The court of Appeal has confirmed that, on a sale of a business, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (Tupe), transfer employees to the new owner with continuity of employment and their existing terms and conditions, but without any additional right to claim benefits that they did not enjoy before the transaction.
Mrs Jackson, the claimant in the Jackson v Computershare Investor Services (CIS) case, had joined a company called Ci in January 1999. Her contract contained no terms relating to severance payments or enhanced redundancy.
In June 2004, Ci became an associated company of CIS, and Jackson’s contract was transferred to CIS under Tupe. Although employees transfer with their existing terms and conditions under Tupe, CIS had an enhanced redundancy scheme which it voluntarily extended to employees who transferred to them, but only to a limited extent.
CIS said staff who ‘joined’ (the term used in the scheme to determine eligibility) the organisation before 1 March 2002 would have more generous entitlements than employees joining it after that date.
After being made redundant in 2005, Mrs Jackson argued she should receive the benefit of the pre-2002 terms because Tupe treats her as having continuity of employment with CIS that dated back to 1999.
Although an initial employment tribunal agreed with Jackson, the Court of Appeal upheld the view of the Employment Appeal Tribunal that this interpretation was incorrect, because CIS used the term ‘joined’ rather than measuring the benefit entitlement on length of service.
This meant that although Jackson had continuity of employment from 1999, this did not impact upon her contractual entitlement under the enhanced redundancy scheme.
Rebekah Martin, an associate at Addleshaw Goddard, said: “The key point for employers is that they must be clear from the outset about how, and if, transferred staff will be permitted to enjoy generous benefits offered to the rest of the workforce.”