.