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TUPE - Restructuring and Joint Employment

03 February 2016

Does TUPE apply if, as a result of a group restructuring, an employee’s employment is transferred from one company employer to a group of companies which includes that original employer? No, according to the Employment Appeal Tribunal.

L was employed as a decorator by a housing association, MHL which joined the Hyde Group of companies. MHL became a subsidiary of HHAL. L remained employed by MHL but HHAL paid his salary as MHL’s paying agent. In the course of the restructuring “the Hyde Group” wrote to L and offered him a post as “repairs specialist” under a contract of employment which stated that his employer would be “the Hyde Group”. The intention was that L would be employed “jointly and severally” by all of the companies within the Hyde Group.

L declined to sign his contract of employment and objected to changes including the loss of a bonus. Notwithstanding that he continued to work and in fact remained in the same team doing the same work he had done historically for MHL. In view of his refusal to sign the contract “the Hyde Group” wrote to L giving notice to terminate his contract of employment but offered to re-engage him on the new contract. L accepted the new contract which he signed, but brought an unfair dismissal alleging that the dismissal was automatically unfair under TUPE. The Tribunal had to decide whether there was a transfer of an undertaking for the purposes of TUPE.

The Tribunal had to decide therefore whether there was “an economic entity” which transferred from one employer i.e. legal person to another.