Parkwood Leisure Limited v Alemo-Herron 2010 EWCA Civ 24
The Court of Appeal overturned the EAT’s decision in this case and held that transferees, whose employment, which was subject to a collective agreement prior to a transfer under TUPE and who transferred to a new employer, did not benefit from bargaining agreements negotiated after the date of the original transfer.
Key point: Post transfer negotiations can be viewed differently from pre-transfer negotiations. Pre-transfer negotiations which are due to take effect after the transfer will be binding on the new transferee employer.
TUPE – Payment of compensation on transfer for loss of rights
Kuehne + Nagel Drinks Logistics Ltd and others v HMRC  UKFTT 379
In 2006 K+N acquired the drinks distribution business of Scottish & Newcastle. This involved a transfer of 2,000 employees from S&N to K&N. TUPE applied. During the consultation it became apparent that because the new pension scheme was not as generous as the S&N scheme the employees should be compensated in the sum of £5,000. They could either take the sums in cash or elect for the sum to be contributed to their pension scheme. Payments were agreed for the employees and the transfer went ahead smoothly.
The Revenue made self-assessment returns on two employees on the basis that the payments were earnings from employment namely for loss of pension rights and as an incentive to work willingly with their new employer. Consequently they were liable for the tax and NIC.
Key point: Employers should consider carefully the status of similar payments where there is no change in the nature of service.