An analysis of the Transfer of Undertakings (Protection of Employment) Regulations 2006

Industrial Law Journal

Volumn 35, Issue 2, 2006, Pages 113-139

  McMullen, John ^a,b  

^a Watson Burton LLP ^*  (United Kingdom)

^b UNIVERSITY OF LEEDS   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 33745439567     PISSN: 03059332     EISSN: 14643669     Source Type: Journal    
DOI: 10.1093/indlaw/dwl010     Document Type: Article

References (123)

1. OJ L61, 5.3.1977, p 26.
2. SI 1981/1794.
3. SI 1995/2587.
4. SI 1999/1925.
5. [1994] IRLR 392. Minor amendments were also made by the Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999 (SI 1999/2402).
6. OJ L201, 17.7.1998, p 88.
7. OJ L82, 22.3.2001, p 16.
8. The deadline for transposition of Directive 98/50 was 17 July 2001. The UK has escaped infraction proceedings for late implementation of the Directive. This is presumably on the basis that Directive 98/50 comprised, largely, measures consolidating existing ECJ case law (such as in the area of the definition of a transfer of an undertaking (Art 1(b)), its application to the public sector and to not for profit undertakings (provided these are carrying out economic activities (Art 1(c))) and the application of the Directive to insolvency situations (Art 5)) and, on the other hand, measures which were optional for member states, such as the transfer of pension rights (Art 3(4)(a)), provision by a transferor of employee information to transferees (Art 3(2))and joint and several liability (Art 3(1)).
9. URN/926. The consultation period was until 7 June 2005 and the intention was to lay Regulations soon thereafter, to come into effect on 1 October 2005. However, notwithstanding that views on policy issues were not invited on the ground these had already been decided (see consultation document: 'next steps'), the volume of responses (presumably on technical grounds) was so great that the 1 October 2005 date was put back until 1 April 2006.
10. A link to the Regulations is to be found at http://www.opsi.gov.uk/si/ si2006/20060246.htm. The Government has also published guidance on the new Regulations. A link to this Guidance is published at http://www.dti.gov.uk/er/individual/tupeguide2006regs.pdf. Also of interest to those interpreting the new Regulations is the Government response to the consultation which shows the Government's thinking in formulating the final Regulations. The link to this document is at http://www.dti.gov.uk/er/tup_mivtresponse_feb06.pdf. The 2006 Regulations apply to any transfer which takes place on or after 6 April 2006, but the duty on a transferor to provide a transferee with employee liability information does not apply to a transfer which takes place on or before 19 April 2006. Finally, Regulations 13, 14, 15 and 16 do not apply in the case of a service provision change that is not also a transfer of an undertaking, business or part of a business that takes place on or before 4 May 2006.
11. SI 2006 No 246.
12. TUPE 2006, Reg 20(1) (subject to Reg 21 (transitional provisions)).
13. See Schedule 2.
14. [1997] IRLR 255.
15. This is because the power to implement Community obligations by Regulation contained in the European Communities Act 1972, s 2(2) provides that the Regulation is to be made 'for the purpose of implementing any Community obligation'. The argument is that if the Regulation goes beyond the implementation of the Community obligation strictu sensu, it will be ultra vires: See remarks in Addison v Denholm Ship Management (UK) Ltd [1977] ICR 770 (considering Reg 2(2) of TUPE 1981 and whether it was ultra vires the European Communities Act 1972, s 2(2) to confer TUPE protection on seafarers employed in an undertaking which includes, but is not limited to, a ship and its crew).
16. Cf, however, more recently, the EAT in NUMAST v P & O Scottish Ferries (EAT(S))/0060/04 which adopted the reasoning of Otton LJ in R v Secretary of State for Industry, exp UNISON, GMB and NASUWT [1996] IRLR 438 when he described the powers under s 2(2) of the ECA 1972 as being 'very general and wide'.
17. Given the remarks also of the Court of Session in Castleview Services Ltd v Howes (EAT/29/99), the EAT in NUMAST therefore considered that Reg 2(2) of TUPE 1981 was not ultra vires.
