The Transfer of Undertakings (Protection of Employment) Regulations 2006

01.01.08

In the first case to consider the application of TUPE to an international transfer of an undertaking, the EAT has decided that TUPE can apply, in principle, to a cross-border transfer - even where the business transfers outside the European Union.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 apply to a business transfer, where the undertaking is situated in the UK immediately before the transfer, and to a service provision change, where there is an organised grouping of employees situated in Great Britain* immediately before the change. The Regulations suggest that TUPE applies to international transfers but do not expressly address this point.

In the case of Holis Metal Industries Ltd v GMB and Newell Ltd, Holis (a company based in Israel) bought part of Newell's UK based manufacturing business. 107 of Newell's employees were informed that they would transfer to Holis and, if they did not move to Israel, they would be made redundant. None of the employees moved to Israel and they were dismissed shortly after the transfer.

Both Newell and the GMB, the trade union representing the employees, brought tribunal claims relating to breaches of the consultation obligations. In the course of deciding whether the claims could proceed, both the tribunal and the EAT decided that TUPE can apply to transfers outside the UK, including transfers outside the European Union.

Most commentaries have considered that TUPE does apply to cross-border transfers and it is helpful to have had this view confirmed by the EAT. Parties should not ignore the potential application of TUPE in an international transfer situation or they risk exposure to claims, particularly for a protective award for failure to consult of up to 13 weeks' pay for each affected employee.

Holis Metal Industries Ltd v (1) GMB (2) Newell Ltd UKEAT/0171/07

*Note the application of service provision changes to Great Britain rather than the UK - Northern Ireland is, therefore, excluded.