UK: TUPE And Transnational Transfers

It is common ground that TUPE can apply even if the business or service being transferred is leaving the UK to go to another country, even if that country is outside the EU. That was established by the EAT in Holis Metal Industries Ltd v GMB [2008] IRLR 187. Often, there is no employment rights issue involved, as employees may simply not wish to transfer their place of work to another country. The focus is then usually on redundancies (although when there is a transnational transfer, the transferor employer must remember to inform and consult with employee representatives, as the employer failed to do in Holis itself). The issue arose again in Xerox Business Services Philippines Inc. Ltd (UK Ltd) v Zeb

In this case, Mr Zeb was employed as a commercial executive in a finance accounting team by Xerox UK Ltd (X UK) in Wakefield. His contract provided for his work location to be "Leeds or Wakefield" although at the material time, he was employed at a business park at Wakefield near junction 41 of the M1. It was decided to move some of the accounting team's work offshore. It chose to move the finance accounting team function from X UK in Wakefield to Xerox Business Services Philippines Inc. Ltd (X Philippines) in Manilla in the Philippines.

The employer accepted that TUPE applied. It told employees that they had a choice. They could formally object to the transfer. If so, their employment would not transfer to X Philippines but they would be made redundant on more generous terms than the law required. If they did not signify objection, they could transfer for X Philippines but only on local Philippines terms and conditions and they would be paid a statutory minimum redundancy payment from X UK as it would have no requirement to carry out the transferring work in the UK after the transfer.

In this case, Mr Zeb wanted to go with the transfer and he wanted, under TUPE, to go under his present terms and conditions. His present terms and conditions were 10 times more favourable than local conditions in the Philippines. The employer would not agree to a transfer to the Philippines on UK terms and conditions. He was dismissed and given a statutory redundancy payment, a payment in lieu of notice and other payments due. He claimed unfair dismissal. He believed he was entitled to transfer to Manilla on the same terms and conditions that he enjoyed in the UK and his dismissal was automatically unfair under TUPE. The Employment Judge found that there had been a variation of Mr Zeb's contract involving a change of workplace from Wakefield to Manilla. As such, he was entitled to go, under TUPE, under UK terms and conditions and as he was prevented from doing so, he was automatically unfairly dismissed. Redundancy was not the true reason for dismissal as contended for by the employer, as there was a TUPE transfer. The employer appealed.

It was accepted by the parties that there was a TUPE transfer and that Holis applied. Although Holis was not in any way disapproved by the EAT in Xerox there was no need to discuss the merits of the Holis decision, given the concession by the parties in the case. The question was whether the Employment Judge had been right. The case raises the novel issues of whether, on a transnational transfer, an employee is automatically entitled to insist on moving under TUPE. The assumption has always been that the employee is entitled to insist on a move. But in Xerox, the EAT pointed out that this depends on the terms of the employment contract. The employee is entitled to transfer under TUPE to a new employer, but only on the employee's present terms and conditions. In this case, the employee was employed to work in Leeds/Wakefield and not in Manilla. He could not, therefore, unilaterally insist on a change to his employment contract to allow for this change of location.

The employment judge had sought to resolve this issue by finding a variation of the employment contract entitling the employee to move to Manilla. There was no evidence of such a variation. The employer was insistent that if the employee were to move, local Manilla terms and conditions would apply. Nor did the employee have any unilateral contractual right to change his place of work. On that basis, the true reason for dismissal was redundancy, as the requirement for an employee was to carry out work of a particular kind in the place where the employee was employed, had ceased (see Employment Rights Act 1996, section 139 (1(b)).

The EAT concluded with a reminder that notwithstanding the availability of redundancy as a reason for dismissal, in a case like this, an employment tribunal must always address the terms of Regulation 7 of TUPE. Regulation 7(1) provides that if the sole or principal reason for the dismissal is the transfer, the dismissal is automatically unfair unless the sole or principal reason for the transfer, under Regulation 7(2), is an economic, technical or organisational reason, entailing a change in the workforce. If the latter applies, the reason for dismissal will either be redundancy (as in the present case) or "some other substantial reason" and the employment tribunal may examine the fairness of such dismissal under the general principles of section 98(4) of the Employment Rights Act 1996.

Interestingly, we are reminded that, prior to the changes made by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014, a dismissal occasioned by a change of location on a TUPE transfer would be automatically unfair and Regulation 7 (2) would not apply. This is because the Courts declined to recognise that a change of location was a change in the workforce for the purposes of the economical, technical or organisational reason entailing a change in the workforce. Of course, in relation to TUPE transfers that take place on or after 31^st January 2014, the position is different. In Regulation 7(3A) of TUPE, it is now provided that the expression "changes in the workforce" includes a change in the place where employees are employed by the employer to carry on the business of the employer or to carry out work of a particular kind for the employer. In other words, changes of location dismissals are no longer automatically unfair under TUPE (although they must be fair within the meaning of section 98(4) of the ERA 1996).

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