Authors
Shireen Shaikh

Shireen Shaikh

Senior professional support lawyer

Read More
kathryn clapp

Kathryn Clapp

Senior professional support lawyer

Read More
Authors
Shireen Shaikh

Shireen Shaikh

Senior professional support lawyer

Read More
kathryn clapp

Kathryn Clapp

Senior professional support lawyer

Read More

17 June 2020

Law at Work - June 2020 – 4 of 5 Insights

TUPE: beneficial changes to contract void

  • QUICK READ

Ferguson and others v Astrea Asset Management Ltd UKEAT/0139/19

Why care

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) provide that changes made to contracts will be void where the principal reason for the change is a TUPE transfer. Typically, this principle applies to prevent detrimental changes being made to employees' contracts. However, a point which arises less often is whether this principle operates to prevent changes being effective where they are made to the employee's benefit. According to the EAT, the answer is yes, the principle can operate both ways, it will apply even where the changes made are to the employee's advantage.

The case

Four owner directors of a company lost a contract to an incoming service provider (the transferee in a service provision change). Just before the transfer, they varied their own contracts, giving themselves enhanced bonuses and severance payments. When the transferee discovered this, it refused to take some of the employees on and dismissed others for gross misconduct. The key finding of the decision is that the changes were held to be void; the sole or principal reason they were made was because of a transfer. The EAT rejected arguments that, based on previous case law, only detrimental changes are void.

What to take away

This case is rather unusual in that it concerns directors who were clearly acting in an abusive way towards the transferee and who were looking to make an unscrupulous gain for themselves. However, it does clarify that it is not only detrimental changes that will be void. The state of the law in this area is complex and advice should always be sought where changes are being made following a TUPE transfer. A Court of Appeal case, Power v Security Services, is an example of changes successfully being negotiated with employees following a TUPE transfer and was held to be distinguishable.

In this series

Employment, pensions & mobility

Pensions – always on the agenda

QUICK READ

by Multiple authors

Employment, pensions & mobility

TUPE: beneficial changes to contract void

QUICK READ

by Shireen Shaikh, Kathryn Clapp

Employment, pensions & mobility

Law at Work: Hot topics - June 2020

QUICK READ

by Shireen Shaikh, Kathryn Clapp

Call To Action Arrow Image

Latest insights in your inbox

Subscribe to newsletters on topics relevant to you.

Subscribe
Subscribe

Related Insights

employment
Employment, pensions & mobility

Contemplating redundancies as furlough scheme ends

16 September 2020
QUICK READ

by Helen Farr and Shireen Shaikh

Click here to find out more
business people talking
Employment

Dismissal without following a prior process following a breakdown in the employment relationship was found to be fair

Gallacher v Abellio Scotrail Ltd

16 September 2020
QUICK READ

by Shireen Shaikh

Click here to find out more
waiting room
Employment, pensions & mobility

No requirement for employer to re-engage employee following unfair dismissal where lack of trust and confidence in employee's capability

Kelly v PGA European Tour

16 September 2020
QUICK READ

by Kathryn Clapp

Click here to find out more