Employer unlawfully reduced employee’s pay following a business transfer, breaching TUPE protections.

The Complainant began working for the Respondent in November 2023, following a transfer of undertakings when the Respondent took over the business. Initially, she had worked as a chef under the previous employer at a pay rate of €17 per hour. After the transfer, the Respondent informed her that her new rate would be €15 per hour. Despite her objections and reference to her former rate, the Respondent stated the new rate would apply for the coming months and might increase later. The Complainant was also issued a new contract reflecting the lower rate and a probationary period, which she refused to accept. She then opted to take a period of absence. During the hearing in December 2024, the Complainant provided payslips showing her previous €17 rate. She submitted that the Respondent’s failure to maintain her existing pay and terms post-transfer was a breach of the Transfer of Undertakings Regulations.

The Respondent denied breaching the Transfer of Undertakings Regulations. They stated that they took over the lease of the premises where the Complainant worked and acknowledged her previous employment with the former tenants. The Respondent claimed they intended to give the Complainant a chance to prove herself and, like all new employees, she was subject to a probationary period. During this time, her pay rate was set at €15 per hour, with the prospect of an increase to €17 after successfully completing probation. The Respondent issued a draft contract reflecting these terms, which the Complainant refused to sign. They argued she lacked proof of prior contractual entitlement to €17.

The Adjudicating Officer found that the Complainant’s employment was subject to a transfer of undertakings within the meaning of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. The Complainant had worked as a chef for the former employer at the same premises and continued in the same role under the Respondent with minimal interruption. Evidence showed that her hourly pay rate was reduced from €17 to €15 post-transfer. The Respondent’s reliance on probationary terms was rejected, as the Complainant’s pay rate transferred as an implied contractual term. The complaint succeeded and compensation of €3,000 was awarded.

• When taking over a business or premises where employees remain in situ, employers must carefully assess if a Transfer of Undertakings (TUPE) applies. TUPE protects existing terms and conditions, including pay, whether express or implied. Failure to honour pre-transfer terms can expose employers to claims.
  
• Before implementing any changes, such as altering pay or imposing probationary clauses, employers should conduct a formal due diligence process on inherited contracts and pay records. This avoids inadvertently breaching transfer regulations and helps ensure lawful employment transitions. 
  
• Lastly, clear communication with transferring employees is vital. Employers should provide written clarification on their continued terms, seek legal advice where necessary, and document any contractual variations agreed post-transfer. Unilateral changes, particularly to core terms like pay, are high-risk.

The full case can be found here.