Regent Security Services v Power (Court of Appeal)

Before being transferred under TUPE to Regent, Mr Power had a contractual retirement age of 60. After the transfer Mr Power agreed in writing to Regent’s retirement age of 65, but when he reached 60 he was retired by Regent.

When Mr Power made a claim for unfair dismissal, there was an issue as to whether he was able to pursue such action. The dismissal took place before the introduction of age discrimination legislation; therefore, an employee could not bring a claim for unfair dismissal if they had reached the normal retirement age for someone holding that position. Regent maintained that the normal retirement age was 60, despite the written variation after the transfer, because the change was for a reason connected with the transfer.

Mr Power agreed that the change was connected with the transfer but claimed that only changes to the detriment of an employee were void as a result of TUPE. The Employment Tribunal disagreed and said that TUPE was not limited in this way and applied to all changes of contract connected with the transfer.

The Employment Appeal Tribunal (“EAT”) allowed Mr Power’s appeal. They said it would be “inconsistent with the aim of protecting the workforce” to prevent an employee receiving those benefits to which he was entitled. The protection afforded by TUPE is that employee’s should not have their position prejudiced or be deprived of any existing rights. The EAT said that there would be prejudice if employees could not rely on more beneficial terms should they so wish.

The Court of Appeal agreed with the EAT’s findings. The basis for the appeal by Regent was that the decision of the EAT amounted to a rewriting of TUPE. The Court of Appeal said that TUPE and the underlying EU Acquired Rights Directive must be read to promote its protective purposes. There was nothing in the legislation that prevented the acquisition of new rights. An employee therefore had a choice between keeping existing transferred rights and signing up to new rights.

This would seem to allow an employee who has been subject to a TUPE transfer to cherry pick the benefits most favourable to them. If changes are introduced they should be drafted in such a way as to prevent the employee relying on them should they seek to subsequently rely on the original transferring term that was replaced as a result of the change.

This case was decided under the old TUPE Regulations of 1981. The 2006 Regulations do not differ on this point. While TUPE now allows for changes of terms the principal reason for them must be unconnected with the transfer unless the reason is an economic, technical or organisational reason (an ETO reason). Although the 2006 Regulations were meant to clarify the position with regard to changes in terms it is evident from this case that we will continue to rely the courts for guidance as to when changes to terms and conditions of employment can be made and then relied upon by the employer as binding.