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UK Employment Law Gets A Passport

Feb.05.2008

A number of important decisions have recently been reported regarding the impact of UK employment law outside the UK.

The Employment Appeal Tribunal (“EAT”) decided in Bleuse v MBT Transport that different rules on territorial jurisdiction apply to statutory employment claims depending on whether the legislation is primarily a UK concept, or whether the legislation derives for EU legislation with direct effect. In this case, the EAT held that the German lorry driver who worked throughout mainland Europe (but never the UK) was not able to bring claims against the UK registered employer for unfair dismissal or an unauthorised deduction from wages, but he would be permitted to proceed with his claim under the Working Time Regulations.

In Holis Metal Industries Ltd v (1) GMB (2) Newell Ltd the EAT considered whether the Transfer of Undertakings (Protection of Employment) Regulations (“TUPE”) 2006 applied to a transfer of part of a business from the UK to Israel. The EAT took the view that TUPE has the potential to apply to a transfer from the UK to a non-EU entity where the undertaking in question did not remain in the UK after the transfer had taken place. In its decision, the EAT held that the wording of the Acquired Rights Directive 2001 and TUPE was precise. It requires that the relevant business or organised grouping of employees is situated in the UK immediately before the transfer or service provision change. There is no provision which renders TUPE inapplicable where, after the change, the business is situated outside the UK. As such, the EAT concluded that TUPE has the potential to apply to transfers from the UK where the undertaking does not remain in the UK.

Readers should be reminded, however, that a key issue in determining the application of TUPE is whether the entity transferred retains its identity. In many cross-border transactions the identity of the undertaking will not be retained, so the impact of this decision may be limited in practice. The decision acknowledged this issue and emphasised that this was a question of fact for each case.

Staying on the subject of TUPE, it has long been established that an employee may not waive his or her rights under a transferred contract by agreeing to a detrimental transfer-related variation with the transferee[1], but what about positive variations? In Regent Security Services Limited v Power the Court of Appeal decided that such variations are not prohibited by TUPE. In this case the employee could choose to rely on his new contractual retirement age of 65 rather than his pre-transfer retirement age of 60, and the employer could not rely on TUPE which was designed to protect employees. This case will be of concern to employers since the transferring employee is apparently free to cherry pick the terms of his employment.

All these cases serve to emphasise the importance of obtaining proper advice on the impact of transactions in advance.

STOP PRESS

It is that time of year again! Compensation limits have now increased and apply to all dismissals occurring on or after 1 February 2008. This year’s core compensation limit increases are:-

  • A week’s pay for the basic award and redundancy payments rises from £310 to £330
  • The maximum compensatory award increases from £60,600 to £63,000

[1] Regular readers will remember that TUPE provides that any transfer-connected variations of contract are valid in any event if done for an “economic, technical or organisational reason entailing changes in the workforce”. These circumstances are relatively rare and will not cover basic harmonisation

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