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Business operations outside of the UK should have been taken into account when deciding when a TUPE transfer took place

Adrian FryerWhere one business purchases the business and assets of another business (or part of it) then this is likely to amount to a ‘business transfer’ under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). A business transfer under TUPE automatically transfers the contracts of employment of all assigned employees to the new employer. The transfer will be on a single date rather than over a period of time. In some cases, the date on which the transfer occurs will be obvious but in others where there are a number of transactions over an extended period of time it may be more challenging to identify the date.

It is important to fix the time of the transfer, as this determines which employees will transfer and which rights and liabilities transfer over with them. In the case of Rajput v (1) Commerzbank AG (2) Societe Generale (London Branch) the issue was whether when, assessing the date the transfer occurred, those parts of the business that were outside of the UK should be taken into account.

The date of the transfer of Commerzbank’s EMC division to Societe Generale (London Branch) was important to Ms Rajput as it would determine who her unfair dismissal claim should be brought against.

The transfer involved a number of transactions across several different countries. The Employment tribunal held that TUPE applied as the economic entity was based in the UK. The Employment Appeal Tribunal agreed with this but considered that when identifying the date of the transfer and when the new business had accepted responsibility for the undertaking as a whole those parts of the business that were based overseas would have to be taken into account. There was no basis for excluding from consideration a part of the transferred economic entity which was predominantly located outside the UK once the application of TUPE had been established.

The EAT also noted that it should not be taken that there is any presumption that the date of the transfer will be after the final transaction. It could well be that in practice the responsibility for operating the business will transfer before that.

When approaching a business transfer taking place across a number of transactions, employers need to look carefully at the point in time that responsibility for operating the business will, in fact, transfer. Usually the parties will agree a date in commercial documentation and the commercial risk associated with any claims will transfer at that point in time but the actual date of transfer remains a matter of fact which cannot be contractually agreed.

For more information please contact a member of our Employment team.