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A transferor’s duties and liabilities under regs.10 and 11 Transfer of Undertakings (Protection of Employment) Regulations 1981 SI 1981/1794 could be transferred to the transferee under reg.5.
Alamo, the first respondent, concluded a contract to purchase Twose, the second respondent, who was in administration. The contract fell to be governed by the Transfer of Undertakings (Protection of Employment) Regulations 1981 SI 1981/1794 ('TUPE'). Twose failed to consult its employees under reg.10 of TUPE. After the transfer, a test case was brought by the applicant employee ('T') against Alamo, for Twose's failure to consult under reg.10 on the basis that reg.5 of TUPE had the effect of transferring the duties and liabilities imposed on an employer under regs.10 and 11 of TUPE. The Employment Tribunal held that Alamo had to bear the burden of Twose's failure to comply with TUPE. Alamo appealed to the Employment Appeal Tribunal ('EAT') contending that liability under regs.10 and 11 did not transfer.
HELD: (1) There were two conflicting decisions of the EAT on the point in question. In Kerry Foods Ltd v Creber (2000) ICR 556; NLC 599109501 it was held that liability did transfer. In Transport and General Workers’ Union v James McKinnon & Others (2001) IRLR 597; NLC 501108901 it was held that the liability did not transfer. The approach in Kerry was to be perferred and was followed in this case. (2) Regulation 5 applied to rights and obligations derived from statute and regulations, even if not expressly or impliedly incorporated in the contract of employment, provided that they existed "in connection with" the contract of employment or "the employment relationship". All things being equal, such rights were included in reg.5 unless they were shown to be excluded rather than the other way round. (3) The rights and liabilities in regs.10 and 11 were rights that arose in connection with the contract of employment or from the employment relationship and, consequently, they were subject to transfer under reg.5. That approach was consistent with the twofold general approach of TUPE: (a) to protect employees on a transfer; and (b) that protection was best achieved by a transfer of rights.