The Court of Appeal has upheld the decision of the EAT in the case of Power v Regent Security.
The case concerned an employee who had been involved in a TUPE transfer.
Pre-transfer his contractual retirement age had been 60. Post-transfer he signed a letter agreeing to be bound by the transferee’s terms of employment as contained in its staff handbook which provided that the retirement age would be 65.
The transferee then wanted to terminate his employment and argued that it could do so when he reached 60 without having to worry about an unfair dismissal claim or even making a redundancy payment because even though his contract had been varied to change the retirement age to 65, the variation was void as being TUPE-related.
The original Tribunal thought that this was correct but the EAT, and now the Court of Appeal, say that in such a case the employee is given an additional right under the varied contract. His rights under the ‘old’ contract transferred automatically under TUPE. He can choose between the transferred acquired right under his old contract and the newly-obtained right under the new one. So, in this case, he could choose which retirement age he preferred.
Points to note:
- The principle is that the TUPE regulations were designed to protect employees not to help employers but it does leave employers in a difficult situation. This decision has now put further difficulties in the way of employers seeking to harmonise terms and conditions across the workforce after a TUPE transfer. It is not now not simply a case of worrying that any new terms may be unenforceable against the employees who have transferred over. The new terms may be enforced against the employer by individual employees – entirely at their choice. Employers do not have the same right.
- The only crumb of comfort for employers is that the Court of Appeal envisages that any employee preferring to enforce their old contract, even if they have agreed to a new and varied one, would have to give up any benefits obtained under the new contract and cannot ‘cherry pick’ different terms from different contracts. When varying employee terms after a TUPE transfer, the best advice to employers is to ensure that provisions are expressly written into the new contracts allowing them to claw back any new benefits from employees who subsequently elect to enforce their old contract terms instead. We shall be happy to advise.
- This case was decided before the Age Regulations came into force but the principle is still the same. If the employee’s contract is properly terminated on the ground that he or she has reached retirement age, then they will have no claim for unfair dismissal or a redundancy payment. The employer will not have to follow the statutory dismissal procedure but will have to follow the procedure laid down in the Age Regulations. We shall be happy to advise on the correct procedure..