Employees are gaining stronger protection against dismissal in business
transfers in the wake of a succession of key cases.
Yet another defeat for an employer has exposed the risks of a common
practice under the complex Tupe laws.
Since a European Court ruling in 1997 – in the Süzen case – firms have often
judged that they do not have to maintain jobs and conditions if substantial
assets are not transferred.
But UK courts are now going back to the spirit of the European directive,
which was to protect staff rights.
Transport industry training company Remit has been forced to pay more than
£30,000 to each of four individuals it made redundant after a transfer, after
losing a county court case.
Jonathan Exten-Wright, partner at law firm Dibb Lupton Alsop, said the case
confirms that courts are following the spirit of the European directive to
"Chancing your arm on whether or not Tupe applies is increasingly
risky. The cost of getting it wrong is going up," he said.
The case follows the landmark ruling of ECM v Cox last summer, which first
undermined Süzen, and the successful claims against Kerry Foods for unfair
dismissal (Legal, 8 February).
In the most recent case, the four claimants had moved from Centrex, a
training arm of the Road Transport Industry Training Board, to Remit in April
John Ashworth, one of the four, said he was offered just over £20,000 at the
point of dismissal – about £10,000 less than his entitlement. "It was very
tempting but not tempting enough. I was due a lot more," he said.
The four won their case over breach of contract. They are also bringing a case
for unfair dismissal, to be heard next month.
Managing director of Remit Michael Allmond said the Road Transport Industry
Training Board went into administration three weeks after the transfer.
He defended the original offer to the Centrex staff as fair in the
circumstances, given that staff in other parts of the training board were
offered nothing. "The ones who transferred did well. Those who did not
were summarily dismissed without a penny," he said.
By Philip Whiteley
Minister admits Tupe law is ‘mind-boggling’
Competitiveness minister Alan Johnson has said that delays in producing
regulations on Tupe law have been caused by the "mind-boggling"
complexity of the law.
"There are still a few issues to which we need to give a little further
thought before we are ready to begin the formal public consultation period. I
hope we are in the final stages," he told a conference last week. The
paper was expected to be published in January.
Johnson said the Department of Trade & Industry has taken
"soundings" from the TUC, the CBI and the cross-sector Tupe Forum.
The aim of the changes to the law – agreed at European level and due to come
into effect by July 2001 – is to clarify the definition of transfers covered by
"The presumption will be that the contracting out, re-tendering or
bringing back in house of a service contract does entail a Tupe transfer,"
This means that recent cases in the UK are already moving closer to this
interpretation (see news story, in print issue).