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Barry  Stanton
Barry Stanton,
TUPE transfers – Offshoring
22 February 2018

An increasingly common scenario, although one where there is little judicial guidance, is the effect of a cross border TUPE transfer.  Happily, for employers, many employees have little interest in travelling to far flung places in the world, no matter how exotic they might be.  For most the practical answer in these situations is that, employees are dismissed on redundancy or, if the employee wishes, and there are roles, employees can transfer to the new employer, but they transfer on local terms, rather than, possibly, their London weighted salary.  To do otherwise would negate the envisaged cost savings.

This was the situation facing Mr Zeb, who was based in Wakefield.  Xerox decided to outsource their accounting function to the Philippines.  Employees were told that they could object to the transfer and be made redundant on generous redundancy terms, or if they did not object they would transfer and still be made redundant but with statutory redundancy only.  There was the possibility of transfer to the Philippines, but only on local terms.

Mr Zeb did not object to the transfer and argued that he should be able to work in the Philippines on his existing (UK) terms.  Mr Zeb was dismissed and alleged his dismissal was unfair.  The ET agreed finding that the dismissal was because of the Transfer and that the employer had not demonstrated that there was a redundancy situation.  It concluded there was an inextricable link between the dismissal and the request to work in the Philippines on his UK terms.

The EAT disagreed and allowed the Xerox’s appeal.  It found that whilst TUPE allows the parties to agree to a contractual variation, there had been no such agreement.  Mr Zeb’s place of work remained in Wakefield.  Xerox was not required to employ him in the Philippines.  The only offer that had been made was to employ him in the Philippines on local terms; that offer had not been accepted.  The EAT also held that Mr Zeb was dismissed because he was redundant, there was no longer a need to employ him in Wakefield.

The EAT’s decision is helpful to employers because it makes clear that employees do not have a right to transfer to the offshore location on their current terms.  The decision accords with the practice adopted by many employers and provides them with reassurance that they can achieve the aims that are intended by the outsourcing. 

There is as always when dealing with TUPE a note of caution; the transferring employer does not have a fair reason to dismiss, because only the transferee has that reason.  Any dismissals by the transferor, even when employees have objected to transfer, should be covered by a suitable settlement agreement protecting transferor and transferee.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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