Search

How can we help?

Icon

Beneficial contract changes made prior to TUPE transfer were void

It is well established that contract changes made solely (or principally) because of a TUPE transfer will be void. However, case law has, so far, focussed on changes that are detrimental to the employee.  In the recent case of Ferguson and ors v Astrea Asset Management Ltd the EAT had to consider beneficial changes.

The Claimants were four directors of a property management company.  Another company was due to take over management of the properties triggering a TUPE transfer.  Prior to the transfer the Claimants changed their contracts of employment to allow for generous guaranteed bonus and termination payments.  Astrea did not accept the transfer of two Claimants under TUPE and the other two, who they accepted transferred, were dismissed immediately after the transfer for gross misconduct as a result of the contract changes.

The Claimants brought various claims against Astrea including breach of contract for the termination payments and unfair dismissal. The EAT held that the contractual changes were void as they were made solely because of the transfer.  This was the case even though they were beneficial changes.   The two Claimants who had been dismissed were successful in their unfair dismissal claims but one of them had been instrumental in changing the contract terms and, as such, had his compensation reduced by 100% on account of his conduct.

Void changes apply to beneficial changes as well as detrimental ones

This case demonstrates that void changes apply to beneficial changes as well as detrimental ones.  The Tribunal said that even if it was wrong about beneficial changes being void, it would have found the changes void on the basis of ‘abuse’ in any event.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

art
  • 10 July 2024
  • Employment

Redundancy : Back to Basics FAQs

Redundancy can be a scary and overwhelming time both for employees being made redundant, and for those that have to make the decision. It is important for both parties to know their rights and obligations in this time.

art
  • 09 July 2024
  • Public Procurement

Buyer Beware: Practical Guidance for Breach of Warranty in an SPA

Are you buying a business? Whether you are buying shares in a company or purchasing its assets… the general Latin common law principle “caveat emptor” applies.

art
  • 08 July 2024
  • Corporate and M&A

Navigating corporate transparency: ECCTA reforms series

This is the second article in a series exploring the changes brought by the Economic Crime and Corporate Transparency Act 2023 (ECCTA).

art
  • 08 July 2024
  • Immigration

Right to Work Check Guidance – Key Changes for Employers

This updated guidance introduces several significant changes aimed at streamlining the right to work verification process for employers.

Pub
  • 02 July 2024
  • Privacy and Data Protection

Data protection unlocked for HR: Introduction to data protection

Lucy Densham Brown and Sana Nahas from the data protection team will discuss data protection issues encountered by HR professionals in the first episode of the ‘Data Protection Unlocked for HR’ podcast series.

Pub
  • 27 June 2024
  • Employment

TUPE Podcast Series: What Transfers

In this sixth podcast in our TUPE Podcast Series, Amanda Glover will delve into the automatic transfer principle and what transfers to the incoming employer under TUPE.