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TUPE Ruling Underlines Need for Advice

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

In a ruling which reveals that even employers as large at British Telecommunications plc (BT) can slip up when it comes to understanding the impact of the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), the company has been landed with a very substantial compensation bill.

BT had honestly believed that when it took over an information technology project from another company the service provision change would not be viewed as a transfer within the meaning of TUPE. However, that belief proved to be seriously mistaken and BT must now make redundancy and other payments to a number of employees of the other company who lost their jobs in the move.

The Employment Appeal Tribunal (EAT) ruled that the employees had, by operation of TUPE, been automatically unfairly dismissed by reason of redundancy. On top of redundancy payments, the employees will now also be entitled to be compensated for past and future losses, including loss of pension benefits that they would have received from the company that originally employed them.

The tribunal noted that BT’s belief that TUPE would not apply to the service provision change because there was not a complete matching of the work performed pre- and post-transfer had been confounded and the company had in the end conceded that the employees had been unfairly dismissed.

The EAT found that, as the dismissals followed a diminution or drying up of the work available to the employees, they had been made redundant ‘in the full meaning of the word.’ They were also entitled to claim pension losses on terms no less favourable than they had enjoyed with their original employer notwithstanding that those benefits had not themselves been transferred by operation of TUPE. That was on the basis that incoming employees’ benefits were customarily honoured by BT.

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