Senior employees seeking to ‘feather their nest’ before a TUPE transfer should take note of Ferguson and Ors v Astrea Asset Management Ltd. Shortly before a TUPE transfer, the Claimants arranged for their employment contracts to be substantially improved to provide for guaranteed bonus payments and generous new termination payments. An ET found the changes were made by reason of transfer and had no legitimate commercial purpose for the transferor but were designed to compensate the Claimants for loss of transferor’s business, thereby dishonestly taking advantage of TUPE 2006 by awarding themselves remuneration to be paid by transferee. The EAT agreed. Reg 4(4) of TUPE 2006 renders void all contractual variations made because of a transfer and not just those adverse to the employee. Here the purpose was not to safeguard employee rights, but for the Claimants to obtain an improper advantage by artificially obtaining variations to their contracts of employment with the transferor in contemplation of the transfer happening.
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