A share incentive plan transferred under TUPE law because it was a benefit in connection with employment, the Employment Appeal Tribunal has held
In Ponticelli UK Ltd v Gallagher, the claimant participated in a Partnership Share Agreement (SIP), through which he bought shares in the transferor’s parent company in a way that was tax-efficient.
Under the scheme, for each partnership share purchased with up to 2% of the claimant’s salary, the parent company contributed funds for the purchase of two additional matching shares.
This arrangement formed part of the claimant’s overall remuneration package. The details of this, however, were found exclusively in an explanatory booklet.
A transfer of undertakings took place in which the claimant’s employment was transferred to another business. As a result, participation in the SIP was brought to an end.
The respondent offered a one-off payment to compensate for the fact a SIP would not be offered post transfer, however this was rejected by the claimant.
The claimant argued that it was a contractual right to participate in a SIP and that this could not be ended by operation of TUPE.
At first instance, the employment tribunal held that the claimant was in fact entitled to participate in a scheme of “substantial equivalence” to that operated by the transferor.
This was appealed by the respondent, who argued that the scheme operated by the transferor was neither “under” the contract of employment, nor “in connection with” that contract, as required by TUPE law in order for the benefit to transfer.
The Employment Appeal Tribunal (EAT) held that even if the Partnership Share Agreement had not arisen “under” the contract of employment, it was plainly obvious that it was “in connection with”, and therefore satisfied TUPE laws.
It was irrelevant, the EAT said, that the contract of employment was silent on the matter, because the rights created by the SIP were part of the overall financial package for the claimant.
If you have more questions on how the law operates to protect employees’ terms and conditions on a TUPE, visit BrAInbox today where you can find answers to questions like How long are employees' terms and conditions protected for after TUPE?
