In a TUPE transfer where only one employee is being transferred and is affected by the transfer, could the transferee company rely on the need to comply with regulatory requirements (which were not relevant to the transferor or to the transferring employee's contract whilst employed by the transferor) as an 'ETO reason' in order to vary the terms of the transferring employee's contract? The term in question is a commission scheme which the employer believes could incentivise risk and following the transfer could fall foul of financial regulatory requirements.

The Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE 2006) provide that, where there is a relevant transfer, there is a statutory novation of the employment contracts of the transferring employees: the transferee effectively steps into the shoes of the transferor. A relevant transfer does not terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping that is subject to the transfer. Instead, the contract of employment has effect after the transfer as if originally made between the employee and the transferee.