News

TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) can apply to the transfer of a business entity outside the United Kingdom and European Union.

(Decision by EAT in Holis Metal Industries Ltd v (1) GMB and (2) Newell Ltd [2007]).

Implications

If an employer is transferring the whole or any part of its business overseas, including outside the EU, then TUPE can apply (if the business retains its identity). In this case make sure you comply with your obligations under TUPE.

This is an important decision, in particular, for off-shoring exercises.

Details

In 2006 Newell Ltd (Newell), the UK based manufacturer of "Swish" products (curtain tracks and poles and blinds), sold part of its business to Holis Metal Industries Ltd (Holis), a company based in Israel.

The employees in the part of the business which was sold were told that the operation would be moved to Israel and unless they agreed to move to Israel they would be made redundant. Unsurprisingly, none of the employees moved to Israel! Shortly after the transfer, Newell dismissed all of the employees.

GMB represented a number of the dismissed employees and brought claims against Newell and Holis for failure to consult. Holis applied to have GMB's claim struck out on the basis that TUPE did not apply to a transfer of a business entity outside the UK (or the EU).

The Tribunal dismissed Holis' application. It found that TUPE applies whenever the business entity is located in the United Kingdom immediately before the transfer. Holis appealed against the decision.

The EAT dismissed Holis' appeal. The EAT found that the wording in TUPE and the EU rules clearly states that TUPE applies to transfers of undertakings which are situated in the UK immediately before the transfer (regardless of the location of where the business is to be transferred).

The EAT accepted that enforcement of an award outside the EU could be a problem but commented that "in these days of multi – national corporations and economic inter dependency…the issue of enforcement [is] less difficult than it used to be".