18. See eg the Transfer of Undertakings (Protection of Employment) (Rent Officer Service) Regulations 1999, SI 1999/2511 and the Transfer of Undertakings (Protection of Employment) (Transfer to OFCOM) Regulations 2003, SI 2003/2715.
19. TUPE 2006, Sched 1, para 2.
20. SI 2006 No 177.
21. See eg Dr Sophie Redmond v Bartol [1992] IRLR 366
22. Mayeur v Association Promotion de L'Information Messine (APIM) [2000] IRLR 783
23. Collino and Chiappero v Telecom Italia Spa [2000] IRLR 788
24. Vigøsdøttir v Islandpøstur hf (Iceland Post Ltd) [2002] IRLR 425 (EFTA Court)
25. Sanchez Hidalgo v Association de Servicios Aser and Sociedad Cooperative Minerva
26. Ziemann v Ziemann Sicherheit GmbH and Horst Bohn Sicherheitsdieist [1999] IRLR 136.
27. [1996] IRLR 701.
28. [1999] STC 1155 (see McMullen, Business Transfers and Employee Rights 5[24.20].
29. For example, the Transfer of Undertakings (Protection of Employment) (Rent Officer Service) Regulations 1999 (SI 1999/2511) and the Transfer of Undertakings (Protection of Employment) (Transfer to OFCOM) Regulations 2003 (SI 2003/2715).
30. (2000): http://www.civilservice.gov.uk/publications/pdf/ stafftransfers.pdf, as supplemented by the Code of Practice on Workforce Matters in Public Sector Service Contracts
31. (2005): http://www/cabinetoffice.gov.uk/opsr/documents/pdf.copwm.pdf.
32. See, respectively, Spijkers v Gebroeders Benedik Abbatoir CV [1986] ECR 1119 and Sanchez Hidalgo Asociation de Servicios Aser and Sociedad Cooperative Minerva
33. Ziemann v Ziemann Sicherheit GmbH and Horst Bohn Sicherheitsdienst [1999] IRLR 136
34. Francisco Hernandez Vidal SA v Gomez Perez
35. Santner v Hoechst AG
36. Gomez Montana v Claro Sol SA and Red Nacional de Ferrocarriles Espanoles (Renfe) [1999] IRLR 192)
37. and see McMullen, Business Transfers and Employee Rights, Chap 5.
38. ECJ Case C-48/94 [1996] IRLR 51.
39. For a detailed discussion see McMullen, Business Transfers and Employee Rights 5[126].
40. EAT(S)/0095/04.
41. As no change of employer is involved: See Henry v London General Transport Services Ltd (EAT/960/97).
42. See also, McChrystal v Wimpey Homes Holdings Ltd [2003] All ER (D) 421
43. Brookes v Borough Care Services and CLS Care Services Ltd [1988] IRLR 636.
44. The House of Lords Select Committee on the European Communities, Fifth Report, Session 1995-96: Transfer of Undertakings: Acquired Rights (HL Paper (1995-96) No 38, 11 July 1995) was in favour of the extension of the Directive to acquisitions of share capital of companies. But in the 2001 Consultation Paper on TUPE, 'Transfer of Undertakings (Protection of Employment) Regulations 1981: Government Proposals for Reform. Detailed Background Paper, Employment Relations Directorate, Department of Trade and Industry, September 2001, it was stated that the Government did not 'intend to apply the legislation to completely new areas such as takeovers by share transfer...'. It is understood that there will be no enthusiasm at European level for taking this further. The 'Better Regulation' initiative is a centrepiece of the European Commission's 'Partnership for Growth and Jobs' (the renamed 'Lisbon Strategy') launched in the Spring of 2005. This involves (1) withdrawal or modification of legislative proposals (on 27.9.05 the Commission announced its intention to withdraw one third of screened legislative proposals) (2) measures to simplify existing legislation and (3) better quality of new Commission proposals by systematic use of impact assessment and public consultation in the development of new policy proposals (see IP/05/311, Brussels, 16 March 2005). Extending the Acquired Rights Directive to share transfers has, therefore no place in this policy. Clarifying the existing Directive's application to cross-border transfers (see infra, does).
45. [1986] 2 CMLR 296.
46. [2001] IRLR 171.
47. [2004] IRLR 168.
