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TUPE Transfers

The Proctor & Gamble case is the first substantial ruling on what constitutes so-called ‘Beckmann liabilities’ since the cases of Beckmann and Martin in the early 2000s.

Generally, when an employee’s employment transfers to a new employer under TUPE, the rights and obligations arising from the employment relationship also transfer to the new employer. TUPE excludes from the scope of such a transfer those rights and obligations relating to an occupational pension scheme (the “pensions exception”). This exclusion is qualified to provide that any provisions of an occupational pension scheme which do not relate to ‘old age, invalidity or survivorship’ are not treated as being part of the scheme, and therefore are not included within the pensions exception and may transfer.

The High Court ruled in Proctor & Gamble Company v Svenska Cellulosa Akiebolaget and SCA Hygiene Products Manchester Limited [2012] that when scheme members are transferred to a new employer under TUPE, the transferee employer is only liable for early retirement benefits up to normal pension age, to the extent that these are not covered through deferred membership of the transferor’s pension scheme.

Although this case casts some light on what constitutes ‘old age’ benefits, the case is subject to appeal and, therefore, no conclusions can yet be drawn.