Q&As

An individual is employed by one group company (A) and works for another group company (B) and possibly other group companies, with Company B cross-charged for salary and other costs relating to the individual. If Company A is ‘demerged’ from the group, can the individual assert that their employment has transferred under TUPE 2006 to Company B?

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Published on LexisPSL on 21/10/2019

The following Employment Q&A provides comprehensive and up to date legal information covering:

  • An individual is employed by one group company (A) and works for another group company (B) and possibly other group companies, with Company B cross-charged for salary and other costs relating to the individual. If Company A is ‘demerged’ from the group, can the individual assert that their employment has transferred under TUPE 2006 to Company B?
  • Is there a business transfer under TUPE 2006?
  • Is there a service provision change under TUPE 2006?
  • What is the effect of a relevant transfer?
  • Who is the employer?

For information on demergers generally, see: Demergers—overview.

You may wish to consider:

  1. whether the proposed demerger amounts to a (a) business transfer or (b) service provision change (SPC) under the Transfer of Undertakings (Protection of Employment Regulations) 2006 (TUPE 2006), SI 2006/246

  2. if so, the effect of a relevant transfer under TUPE 2006, SI 2006/246 on employees of Company A (ie would the transfer have the effect of transferring those employees to Company B, which would depend on the nature of the transfer)

  3. if the employee is unable to establish the desired right under TUPE 2006, SI 2006/246, whether it is possible for them to assert that they are in fact (and were pre-transfer) employed by Company B, despite, for example, having a contract of employment with Company A

Is there a business transfer under TUPE 2006?

A relevant transfer under TUPE 2006, SI 2006/246 may take the form of:

  1. a business transfer

  2. a service provision change

A business transfer under TUPE 2006, SI 2006/246 occurs where there is:

  1. a transfer of an undertaking or business (or part of an undertaking or business)

  2. situated immediately before the transfer in the UK

  3. to another person

  4. where there is a transfer

  5. of an economic entity

  6. and the economic entity retains its identity after the transfer

There are therefore three key elements:

  1. an undertaking or business, or part of an undertaking or

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