Coutinho v Vision Information Services (UK) Ltd and Rank Nemo (DMS) Ltd

Although all rights and liabilities transfer over under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) from the transferor to the transferee, the Employment Appeal Tribunal (EAT) has said in Coutinho v Vision Information Services (UK) Ltd and Rank Nemo (DMS) Ltd (IDS 849) that the employee has to be employed at the time of the transfer to be protected.

Basic facts

Mr Coutinho was made redundant from his job as an IT project leader on 30 March 2004. He lodged a tribunal claim on 30 June, alleging unfair dismissal and race discrimination against Vision Information Services (VIS).

At the end of July 2004, VIS was transferred to Rank Nemo Ltd (although the transfer had been in the offing for about 18 months before that). Rank Nemo Ltd was added to the tribunal claim on 28 November 2005.

In April 2005 Mr Coutinho asked VIS by e-mail for a reference (copied to Rank Nemo) and was finally provided with one in June 2006. He then lodged a second tribunal claim of victimization against both companies on the basis that the duty not to victimize him by failing to provide a proper reference had transferred to Rank Nemo under TUPE.

Relevant law

Regulation 4(2) of TUPE states that after a relevant transfer—

(a) all the transferor's rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this regulation to the transferee; and

(b) any act or omission before the transfer is completed, of or in relation to the transferor in respect of that contract or a person assigned to that organised grouping of resources or employees, shall be deemed to have been an act or omission of or in relation to the transferee"

Tribunal decision

The employment tribunal upheld Mr Coutinho’s complaint of unfair dismissal. It found that he had been dismissed for a reason related to the transfer which made it automatically unfair.

With regard to the reference, the tribunal said that VIS could not be held liable for victimisation in July 2004 as that liability could only have arisen when it was actually provided in August 2006. Nor was Rank Nemo liable as Mr Coutinho had not actually asked the company to provide him with a reference. The tribunal made clear, however, that the duty to provide a fair reference could, in theory, transfer to the transferee. It just had not done so in this case.

Mr Coutinho appealed against that part of the decision.

EAT decision

The EAT upheld the tribunal’s decision. It said that copying Rank Nemo into his request for a reference could not justify a claim of victimisation as he had never actually asked them for one. And as Mr Coutinho had never been employed by Rank Nemo, the duty not to victimize him did not shift from VIS as his former employer.

Nor could the duty to provide a reference “become the responsibility of the TUPE transferee simply by virtue of the transfer”. As the transfer had taken place in July 2004 and the request for the reference was made in April 2005, no duty had transferred under regulation 4(2)(b) as the request had not been made before the transfer.

The EAT said that it would be absurd for a transferee to be liable in a situation “where as here an employee has not actually transferred his employment and, for example, may require the transferor to provide a reference many years after his employment has come to an end”.

That would place an impossible burden on the transferee and the EAT therefore dismissed the appeal.