UK: University Challenge: A Degree Of Uncertainty Regulation 5(1) of the Transfer

Last Updated: 23 October 2000

Regulation 5(1) of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) provides for the transfer from transferor to transferee of all rights, duties, powers and obligations under the contracts of employees employed at the time. By contrast, Reg 5(4A) gives such an employee the right to object to being transferred under Reg 5(1). If he objects pre-transfer then his employment will not move to the transferee. Instead it will be treated under Reg 5(4A) as terminated by the transfer itself and the employee will have no rights in consequence against the transferor. Reg 5(5) preserves an employee’s right to quit and sue if a substantial and detrimental change is made in his terms and conditions of employment (i.e. a constructive dismissal situation). But sue whom? Traditionally, the answer would be the transferee, but what may seem a relatively straightforward principle of transfer of liability has been confused by recent case law.

In University of Oxford v (1) Humphreys (2) Associated Examining Board, Mr. Humphreys worked as an examiner. He was advised by his employer, Oxford University, that his employment would be transferred upon a TUPE transfer of its exam business to the Associated Examining Board (AEB). Mr. Humphreys objected to the transfer under Reg 5(4A) on the basis that AEB had said it would only guarantee him three years of further employment. The transfer of the exam business took place and Mr. Humphreys brought an action against the University on the basis that against that background its proceeding with the transfer constituted a constructive dismissal. The University applied to strike out Mr. Humphreys claim contending that there was no reasonable cause of action against it – in other words it argued that under Reg 5(1) any liability on its part had been transferred to AEB. Moreover, Reg 5(4A) stated that an objecting employee would not be deemed dismissed by the transferor.

The Court of Appeal held that an employee who objects to a transfer on the grounds that it will detrimentally change his working conditions is entitled to bring a claim against the transferor based on the argument that he has been constructively dismissed. Reg 5(5) (preservation of right to claim constructive dismissal) effectively overrode the non-dismissal provisions of Reg 5(4A). An objection to a transfer under Reg 5(4A) prevents the employee’s contract from transferring and therefore an employee’s remedy for constructive dismissal must be asserted against the transferor (in this case the University). Mr Humphreys was therefore allowed to pursue his claim against the University. It was admitted by the University that AEB’s refusal to guarantee more than 3 years’ further employment was a substantial and prejudicial change in his working conditions, so it is to be presumed that the University may have difficulty in defending itself on the merits. If correct, this seems to leave the University in the rather bizarre position of being responsible for Mr Humphreys' wrongful dismissal claim even though it had itself been guilty of no direct breach of his contract of employment. On the other hand, if Mr Humphreys had transferred to AEB and then sued, liability could attach to AEB instead. The question of liability seems to become something of a lottery, depending on the precise point at which the employee objects and whether he does so under Reg 5(4A) pre-transfer or simply by suing the transferee afterwards. It is not a satisfactory state of affairs.

The EAT’s decision in Euro-Die (UK) Ltd v (1) Skidmore (2) Genesis Diesinking Ltd should be contrasted with the decision in the Humphreys case. Mr Skidmore was advised by his employer, GD, that it was to cease trading with immediate effect and that he could work thereafter for ED Ltd which would be continuing the business. Mr Skidmore refused to work for ED until he received assurances from GD that his continuity of employment would be protected. The assurances were not received and he claimed constructive dismissal against both GD and ED. The EAT held that GD’s failure to give an assurance amounted to a fundamental breach of the implied term of trust and confidence and so the employee was entitled to treat himself as having been constructively dismissed. The EAT also found in contrast to the Humphreys case that Mr Skidmore had not objected under Reg 5(4A). He had no absolute objection to working for ED – he simply declined to work for them unless he was given an assurance about his continuity of employment. On the basis that Mr. Skidmore had not objected to the transfer under Reg 5(4A) his contract transferred to ED Ltd and as a consequence his claim of constructive dismissal did the same. No liability therefore attached to GD, his previous employer.

These cases appear to establish that if the employee objects to the transfer under Reg 5(4A) and is able to show a fundamental breach, then the transferor will be liable for the constructive dismissal. If however, there is no statutory objection raised but there is a claimed pre-transfer constructive dismissal then the transferee will be liable. Clearly whether an employee’s objection amounts to a statutory objection under Reg 5(4A) will be of fundamental importance and it is likely that we will see future litigation on this point. If he does object under Regulation 5(4A), but not as a result of any breach of contract, then he will have no claim against either party.

The Euro-Die case also raises the proposition that a failure by the transferor to provide assurances as to the employees security with the transferee can be a breach of contract. But how can the transferor safely provide such an assurance? The case leaves unanswered the question of whether there is a breach of contract (and if so, by whom) if the transferor gives such an assurance but it later (post-transfer) proves false. Does it matter if the assurance was given in good faith following representations from the transferee? Clarifying decisions are urgently required. In the meantime, it would seem possible in theory for an employee to argue that a failure to inform and consult under Reg. 10 of TUPE itself amounted to a breach of contract, thereby justifying a resignation and constructive dismissal claim against the transferor. The Euro-Die case therefore adds new weight to those Reg. 10 obligations.


The Data Protection Act 1998 came into force on 1 March. The new legislation gives employees the right to access their computerised and manual personnel files and to demand that any inaccuracies be corrected or removed. A future bulletin will deal with the provisions of the new Act in more detail.

The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.

For further information please contact Susan Nickson, Employment.

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