Pensions Transfer

Power v Regent Security Services Ltd

The 1981 Transfer of Undertakings (Protection of Employment) Regulations (better known as TUPE) protect an employee’s contractual rights if their job is transferred under the regulations to another employer.

In Power v Regent Security Services Ltd (IDS 824), the Employment Appeal Tribunal (EAT) said that the employer was bound by a term in the employee’s contract allowing him to continue to work until 65.

Basic facts

Mr Power first got a job managing properties on an estate in London in 1985. His contract stated that his normal retirement age (NRA) was 65. After being transferred to another employer in 1997, he agreed to change his NRA to 60.

After yet another transfer in 2005, he was informed by Regent (just before the transfer took effect) that his employment would terminate, without notice, when he reached the age of 65. Then shortly after the transfer, the company forced him to retire at 60.

Mr Power claimed unfair dismissal. The company argued that the contractual variation was invalid because it was related to the transfer and was therefore contrary to regulation 12.

The law

Regulation five of TUPE says that any contract that has been transferred under the regulations has to be adopted wholesale by the transferee (the new employer). Regulation 12 says that any agreements that try to get round regulation five must be treated as null and void.

That does not mean that employers cannot make changes to contracts, but the transfer cannot be the reason for the change. And according to the rule in Daddy’s Dance Hall (Foreningen af Arbejdsledere i Danmark -v- Daddy's Dance Hall A/S), employees cannot waive the rights conferred on them by TUPE, even if they are offered compensatory benefits to offset any changes that disadvantage them.

In an unfair dismissal claim, tribunals also have to take account of section 109 of the Employment Rights Act (ERA) 1996 which states that employees cannot claim unfair dismissal once they have reached the NRA for someone “in their position”.

Tribunal decision

The tribunal said that Mr Power’s NRA was the same as his contractual retirement age, for the purposes of the ERA. However, it then said that regulation 12 meant that the contractual variation of his retirement age from 60 to 65 was null and void. Although this might be to his disadvantage, the tribunal said there was nothing in the regulations to prevent that effect.

His retirement age was, therefore, 60 and he could not bring a claim of unfair dismissal because of the ERA. Mr Power appealed arguing that the tribunal’s interpretation of regulation 12 ran counter to the decision in Daddy’s Dance Hall.

EAT decision

The EAT agreed with Mr Power, saying that the regulations were not designed to protect employers, but to protect employees. Denying Mr Power the benefit of a more favourable term (in this instance, retirement at age 65 instead of 60) meant that he was being put at a disadvantage, something that the regulations were designed to prevent.

It then went on to say that he was entitled to hold the employer to the variation, whether or not it was more favourable to him, as an employee. The decision in Daddy’s Dance Hall and Credit Suisse First Boston (Europe) Ltd v Lister just meant that employees can rely on a term in their contract with the transferor, rather than the agreement with the transferee.

If, however, the employee wants to hang onto a new term with the transferee, they are equally free to do so. Regulation 12 did not make them void. Employees can object to any change they think are to their disadvantage. Employers, on the other hand, cannot avoid a variation that the employee wants to enforce.