48. See also the European Court decision in Güney-Görres v Securicor Aviation (Germany) Ltd (Case C-232/04) where the court ruled on a referral where the facts were that the claimant's employer was a security contractor carrying out security checks on passengers and their baggage at Düsseldorf airport. To carry out the contract the client made available to the contractor aviation equipment necessary to carry out the security checks. This could only be used for the purpose in hand and not in an independent commercial manner. The European Court held that in examining whether there is a transfer of an undertaking or business within the meaning of the Directive, in the context of a fresh award of a contract, the transfer of the assets for independent commercial use is not an essential criterion for finding that there was a transfer of those assets from the original contractor to the new contractor.
49. See RCO Support Services Ltd v UNISON [2002] ICR 751
50. P & O Trans European Ltd v Initial Transport Services Ltd [2003] IRLR 128
51. GEFCO UK Ltd v (1) Oates and (2) Car and Delivery Co Ltd (EAT/0014/05).
52. [2005] CSIH 68.
53. Another significant example of this appoach is ECM (Vehice Delivery Service) v Cox [1998] ICR 631 where the Court of Appeal suggested that, among the factors to be taken into account in this multifactorial approach, was the motive of the putative transferee in deciding whether to take on employees under the test in Süzen.
54. And 'contractor' includes 'subcontractor' (Reg 2(1)).
55. Case C-209/91 [1995] CMLR 331.
56. P 10.
57. P 11.
58. Although, by the time of the Consultation Document of March 2005 the Government's advocacy of such an exemption was becoming neutral. First, it argued that drafting a generic definition of 'professional services' was too difficult (in the 2005 draft Regulations the 'professional services' to be excluded were to be identified in a (never completed) schedule). And in paras 31 and 32 of the Consultation Document (at p 20) the Government cited two arguments in favour of the exclusion but five against (one of the most compelling of which being that white collar workers deserve protection equal to that given to blue collar workers). The inclusion of 'professional services' in the supplementary definition has nonetheless excited keen interest in the legal press: See 'TUPE changes 'force' legal teams on firms', Law Society's Gazette, 9 March 2006, p 1.
59. EAT/0256/04.
60. Thus not infringing the principle in ECM (Vehicle Delivery Service) v Cox [1998] ICR 631, note 32 supra.
61. [1988] IRLR 315.
62. [1993] IRLR 133.
63. (Case E/3-95).
64. [2002] IRLR 425.
65. [2004] IRLR 74.
66. For cases illustrative of when a variation will be considered to be by reason of a transfer, see Lansing Linde Severnside Ltd v Spiers (EAT/ 1490/01)
67. and Carlton Care Ltd v Rooney (EAT/112/00).
68. [2005] IRLR 61.
69. [1998] IRLR 706.
70. [1998] IRLR 504.
71. [1998] IRLR 700.
72. [2001] IRLR 738.
73. [1985] ICR 546.
74. See Gibson v Ciro Citterio (Menswear) plc (EAT/276/97).
75. P 17.
76. P 17.
77. P 18.
78. [2002] IRLR 248.
79. P 20.
80. For the case law here, see Trafford v Sharpe and Fisher (Building Supplies) Ltd [1994] IRLR 325 (EAT)
81. Warner v (1) Microsystems Centre (Slough) Ltd (2) Adnet Ltd [1998] IRLR 94 (CA)
82. Whitehouse v Chas A Blatchford & Sons Ltd [1999] IRLR 492 (CA)
83. Kerry Foods Ltd v Creber [2000] IRLR 10 (EAT)
84. Collins v John Ansell & Partners Ltd (EAT/124/99)
85. Thompson v SCS Consulting Ltd [2001] IRLR 801 (EAT)
86. Convy v Saltire Press Ltd [2000] All ER (D) 1332 (EAT).
87. See Canning v (1) Niaz (2) McLoughlin [1983] IRLR 431
88. although this decision was doubted subsequently in Gorictree Ltd v Jenkinson [1985] ICR 51
89. and Anderson v Dalkeith Engineering Ltd [1985] ICR 66.
90. [2002] IRLR 578.
91. [2004] IRLR 74.
92. http://www.odpm.gov.uk/pub/98/odpmCircular032003BestValuePerformance Improvementwith2004addensumspdf196Kb_id1136098.pdf
93. For an outstanding summary of the law in this area, see D. Pollard, 'Pensions and TUPE' (2005) 34 ILJ 127-57.
94. See also B.A. Hepple and K. Mumgaard, 'Pension Rights in Business Transfers' (1998) 27 ILJ 309.
95. [1989] IRLR 161.
96. [2000] ICR 717.
97. [1985] ECR 469.
98. See D'Urso v Ercole Marelli Elettromeccanica Generale SpA [1992] IRLR 136
99. Spano v Fiat Geotech SpA and Fiat Hitachi Excavators SpA [1995] ECR 1-4321
100. Europièces SA v Sanders [1999] All ER (EC) 831
