TUPE regulations go under the spotlight July 2011
Posted date: 24 June 2011
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) have been brought into question due to a Supreme Court ruling.
The issue of how TUPE applies to contractual collective bargaining arrangements following a transfer has remerged in the case of Parkwood Leisure v Alemo-Herron. The Supreme Court has rejected a Court of Appeal decision which stated that a transferee employer was only bound by collective agreements in force at the time of the transfer, and not subsequent agreements.
The ruling is of particular interest to private sector employers who have taken on public sector workers as part of a TUPE transfer. As part of these regulations, the employer who takes on the employees must honour their employment terms and conditions.
The case centres on the issue of whether or not public sector employees who transfer to the private sector are entitled to increases in pay which are negotiated after they have been transferred via the TUPE regulations.
Previously the Court of Appeal ruled that the employer was only bound by collective agreements at the time of transfer. It would not have to adhere to subsequent collective arrangements.
The Supreme Court has rejected this approach and has sent the case to the Court of Justice of the European Union for clarification.
Mark Hammerton, Partner at Eversheds, said: “Private sector employers in particular may have reason to feel nervous that the comfort offered by the Court of Appeal may be short-lived, and they will face continuing obligations under re-negotiated collective agreements.”
Hammerton warns that until this issue is clarified many employers and employees will be left in limbo. This could lead to some employers putting off plans which would involve acquiring public sector operations.
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