The practice of ‘offshoring’ – of moving work from one country to another, usually with the aim of reducing costs, is something that most of the best employment lawyers will have dealt with at some time or other. We are all familiar with the concept – mostly through experiences with call centres, but in many cases it is not just customer facing roles that experience offshoring. From an employment law perspective, offshoring raises difficult questions in relation to what happens to the staff in the original location. Does TUPE transfer in an offshoring situation? And what is the correct approach.
The case of the offshore transfer - Xerox Business Services Philippines Inc v Zeb
The UK employment Appeal Tribunal recently offered some helpful guidance as to the correct approach to TUPE, and to redundancy, in this situation. In this case, Xerox Business Services Philippines Inc v Zeb the employee, Mr Zeb, worked in Wakefield, West Yorkshire, in the finance accounting team of Xerox UK Ltd. As part of a corporate reorganisation, the work of this team was to transfer to Manila, to Xerox Business Services Philippines Inc (Xerox). Xerox accepted that TUPE applied to the transfer and offered employees a choice – either object to the transfer and receive a generous redundancy payment, or transfer and be made redundant, receiving statutory redundancy only, and not the enhanced package on offer to those who objected. employees were advised that they could transfer to the Philippines, but only on local (Philippines) Ts & Cs.
Mr Zeb’s contract of employment said that he worked in ‘Leeds or Wakefield’ although he could be asked to work anywhere within reasonable commuting distance of his home. He argued that he should be allowed to relocate to the Philippines on his UK Ts &Cs. Xerox explained that this would defeat the money-saving purpose of the offshoring exercise. Mr Zeb was dismissed and received statutory redundancy pay.
The employment tribunal upheld the complaint
Mr Zeb complained that he had been unfairly dismissed to the employment tribunal. He argued that he should have been able to transfer to Xerox on his UK Ts & Cs. The Tribunal found that the real reason that Mr Zeb was dismissed was because he wanted to remain on his UK Ts &Cs and not because he was redundant – after all, the work was continuing, just in Manila. Although the usual position under TUPE is that Ts and Cs cannot be varied in connection with a transfer, the Tribunal found that in this case, there had been an agreed variation to the Ts & Cs, allowed under Regulation 4(5) of TUPE.
The UK EAT disagreed
Xerox appealed the decision that Mr Zeb had been unfairly dismissed. In finding for Xerox, the EAT also gave some helpful guidance on the application of TUPE in the offshoring scenario.
No variation of contract
The EAT found that there had been no variation of the contract permitted under TUPE Reg 4(5). Mr Zeb had transferred to Xerox, but on his existing Ts & Cs which meant they had to employ him in Leeds, Wakefield or within reasonable commuting distance of his home. It was an ‘all or nothing’ situation – the offer to transfer to the Philippines was dependant on Mr Zeb accepting local Ts & Cs so he could not separate off the location clause in the contract.
Incorrect application of the redundancy test
The EAT held that the employment tribunal had not properly applied the statutory redundancy test to the situation. The question to ask was whether Xerox had a requirement for employees such as Mr Zeb to carry out that work of a particular kind, in that particular place – Leeds/Wakefield. The facts led inexorably to a conclusion that the requirement has ceased.
But there had been no consideration of TUPE Reg 7
One of the key questions on a TUPE related case is to determine with the transfer is the sole or principal reason for the dismissal. Neither Xerox nor Mr Zeb raised this question, but as the question is fundamental to the question of unfair dismissal where there has been a business transfer, the EAT thought the employment tribunal ought to have addressed the question anyway. The Eat remitted the case back to the employment tribunal to consider this point.
Clarity in offshoring situations
As UK employment lawyers know, considering the application of TUPE, particularly in an offshoring situation, can be complex. The case serves as a helpful reminder that TUPE may apply to an offshoring situation, but the usual statutory redundancy principles apply too. In this case, the EAT felt that the employment tribunal had focussed too much on the situation in Manila without concentrating on the legal principles involved. Although a transferee employee such as Xerox in this case, cannot change an employee’s terms and conditions in connection with a transfer, this does not mean that it has to allow employees to transfer on their UK Ts &Cs if there is a genuine redundancy situation such as in this case. However, employers must still ensure they go through a fair redundancy process – including, where appropriate, considering the possibility of relocating – even if that will be on different Ts &Cs.
If you are looking for a top employment law firm to help provide clarity and guidance in an offshoring situation, OTS Solicitors have a dedicated team of employment lawyers in London who can give you the advice and support you need. Recommended in the Legal 500 for providing intelligent and practical advice, our team of top employment lawyers in London can provide your business with the support it needs. Book an appointment today by calling 0203 959 9123.
Posted on: Wednesday, 06 June, 2018