101. and Jules Dethier Équipement v Dassy and Sovram SPRL, In Liquidation [1998] IRLR 266. The Government's view is that 'relevant insolvency proceedings' means any collective insolvency proceedings in which the whole or part of the business or undertaking is transferred to another entity as a going concern.
102. J. Armour and S. Deakin, 'Insolvency, Employment Protection and Corporate Restructuring: The Effects of TUPE' Centre for Business Research, University of Cambridge, Working Paper 204 (2001).
103. P. Davies, 'Amendments to the Acquired Rights Directive' (1998) 27 ILJ 365.
104. J. Armour and S. Deakin, op cit.
105. See Regulation 9(4).
106. A similar (but differently constructed) obligation will apply soon in the Republic of Ireland by virtue of s 21 of the Employees (Provision of Information and Consultation) Act 2006.
107. [2003] IRLR 266.
108. See also McNeish v Blue Diamond Services Ltd [2003] All ER (D) 20.
109. And the transferee is thereby unable to take advantage of the employer's insurance cover by virtue of the decision in Bernadone v Pall Mall Services Group [2000] IRLR 487.
110. See, in detail, McMullen, Business Transfers and Employee Rights, 13[52].
111. Section 203 of the ERA 1996 is mentioned in Reg 18 (contracting out). Reg 18 does state that s 203 of the ERA 1996 applies to the TUPE Regulations 'as if they were contained in that Act'. But a claim under Reg 15 of the TUPE Regulations 2006 (for breach of the provisions of Reg 13 of TUPE) is not one referred to in s 203(2)(f) (claims which may be settled by compromise agreement under the Act) either directly or indirectly as one of the claims listed under s 18(1) of the Employment Tribunals Act 1996 (ERA s 203(2)(f); ERA 1996, s 18(1)). Although Reg 16(1) of the Regulations states s 18 of the ETA Act 'shall apply to the rights conferred by Reg 15', the position is far from clear, and a better use could have been made, in the Regulations of Schedule 2 (consequential amendments to existing legislation).
112. TUPE: Draft Revised Regulations: Government Response to the Public Consultation, February 2006, para 8.6, p 36.
113. http://www.dti.gov.uk/er/individual/tupeguide2006regs.pdf p33 [Accessed 12 February 2006].
114. These are an award of compensation under section 80I(1B), a basic award of compensation for unfair dismissal, an additional award of compensation for unfair dismissal, an award under s 112(5) or a redundancy payment.
115. Notwithstanding the territoriality provisions concerning employees in Reg 3(4)(b). There is significant economic activity in the area of cross-border mergers and acquisitions and also, now outsourcing. For the former, see A. Cosh and A. Hughes, 'International Merger Activity and the Regulation of Mergers: A UK Perspective', 23 Emperica (1996) 279-302
116. R. Conn, A. Cosh, P.Guest and A. Hughes, 'The Impact on UK Acquirers of Domestic, Cross-Border, Public and Private Acquisitions', ESRC Centre for Business Research, University of Cambridge, Working Paper No 276
117. and the footnote literature in J. McMullen, 'International Outsourcing and Transnational Transfers of Undertakings: A United Kingdom Perspective', 26(10) The Company Lawyer (2005) 296.
118. Memorandum on the Rights of Workers in Cases of Transfers of Undertakings (Commission Services Working Document, October 2004.
119. See also Communication on the Social Agenda COM (2005) 33 final (9.2.2005).
120. For more material on the transnational issues of employment transfers see Professor Bob Hepple QC 'The Legal Consequences of Cross Border Transfer of Undertakings Within the European Union', A Report for the European Commission, DG-V, May 1998 (http://europa.eu.int/comm/emmployment-_social/labour_law/docs/ transfer_crossborder_study_hepple_en.pdf)
121. J. McMullen, 'International Outsourcing and Transnational Transfers of Undertakings: United Kingdom Perspective' (and the footnote material therein), (2005), The Company Lawyer, 296
122. J. Evans, 'Offshoring Outsourcing: Is the Law Failing to Keep Up?', (2004), Employment Law Journal, 8-10
123. J. Evason and M. Kurnatowska, 'Outsourcing and Offshoring Employment Law Issues' 16(11) PLC (2005) 35-44.