Removal of contractual allowances post-TUPE

In this case, the Employment Appeal Tribunal found that the removal of an “outdated and unjustified” contractual allowance after a transfer was not void under TUPE.
The claimants were electricians who had ultimately transferred from Birmingham City Council (BCC) to the respondent as a result of a number of TUPE transfers. Within BCC the claimants had enjoyed an “Electricians Travel Time Allowance” (ETTA) payment, but the reasons behind the allowance had ceased to exist over the years.
After TUPE-ing to the respondent in 2008, the respondent gave notice that it was bringing the contractual entitlement to the ETTA to an end. The claimants argued that the reason for the variation was because of the TUPE transfer, and that the variation was therefore void under regulation 4(4) of TUPE.
In the first instance, the Employment Tribunal (ET) disagreed with the claimants, finding that the contractual variation was made because the ETTA was an outdated and unjustified payment and not because of the earlier transfer. The claimants’ appeal was dismissed by the Employment Appeal Tribunal, which upheld the findings of the ET.
This is good news for employers who inherit contracts containing out of date benefits as a result of TUPE transfers – where the contracts contain an unjustifiable allowance, employers may be able to vary the benefit without the variation being automatically rendered void by TUPE. However, each case will turn on its facts, and care should be given to the mechanisms for removing such benefits, even if they are genuinely out of date.

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Sinead Noonan