TUPE: Tribunal wrongly excluded business located outside of the UK when assessing transfer date

Published 11 septiembre 2023

The EAT has held that, in ascertaining the date of the transfer of a multinational business under TUPE, an employment tribunal erred by excluding a substantial part of the business on the basis that it was located outside the United Kingdom.

THE FACTS

Ms Rajput began work for Commerzbank (CAG) as a senior compliance officer in the Equity Markets and Commodities (EMC) division, based in London. On 8 November 2018, a business purchase agreement was entered into between CAG and Société Générale (SG), whereby SG agreed to purchase CAG’s EMC business by way of a TUPE transfer. The EMC business comprised three components: flow trading (Flow); exotics, vanilla and funds (EVF); and asset management (AM). The AM business was split mainly across Luxembourg, London and Frankfurt; the EVF business was based mainly in London and Hong Kong; and the Flow business was based mainly in Germany, with only a small presence in London. Given the complex and multinational nature of the EMC business, its transfer was effected in ‘batches’.  95% of the AM and EVF businesses had transferred to SG by the end of September 2019. However, much of the Flow business did not transfer until March 2020, with the remainder transferring at the end of May 2020.

In parallel with the sale of the EMC business to SG, Ms Rajput was in dispute with CAG regarding its treatment of her. This culminated in her dismissal on 31 March 2020, following which she brought an employment tribunal claim against both CAG and SG for unfair dismissal, discrimination and victimisation.  After it became common ground that a transfer of the EMC business had taken place and that Ms Rajput was assigned to the part of the business which transferred, CAG pleaded that the transfer date was 1 October 2019. On this basis Ms Rajput's dismissal might be considered a nullity because CAG was not her employer at the time so could not have dismissed her. Ms Rajput submitted that the transfer date was  the later date of 10 May 2020 because that was the date on which the transfer of the Flow business was completed. The ET found the transfer date was the earlier date of 1 October 2019.

In coming to this decision at a preliminary hearing, the tribunal found that by 1 October nearly the whole of the EVF and AM businesses had transferred. It accepted CAG and SG's submissions that the Flow business should not be the focus of the enquiry because it was hardly part of the London operation, and the tribunal was concerned with the transfer of the business situated in the UK. Ms Rajput appealed to the EAT, arguing that where there is a series of transactions, the transfer is not effected until ‘full and final’ responsibility for carrying on the transferred business or part of a business lies with the transferee. Generally, that will not be until the last transaction in the series takes place. In this case, ‘full and final’ responsibility for running the transferred business did not vest in SG until completion of the series of transactions transferring the Flow business.

In its decision the EAT observed that transfers of businesses come in all shapes and sizes. Some are closely regulated by contracts which set rigid deadlines that are performed to the letter. Others happen in a less formal way, with a handover of functions over time, more loosely linked to a contract ‘framework’. The present case more closely fitted the latter description: the business purchase agreement prescribed numerous transactions effecting the transfer of the EMC business to SG, but despite its length and detail it included much flexibility, in particular about timing. The EAT agreed with the Respondents that there is no presumption or rule that a transfer effected by a series of transactions occurs at the end of the series: completion may be artificially delayed; the last transaction in the series may be a minor detail, putting the last piece of the jigsaw in place long after the transferee has started running the business to the exclusion of the transferor. By similar reasoning, a ‘full and final’ gloss should not be added to the concept of responsibility for running the business: a transferor might retain minor responsibilities for mopping up work long after responsibility has shifted to the transferee in substance.

The EAT held that while the tribunal had correctly decided that the date of the transfer was not necessarily the date of the last transaction in the series, it had misdirected itself by excluding the Flow business from its consideration on the basis that it was geographically located outside the UK. It was common ground that the EMC business, was ‘situated immediately before the transfer in the United Kingdom’, as required by TUPE. However, a business or part of a business can be situated in the UK without its entire operation being located in the UK. Everyone, including the tribunal, agreed that the EMC business was geographically located across several countries. In ascertaining the transfer date, TUPE did not require the tribunal to confine its consideration to the part of the organised grouping of resources based in the UK. Indeed the TUPE Regulations themselves (Reg 3(4)(b) and (c)) make it clear that the involvement of foreign law and legal systems does not prevent TUPE applying to a transfer. By excluding the Flow business from its consideration, the tribunal had erred in law. If it had not done so, it would likely have found that the transfer occurred later than 1 October 2019, and possibly after Ms Rajput had been dismissed. The EAT therefore allowed her appeal on this point and remitted the issue as to date of transfer for further consideration by a different Employment Judge.

WHAT DOES THIS MEAN FOR EMPLOYERS?

As always with TUPE this case is a reminder that when considering the date of a TUPE transfer the tribunal will always examine the particular facts This case makes it clear that that factual analysis should take into account any non-UK components of a transferred business. In this case the Flow business in Germany comprised a small part of the transferring business but nevertheless it could not be ignored. Employers transferring multinational businesses need to take note.

Jagruti Rajput -v- 1) Commerzbank AG; and 2) Société Generale London Branch [2023] EA-2021-001040-OO