Hello and welcome back to your weekly case law update. Last week’s newsletter had features on tax, holiday pay and the future of employment law under the Truss premiership. This week we are looking at TUPE transfers.
Ponticelli UK Ltd v Gallagher
Under Regulation 4(2)(a) of the TUPE Regulations 2006 when a transfer of employment takes place all rights under or in connection with a contract of employment shall transfer with the transferring employees. The question in this week’s case is:
Is a share incentive plan something in connection with a contract of employment?
Gallagher, the Claimant, was an employee of Total Exploration and Production Ltd. Total offered a share incentive plan and the Claimant was a part of the scheme. However the scheme was voluntary and no reference of it was made in the Claimant’s contract.
Ponticelli UK Ltd, the Respondent, then took over the Claimant’s contract and he was transferred via TUPE. The Respondent did not offer a comparable share scheme but instead offered a lump some of over £1,800 to employees impacted by the transfer.
The Claimant, commenced a TUPE claim stating that his share scheme membership should have transferred and they would not be operating an equivalent scheme. The Employment Tribunal held that the share scheme was in connection with the Claimant’s employment and therefore the Respondent should provide an equivalent scheme.
The Respondent Appealed and the Employment Appeal Tribunal upheld the original ET decision. The tribunal had been right to find that whilst the share scheme was not part of the contract of employment it did arise in connection to it.
The takeaway point
Yes, a share scheme, even a voluntary one, is in connection with a contract of employment and is therefore protected under TUPE. It is perhaps somewhat surprising that the Respondent sought to argue this given the wording of Regulation 4(2)(a).
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