It seems obvious but….

25 Jan 2013

When a business transfers from one owner to another or a service is moved from one provider to another, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) will normally apply.

One of the implications of TUPE is that the Transferee and the Transferor are jointly and severally liable for any awards made by a Tribunal arising from claims by employees relating to the transfer.  So, what happens if either the Transferee or Transferor settles a claim brought by an employee without confirming that the settlement is on behalf of the other party as well?

According to the Employment Appeal Tribunal in Tamang v Act Security Limited, the employee can continue to bring the same claim against the other employer.  Therefore, the employee can, essentially, settle their claim with one employer and then continue to seek further compensation from the other.

Our view:

Whilst this appears obvious, in so far as one employer's settlement cannot bind the other employer, it does seem a little unfair – the employee can have their cake and then ask for another one!

It does, however, underline the importance of ensuring that, if a settlement is reached in cases involving TUPE, all Respondents are joined to the settlement agreement in order to prevent the Claimant continuing their claim against any remaining Respondents.