the effect of TUPE regulations 1981 (SI 1981/1794) reg 5 is that when there is a transfer of a business or undertaking covered by the TUPE regulations, the employment relationship of employees with the transferor autmatically comes to an end and all obligations formerly owed by the transferor to staff employed in the transferred business are automatically transferred to the new owner of the business or undertaking even if the new owner is unidentified.

Outline facts

Mr Dyke had been employed as a local authority gardener/groundsman since the early 1960's. In 1964 the local authority contracted out the groundsman's work to MRS Environmental Services Ltd and Mr Dyke became their employee. MRS later lost the contract. MRS notified Mr Dyke that his employment would transfer to the new contractor but said it had been unable to find out who that was. The new contractor failed to contact Mr Dyke who therefore brought an unfair dismissal claim against the only employer he knew, ie MRS Environmental Services Ltd.

Later, the new contractor was identified as being a Mr William McBride, who was joined as a party to the proceedings.

When the case was heard, the industrial tribunal said it was bound by a 1995 EAT ruling (Photostatic Copiers (Southern) Ltd v Okuda [1995] IRLR 11) to the effect that there could not be no a transfer of an employee's contract unless the employee had notice of the identity of the transferee. Accordingly, the industrial tribunal held that MRS Environmental Services Ltd was liable. MRS appealed.

Decision

MRS won. After a detailed review of the case law, the EAT held that its previous decision in Photostatic Copiers (Southern) Ltd v Okuda should not be followed.

Note: the EAT had already come to a similar conclusion, that Photostatic Copiers (Southern) Ltd v Okuda should not be followed in November 1996 in Sec'y of State (DTI) v Cook 1997 ICR 288.