In a noteworthy development, an interesting take on employee’s rights has come to light in the recent Scottish appeal court case, Ponticelli Limited v Gallagher. The Court of Session (CS) has ruled that an employee’s right to participate in a Share Incentive Plan (SIP) can be transferred under The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), even in circumstances where it is not explicitly mentioned in his/her contract of employment. Read the full judgement here.
For legal professionals, particularly those advising on M&A deal structuring and human rights at the workplace, this precedent could have significant implications. Between buyer, seller, and employee, this case lays the foundation for negotiations over the scope and applicability of contractual benefits under TUPE. It underscores the fact that a purchaser may be required to provide a benefit that is substantially equivalent to the SIP following the acquisition.
It’s worth noting that the court did not delve into the specifics of what would constitute a “substantially equivalent” benefit, leaving the door open for multiple interpretations and potential legal battles in future.
This ruling also highlights the wider issue of employee rights during business sales. It serves as a reminder that, during a TUPE transformation, not just tangible but also intangible benefits need to be considered and carefully dealt with to ensure a smooth transition.
In conclusion, this judgement can be seen as progressive, setting a precedent that both corporations and law firms can learn and draw inferences from. It serves as an important reminder of the rights and obligations that come into play during transactions. For global companies and legal professionals working in both M&A and employee rights arenas, these developments in the interpretation of TUPE are worth tracking.