Factual Background
In Holis Metal Industries v (1) GMB; (2) Newell Ltd, part of a curtain-making business was transferred from a factory in England to Israel. None of the employees were (unsurprisingly) taken on by the Israeli employer (Holis) and they were dismissed by the incoming business shortly after the transfer.
Claims were lodged in the employment tribunal against Holis relating to breaches of the duty to consult under TUPE and under the law governing collective redundancies.
EAT rules that the TUPE Regulations can apply to such transfers
The EAT did not decide whether TUPE applied to the facts of this particular case. It did, however, make a significant ruling - that the TUPE Regulations have the potential to apply to a relevant transfer from the UK to somewhere abroad (including outside the EU).
Comment
The EAT’s view reflects the view we took on this issue in chapter 12 of EEF’s publication ‘Business Transfers and Contracting – A Practical Guide to TUPE’. As we pointed out in that publication, the Regulations are not prevented from applying simply because following a relevant transfer, the business is based abroad, or following a service provision change, the contract is performed abroad.
Of course, on a business transfer, it might be questionable whether an economic entity which has been transferred to outside the UK retains its identity - this is a question of fact for employment tribunals to determine in each individual case.
Practically, rather than legally, it makes a big difference when the transferee is based abroad.
First, the incoming contractor or purchaser is unlikely to want to take on the transferring employees (a large part of the rationale for off shoring was probably to save costs!).
Second, the affected employees are less likely to be in a position to be able to enforce any claims against the new employer where it is wholly based abroad. In the Holis case, the EAT acknowledged this point - that enforcement of any tribunal awards might prove difficult.
However, as the EAT judge hearing the case commented, ‘In these days of multi-national corporations and economic inter-dependency, I would regard the issue of enforcement as less difficult then it used to be – witness the willingness of Holis to submit to the jurisdiction in this case.’