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TUPE transfer test case looms
Thursday 14 September 2006
Employment laws that potentially give professional services employees including lawyers the right to transfer to a rival firm if their client account moves across could be invoked for the first time in a disagreement that has come to light this month.
A dispute between advertising agencies McCann Erickson and Euro RSCG could potentially involve the first use of the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) that were introduced in April 2006. Some leading employment lawyers claim that the regulations have extended transfer rights to all professional services firms, including law firms (see (2006) Gazette, 9 March, 1).
McCann Erickson lost its Boots Healthcare International advertising account to Euro RSCG in July. It is understood that some members of a small group of employees that had worked on the account now want to transfer to the rival agency by invoking TUPE.
Under the rules, dedicated teams of professionals who spend most of their time acting for one client could have the right to transfer to the new firm under the same terms and conditions as before, including salary and bonuses.
Marina Palomba, head of legal at the Institute of Advertising Practitioners, said: There are five or six staff who worked on the account almost exclusively, and some of them want to transfer because there are no cases yet, no one is sure whether the regulations apply or not.
She added: Extending the regulations to professional services was not thought through, and is not at all helpful for businesses. There is a lot of uncertainty, particularly in the advertising industry, and it will also affect law firms.
Simon Henthorn, solicitor-advocate at City firm Reynolds Porter Chamberlain, said: This is the first such case that I am aware of, and there will be others, without a shadow of a doubt. The regulations are only just beginning to bite.
He added: When there is a downturn in business, organisations will almost certainly take advantage of TUPE laws to reduce the cost of losing business.
McCann Erikson and Euro RSCG declined to comment.
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