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Application of TUPE to non-EU Countries
Published March 2008 By Sally Morris
The Employment Appeals Tribunal (EAT) has considered the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 to the transfer of an undertaking outside the European Union, where the business moves in its entirety, with no ongoing presence in the UK after the transfer.
These regulations, known as TUPE, provide employment rights to employees when their employer changes as a result of a transfer of an undertaking, and will apply where a business or undertaking, or part of one, is transferred to a new employer.
Facing this issue for the first time, the EAT held that the application of TUPE is determined by the situation prior to the transfer, with the important consideration being that the undertaking was situated in the UK before the transfer, with there being an organised group of employees in the UK before there is a service provision change.
The circumstances of this case, Holis Metal Industries Limited v (1) GMB & (2) Newell Limited involved the sale of parts of Newell Limited, a manufacturing business based in the UK to an Israeli company.
The affected staff were informed of the transfer to Israel and told that unless they moved to Israel from the UK to carry out their duties they would be made redundant. Unsurprisingly, the employees declined the transfer and were made redundant shortly after the transfer. Proceedings were issued alleging a failure to inform and consult with the employees under TUPE and collective redundancy legislation. In response, it was requested by Newell Limited that the proceedings be struck out on the basis that the application of TUPE did not extend to cross-border business transfers outside of the UK.
The EAT determined that the transfer and redundancy dismissals took place in the UK, and that for TUPE to apply all that is required is for the business and organised group of employees to be situated in the UK immediately before the transfer, and that as such TUPE could apply to any transfer outside the UK or the EU where post transfer, the business has no existence in the UK.
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