It is often assumed that terms and conditions varied as a result of a TUPE transfer are unenforceable as the purpose of TUPE is to safeguard an employee's existing terms and conditions on transfer. In an interesting decision, the EAT upheld a term of the new contract agreed post-transfer even though the variation was by reason of the transfer. An employee was able to rely on a later retirement age of 65 agreed with the new employer post-transfer and the new employer's attempt to void the term (and rely on the earlier retirement age of 60 in the original contract) was unsuccessful. The EAT held that there is nothing in ECJ case law, nor in TUPE itself, nor a principle of public policy which would allow the new employer (the transferee) to resile from a voluntarily agreed variation to the contract, even where the transfer is the reason for the variation. By contrast, the employee may object to any change which he considers detrimental (notwithstanding the existence of compensating advantages in the new contract) and rely on the original contract. Or, if he so wishes, the employee, may rely on a variation of the contract agreed with the new employer by reason of the transfer. (Power v Regent Security Services).
This result does create some uncertainty. We know from Daddy's Dance Hall and Credit Suisse v Lister that if an employee wishes to rely upon a term in his original contract of employment with the transferor, rather than relying upon a term in the varied or new agreement with the transferee employer, he will be entitled to do so. It is not a question whether, objectively viewed, the original term is more beneficial or not. It is simply a question of whether the employee wishes to rely upon it (although this will, no doubt, only occur where he thinks it is beneficial to do so). However, the decision in Power suggests that an employee can pick and choose terms from the two contracts leaving the status of variations uncertain. In a non-binding comment, the EAT did suggest that an employee "may well have to give up any benefits obtained under the varied contract" if he objects to any changes under the new contract which he considers to be to his detriment. However, the question of how a new employer should treat beneficial variations agreed by reason of the transfer where an employee objects to more onerous terms remains undecided. There is certainly a risk that the new employer could be bound by those provisions in the new contract which the employee considers beneficial, whilst also safeguarding any favourable terms in the original contract.
N.B. The Power case was actually decided by reference to TUPE 1981 but the concepts would apply to the new regulation 4(4) of TUPE 2006 which provides that "any purported variation of the contract shall be void if the sole or principal reason for the variation is the transfer itself; or a reason connected with the transfer which is not an ETO entailing changes in the workforce". On the face of it, regulation 4(4) would seem to void any changes agreed by reason of the transfer which are not an ETO entailing changes in the workforce. However, in light of the EAT decision in Power, there is certainly an argument that the provision should only operate to void changes that are to the employee's detriment.