Ponticelli UK Limited v A Gallagher

The Employment Appeal Tribunal held that obligations arising from the claimant's membership of a Partnership Share Agreement under a Share Incentive Plan (SIP) plainly arose "in connection with" his contract of employment for the purposes of Regulation 4(2)(a) of TUPE 2006. The claimant's participation in the TEPUK SIP therefore transferred to the appellant on 1 May 2020 and he was entitled to participate in a scheme of substantive equivalence following the transfer (applying the approach in MITIE Managed Services Limited v French). The Court found Chapman v CP Computer Group distinguishable and not an obstacle because Chapman had not considered the words "or in connection with". The Tribunal's remedy was competent but paragraph 2 was adjusted to require reference to the statutory written statement of particulars rather than to "terms and conditions of employment".

Background and facts: The claimant was employed by Total Exploration and Production UK Limited (TEPUK) and joined TEPUK's Share Incentive Plan (SIP) by entering a Partnership Share Agreement on 28 August 2018. His employment transferred to Ponticelli UK Limited on 1 May 2020 under TUPE 2006. TEPUK ceased to operate the SIP for the claimant on transfer and Ponticelli refused to provide an equivalent scheme; Ponticelli made a one-off compensation payment which the claimant rejected while pursuing his rights.

Nature of the claim and relief sought: The claimant applied to the Employment Tribunal under sections 11 and 12 of the Employment Rights Act 1996 for a declaration that he was entitled, after transfer, to participate in a SIP of substantive equivalence to the TEPUK plan and for a written statement reflecting that obligation.

Issues framed: (i) Whether the rights and obligations created when the claimant joined the TEPUK SIP arose "under" the contract of employment or "in connection with" it for the purposes of Regulation 4(2)(a) of TUPE; (ii) if they transferred, whether the Employment Tribunal could make the requested declaration and require inclusion in the written statement of particulars.

Reasoning and decision: The EAT accepted that the Partnership Share Agreement created mutual obligations directly tied to the claimant's status and remuneration as an employee and therefore arose "in connection with" his employment contract. Chapman v CP Computer Group was regarded as distinguishable and was not conclusive because it did not address the words "or in connection with". Accordingly Regulation 4(2)(a) applied and the rights transferred on 1 May 2020; MITIE was applicable on the remedies. The Tribunal's order was competent, but paragraph 2 was corrected to require the inclusion of the transferred obligation in the claimant's written statement of particulars under the Employment Rights Act 1996.

Appeal dismissed. The Employment Appeal Tribunal held that the mutual rights and obligations created by the Partnership Share Agreement arose "in connection with" the claimant's contract of employment and therefore transferred under Regulation 4(2)(a) TUPE 2006; the Tribunal's declaration was competent but paragraph 2 was adjusted to require reference to the statutory written statement of particulars.

Appeal from an Employment Tribunal judgment dated 23 August 2021 (full tribunal chaired by Employment Judge J M Hendry) to the Employment Appeal Tribunal, Neutral Citation: [2022] EAT 140.