Regent Security Services Ltd v Power

The Court of Appeal held that the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) do not permit a transferee employer to rely on regulation 12 to render void a consensual post-transfer contractual variation in a transferred employee's favour. The court treated the variation that raised Mr Power's contractual retiring age from 60 to 65 as valid against the transferee, while the employee's pre-existing acquired right to retire at 60 remained preserved by regulation 5 and the Directive. The decision turns on the protective purpose of the Directive and on the proper construction of regulation 12: an employee may not be deprived of an acquired right by reason of the transfer, but may obtain an additional right from the transferee and choose which right to enforce.

Background and parties. The respondent, Mr Michael Power, was employed by a transferring undertaking whose business was transferred to the appellant, Regent Security Services Ltd, on 1 July 2005. Before the transfer Mr Power had a contractual retiring age of 60. After the transfer he signed a letter adopting Regent's terms, which provided for retirement at 65. Regent dismissed him on reaching 60 on 19 November 2005. Mr Power claimed unfair dismissal and redundancy pay.

Procedural posture. The Employment Tribunal (decision registered 7 July 2006) held that the consensual variation was void under regulation 12 of TUPE and that Mr Power's normal retiring age remained 60. The Employment Appeal Tribunal (EAT) allowed Mr Power's appeal on 29 January 2007 and remitted remedy questions to the original tribunal. Regent appealed to the Court of Appeal.

Nature of the claim and issues. The claim concerned entitlement to unfair dismissal and redundancy pay. The principal legal issue was whether a consensual post-transfer variation of a contractual retiring age, agreed for a reason connected with the transfer, was void by virtue of regulation 12 of the 1981 TUPE Regulations or whether the employee could rely on the new term agreed with the transferee while also retaining the acquired pre-transfer right.

Court's reasoning. The court emphasised the protective purpose of the Acquired Rights Directive and TUPE: acquired rights are preserved on transfer and the Directive does not aim to protect employers from post-transfer contractual promises. Regulation 5 preserves the transferor's acquired rights, so an employee cannot be deprived of the pre-transfer right to retire at 60. However, nothing in the Directive or TUPE prevents an employee from acquiring an additional contractual right from the transferee and enforcing it. Regulation 12 was construed as preventing contracting out of TUPE protections but not as barring an employee from accepting and enforcing an additional beneficial term offered by the transferee. Authorities relied upon by Regent (including Daddy's Dance Hall and Credit Suisse) do not require a different outcome. The EAT was therefore right to allow the appeal and the Court of Appeal dismissed Regent's appeal, with costs awarded to Mr Power.

Appeal dismissed. The Court of Appeal agreed with the Employment Appeal Tribunal that regulation 12 of the 1981 TUPE Regulations does not render void a consensual post-transfer contractual variation in the employee's favour; the transferred acquired right to retire at 60 remained preserved but the employee could also rely on the additional right to retire at 65 agreed with the transferee. The EAT's conclusion that the Employment Tribunal was wrong in law was upheld and the matter as to remedy was remitted.

Employment Tribunal decision registered 7 July 2006; Employment Appeal Tribunal allowed the employee's appeal on 29 January 2007 (EAT/0499/06); Court of Appeal dismissed Regent's appeal on 20 November 2007 ([2007] EWCA Civ 1188).