The
Transfer of Undertakings Regulations (TUPE) are designed to protect
the rights of workers when they are transferred to another company.
The Employment Appeals Tribunal ruled for the first time in
December that TUPE does apply in cases where ownership of a company
passes to a firm outside the EU.
Newell Ltd was a company with a blinds manufacturing business in
Tamworth. Its factory was bought by Israel-based Holis Metal
Industries, which sought to transfer all its work to Israel. The
GMB union, representing employees, objected and said that the
companies had not complied with TUPE.
The Employment Appeals Tribunal (EAT) ruled that TUPE can apply
when jobs are transferred outside of the EU, though it did not
apply it in this case.
But Ben Doherty, an employment specialist with Pinsent Masons,
the law firm behind OUT-LAW.COM, said that TUPE could in fact act
against workers' interests when jobs are transferred so far
away.
"If employees are informed of a transfer abroad, they could
object to the transfer," said Doherty. "If they do, this will mean
that their employment does not transfer but it will terminate with
no right for the employee to be treated as having been dismissed.
Accordingly the employee will have no right to a redundancy payment
or notice pay."
Doherty said that the alternative – waiting for the transfer to
happen then seeking redundancy – is also fraught with problems.
"Alternatively should the employee wait for the transfer to
happen and hope that they are made redundant by the new employer?
In this instance if the employee is made redundant but does not
receive a redundancy payment they will be left to litigate against
the new employer. This in turn raises questions of jurisdiction:
should the employee litigate in the UK tribunals or in the country
in which the new employer is based?"
"It also raises questions of enforcement: if the employee
obtains a judgment from a UK tribunal, how does he enforce that
judgment against the new employer? At the very least this process
will be time-consuming and expensive," said Doherty.
Judge Ansell of the EAT said that he did not have enough facts
to rule conclusively on whether the redundancies took place in the
UK or elsewhere, so no final ruling could be made. But he did say
that he was satisfied that TUPE does apply outside of the EU.
"Set against the purpose of protecting the rights of workers in
the event of change of employer it seems to me that a purposeful
approach requires that those employees should be protected even if
the transfer is to be across borders outside the EU," he said. "It
is not a case of either the UK or the EU seeking to legislate
outside their jurisdictions without good reason. I am satisfied
that the pre-transfer requirement of location in the UK acts as a
significant limitation which should that not offend against the
comity of notions."
Ansell said that the regulations were vital in an age where
outsourcing is an increasingly common and international
phenomenon.
"I am also satisfied that the service provision changes brought
into the 2006 regulations, where again the only limitation is that
there should have been an organised group of employees situated in
Great Britain immediately before the service provision change, is
clearly aimed at the modern outsourcing of service provision,
particularly call centres, whether inside or outside the EU," he
said.
Ansell did admit that it would be hard to enforce UK law on an
Israeli company, but said that the problem was not unique to this
case. "I accept that enforcement may present a problem although I
accept [GMB lawyer] Mr Siddall’s argument that enforcement can
present a problem even within the EU," he said. "In these days of
multi-national corporations and economic inter dependency I would
regard the issue of enforcement as less difficult then it used to
be – witness the willingness of Holis to submit to the jurisdiction
in this case."
