Multinational Employers and TUPE Obligations – Tribunal Gives Guidance

Multinational companies frequently move their operations between countries – but how do to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) impact on their search for value? The issue was strikingly raised by a case in which a Yorkshire-based office worker offered to follow his job to the Philippines – but only if he continued to be paid his UK salary.

The man’s employer had decided to shut down the finance department in which he worked and shift the entire operation to Manila. It was agreed that TUPE applied to the transfer of the department’s functions between two companies in the same international group. There was no suggestion that the amount of work that had to be done by the department or the number of employees engaged to do it would be reduced following its transfer to the Philippines.

When offered redundancy, the man responded by offering to relocate from Wakefield to Manila on the same terms and conditions that he had enjoyed in Yorkshire. Had that request been granted, he would have been paid almost 10 times as much as local workers in the Philippines. It was, however, refused and he was dismissed. His unfair dismissal claim was subsequently upheld by an Employment Tribunal (ET).

In upholding the employer’s challenge to that ruling, the Employment Appeal Tribunal (EAT) noted that the man’s contract provided for him to work in the Leeds or Wakefield area. There had been no consensual variation of that term and the employer was not required to engage him in Manila on the same salary that he had enjoyed in Yorkshire. It had never deviated from its refusal of his proposal and there was a complete absence of the meeting of minds required to achieve a variation.

Remaining issues in the case, in particular as to whether the reason for his dismissal was truly redundancy, were remitted to a newly constituted ET for fresh consideration in the light of the EAT’s ruling.