The following is an important addition to the case law on TUPE because it deals with the issue of pensions - which historically have been excluded from its scope.
In Martin and Ors v South Bank University (IDS 747; IRLR 2004, 74) the European Court of Justice decided that certain early retirement benefits can be included on a TUPE transfer. Only benefits paid from the end of the normal working life count as old-age benefits and therefore don't transfer.
What were the original terms and conditions?
The applicants were all lecturers at an NHS nursing college, and employed under conditions of service agreed by the General Whitley Council (GWC), made up of representatives of employers and employees.
One of the conditions stated that employees aged 50 or over, with five years' service, were entitled to retire early with their pension. In addition, they were entitled to compensation if they were made redundant, if they retired early because of organisational change or because it was in the interests of the service.
What happened after the transfer?
In late 1994, the college became part of South Bank University and the applicants became university employees. They held onto their existing terms and conditions, but joined the teachers' superannuation scheme because they could not stay with the NHS. Two of the applicants transferred all their pension rights into the scheme.
Then in January 1997, the University offered early retirement in the interests of the efficiency of the service to everyone over 50. Two of the applicants accepted. But the terms were not as good as the NHS ones and the applicants claimed they were entitled to the more favourable terms.
What did the employment tribunal decide?
The employment tribunal decided to refer a number of questions to the European Court of Justice (ECJ).
What did the ECJ decide?
The ECJ decided that there was no need to treat benefits made available on early retirement any differently from, say, those that applied in the event of redundancy (as in Beckmann v Dynamco Whicheloe Macfarlane Ltd). On the basis of that logic, those terms therefore also transferred over to the transferee under the TUPE regulations.
But the trouble was that two of the applicants had already accepted the less favourable terms. Did that matter?
The ECJ was quite clear - the rights that employees have under the regulations cannot be waived, even with their consent. That isn't to say that the transferee can't try to amend terms and conditions - as long as the transfer isn't the reason for the amendment.
Unfortunately the court didn't explain the circumstances under which employers can negotiate changes following a transfer, but harmonisation of terms and conditions will generally be a transfer-connected reason.
In this case, the ECJ decided that the reason for the change in terms was the transfer and was therefore precluded. The fact that two of the applicants had joined the superannuation scheme did not mean they had consented to the different terms.
Equally, the fact that two of them had accepted early retirement on less favourable terms was neither here nor there - they were entitled to the terms on which they had transferred.