Regent Security Services Limited v Power Court of Appeal

Many previous cases have considered the effect of post-transfer changes to an employee’s terms and conditions, and in particular the issue of enforcement where the new terms and conditions were to the employee’s overall benefit.

In this case the Court of Appeal held that, while employees cannot be deprived of contractual rights that they had before a TUPE transfer, this does not mean that an employer can rely on TUPE to avoid honouring terms and conditions agreed with employees at or following the transfer date.

Change of contract

Before the transfer, Mr Power’s contractual retirement age was 60, but following it he signed a letter with Regent agreeing, among other things, to a contractual retirement age of 65.

When Regent nonetheless retired him at 60, Power claimed unfair dismissal.

The tribunal rejected Power’s argument that only changes to his terms and conditions that were to his detriment were void as a result of TUPE, on the basis that TUPE must have the same effect on all changes – of voiding them – whether or not they were to an employee’s benefit.

However, both the EAT and the Court of Appeal held that allowing an employer to renege on its post-transfer agreement with an employee would be contrary to TUPE’s purpose, which was the protection of employees’ rights. The result of this is that the employee may be able to cherry-pick between pre- or post-transfer terms, without interference from TUPE.

Key points

The essential principle of TUPE is to preserve employees’ pre‑transfer rights, but it does not prevent them gaining additional rights after the transfer.

Employees may be able to cherry-pick between pre- or post-TUPE transfer rights.

What you should do

Be aware of the risk that employees can potentially pick and choose between the two sets of terms and conditions when deciding what new terms and conditions to take, and keep it in mind that whatever new and beneficial terms and conditions are offered it will still be open to employees to rely on their pre-transfer contracts.

Try to ensure that beneficial changes to terms and conditions are drafted to provide that any new benefit will have to be given up should the employee try to rely on a more beneficial pre-transfer term.

Ensure that any changes to terms and conditions are made for a valid economical, technical or organisational reason.