This week Sarah Lamont of law firm Bevan Ashford looks at the highly problematic legislation on staff transfers and the continuing confusion over what actually constitutes a transfer of staff from one employer to another
n Most employers are familiar with The Transfer of Undertakings (Protection of Employment) Regulations 1981, known as Tupe. What is surprising is that, 20 years after Tupe came into force, we are still trying to get to grips with it in practice.
The Act and its purpose
Tupe is the UK’s legislation enacted to implement the Acquired Rights directive. Its purpose is to protect the rights of employees where there is a transfer of the undertaking (or part) in which they are employed, to a new employer. This is done by way of an automatic transfer of the contracts of employment of employees from the transferor to the transferee. There are also special protections against dismissal and consultation obligations.
Many of the important developments have centred on the most fundamental question of all – how do you define a transfer of a undertaking?
While it is relatively easy to identify the requisite change in employer when company A buys company B’s business, it is less clear in the case of service contracts, such as where company A contracts out a service to company B, particularly where there are no assets to transfer.
This continues to be an area which is subject of argument, (see Recent developments). The key to this is the decision of the European Court in Süzen v Zehnacker Gebaudereinigung Krankenhausservice, 1997, IRLR 255. Before Süzen, the court had said that the transfer of an activity from the transferor to the transferee was sufficient to show a Tupe transfer (Schmidt v Spar und Leihkasse der Fruheren Amter Bordesholm Kiel und Cronshagen, 1994, IRLR 302). But in Süzen, the court made it clear that it is not sufficient of itself that there is a transfer of an activity.
The problem is that not all UK courts are willing to recognise this change of direction, the leading case being ECM v Cox, 1999, IRLR 559 in which the court said that “the importance of Süzen was overstated”