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Resisting changes to contract terms after a transfer
Under regulation 4 of the TUPE regulations, changes to an employee’s terms and conditions as a result of a TUPE transfer are void (unenforceable), wherever those change are to the employee’s detriment (Power v Regent Services Limited [2007] UKEAT/499/06). In other words, any variation to wages, overtime pay, holiday entitlements, notice periods, contractual (enhanced) redundancy terms or retirement dates will be void and unenforceable by the employer if the reason for making the change is to bring the terms and conditions of the transferred workforce into line with those of the new workforce (a process known as harmonisation) (Foreningen af Arbejdsledere I Danmark v Daddy’s Dancehall A/S [1998] IRLR 315).
The rule — that changes as a result of a transfer will be void wherever they are to the employee’s detriment — was set by an important Court of Appeal judgment in Power v Regent Services Limited ([2007] UKEAT/499/06):
Mr Power’s original contractual retirement age was 60. Following a TUPE transfer, his new employer raised it to 65 to bring it into line with the retirement age of the existing workforce, but when Mr Power reached 60, it suited his new employer to try to force him to retire, so the employer argued that the new retirement age of 65 was void and unenforceable because it was in breach of regulation 4 of TUPE. The Court of Appeal disagreed, emphasising that the TUPE regulations must be interpreted to meet the purpose of the Acquired Rights Directive, namely to safeguard the rights of transferring employees. The Court of Appeal concluded that Mr Power could choose between his old retirement age of 60, which transferred under TUPE, and a new retirement age of 65. As a consequence of the employer’s actions, it was up to him to decide which of the terms he preferred.
Power v Regent Services Limited [2007] UKEAT/499/06
It is not open to an employer to argue that changes to contract terms should be read “as a whole” and that the overall “value” of the package of terms is not changed by a variation.
A change to the method of payment is still a breach of TUPE even though the employee receives the same pay overall (Chubb Security Personnel v Bates EAT/0358/04).
The fact that employees have agreed to (and have even signed up to) the changes will not prevent them being void. Neither will the fact that the employer has sought to “pay” for the changes through, for example, a wage increase (Wilson v St Helens Borough Council [1998] IRLR 706).