The Answer
This question was answered by the Court of Session in Scotland, who confirmed that - when an employee transfers under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), they are eligible to be provided with an equivalent share incentive scheme that was previously provided by the transferor.
The Court stipulated that the employee's right must derive from a Partnership Share Agreement, and not from the employee's contract of employment. The Court directed this as the obligations under the agreement were connected to the employee's contract of employment, and hence fell as a transfer liability under TUPE Regulations 2006.
The Risk/ Threat
Where a transferee fails to provide the same provision as a transferor's scheme - or fails to provide an alternative scheme with equivalent benefits, they will breach the employee's rights under TUPE 2006. If this happens, they can be ordered by the Employment Tribunal to pay the employee damages.
What You Need To Do
Employers and HR practitioners should undertake due diligence and get legal advice about any connected contracts providing share schemes or other employee benefits.
If you require any further assistance, please do not hesitate to contact our HR/Legal Advice Team on 0116 274 9193.
