TUPE regs apply to transfers outside UK

The TUPE regulations could apply in relation to the transfer of a UK-based business even if the purchaser is outside the EU, following an Employment Appeal Tribunal (EAT) ruling.

In GMB v Holis Metal Industries Ltd the EAT held that TUPE did potentially apply to transfers outside the UK, although it conceded that enforcement of tribunal awards might prove tricky.

Judge Ansell was hearing an appeal against an employment tribunal’s refusal to strike out a claim brought against Holis—the Israeli buyer of part of UK business Newall—relating to alleged breaches of the duty to inform and consult under reg 13 of the TUPE regulations. Holis argued that TUPE and/or the Acquired Rights Directive could not apply transnationally but the EAT disagreed.

Dr John McMullen, partner and head of employment at Watson Burton, says the case will be of considerable interest to practitioners in this area and those who advise on cross-border transfers of undertakings.

He says: “I have consistently argued that there is a strong case for any obligation that is engaged prior to the transfer should be caught by TUPE even if the UK-based business is then transferred outside the jurisdiction.
“However, this case takes the argument a step further by accepting, as a generality, the potentiality or the application of TUPE against a foreign based transferee either in the EU or outside the EU.”

McMullen adds: “Employers should seek indemnities against the possibility of TUPE claims on cross-border transfers. Those advising foreign transferees would be negligent not to consider negotiating such indemnities.”