Employers involved in Transfer of Undertakings (Protection of Employment) (Tupe) proceedings may be liable for incoming employees even before the transfer has taken place.
The case, G4S Justice Services v Anstey and Others, which was heard in March, concerned a situation where the outgoing contractor dismissed two employees for gross misconduct three weeks before its contract was due to end. The employees appealed before the transfer took place, which led to a dispute between the old and new contractors about which was responsible for hearing the employees’ appeals.
The outgoing contractor heard the appeals and decided both employees should be reinstated but the new contractor refused to take the employees on.
As a result, the Employment Appeal Tribunal ruled that the employees were retrospectively employed at the time of the transfer, so their employment and all liabilities relating to it transferred to the new contractor. This included liability for back pay, benefits and unfair dismissal.
Jon Fisher, employment associate at law firm Pinsent Masons which represented the outgoing contractor, explained: "The concept that a transferee can be bound by the outcome of a transferor’s internal appeal process is open to abuse because the ruling creates a significant incentive for transferors to grant reinstatement in these cases so that they can pass on any liabilities relating to the dismissed employees."