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Company Loses Appeal Over Unexpected TUPE Liability

When taking over other companies or contracts from other businesses it's important to be sure of the liabilities that may apply under TUPE - the Transfer of Undertakings (Protection of Employment) Regulations 1981.

Failure to do so could result in unexpected costs as happened in a recent case involving two companies, Born London Ltd and Spire Production Services Ltd.

Born took over a major printing contract from Spire, which involved taking on some of Spire's employees. The transfer was subject to TUPE regulations, which protected the contractual rights of the transferred employees.

When providing Employee Liability Information, Spire stated that Christmas bonuses paid to the employees were non-contractual. It later transpired that the bonuses were contractual and so Born was obliged to pay them.

It tried to recover the costs from Spire on the basis that it had not provided accurate information as required under TUPE.

The Employment Tribunal dismissed the claim saying it had no prospect of success. It held that Spire simply had to provide information about employment as required by the Employment Rights Act 1996. This did not require details about whether remuneration was contractual or not.

The Employment Appeal Tribunal upheld that decision.

The case highlights the need to undertake full due diligence when employee transfers take place under TUPE as there can be pitfalls.

To find out more about JPP's employment law services please visit employment law


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