Monday 8 December 2003

New TUPE Cases

New TUPE Cases

Two new TUPE cases: one Court of Appeal, one Employment Appeal Tribunal.

Alderson v Secretary of State for Trade & Industry (Court of Appeal, 8/12/03)

A case of historical interest only: regulation 2(1) of TUPE used to define an 'undertaking' as including "any trade or business but does not include any undertaking or part of an undertaking which is not in the nature of a commercial venture."

The employees were employed by Liverpool City Council as refuse collectors. The refuse services were contracted out, and the employees were engaged by the new contractor on less favourable terms and conditions. They brought a Francovich claim against the DTI, arguing that by excluding non-commercial ventures (ie refuse collections for a local authority) from the scope of TUPE, the government had failed to properly implement the Acquired Rights Directive.

The Court of Appeal held that exclusion for undertakings "not in the nature of a commercial venture" did not apply to this case, because it was clear that (i) the undertaking was of a commercial nature after the transfer, and (ii) it had all the same characteristics, other than it was not operated for profit, before the transfer (para. 31)

As stated above, the case is of historical interest only because the non-commercial venture exclusion was abolished in 1993 by the Trade Union Reform and Employment Rights Act 1993.


-------------------------------------------------------------------------------- Perth & Kinross Council v Donaldson (EAT, Lord Johnston, 30/10/03)

The EAT (sitting in Scotland) held that TUPE does not apply to a liquidator who is gathering in assets to dispose of them for the maximum benefit of creditors. Unlike receivers and administrators, "if [the liquidator] has to look over his shoulder at the TUPE Regulations, this might well fetter the extent to which he might perform his duty. (para. 19)".

Thus when the local authority took housing maintenance services back in-house (pun unintended), following the insolvency of, and appointment of liquidators for, the company it had contracted those services to, TUPE did not apply.

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