Briefing Note - Normal Retirement Age and Business Transfers under TUPE

The Court of Appeal has ruled (Cross & Gibson v British Airways plc) that when a business transfer takes place to which the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) apply, the normal retirement age of employees that existed beforehand does not transfer under section 5 of the Regulations. The issue may be important for unfair dismissal claims.

Michael Cross and Carole Gibson were employed by British Caledonian Airways (BCal) Ltd at Gatwick Airport as a pilot and a cabin services director respectively. In 1988, the company was taken over by British Airways plc (BA) and they continued to work for BA in those same capacities.

When they worked for BCal, Mr Cross and Mrs Gibson had been entitled to continue working until the age of 60, when they could retire on full pension. BA, however, had a policy requiring its flying crew to retire at age 55.

Shortly after the transfer, Mr Cross signed a new contract with BA, which provided for a compulsory retirement age of 55. A year later he was promoted and transferred to Heathrow Airport. Had he not already accepted BA’s retirement policy, he would have been required to do so at that time.

Mrs Gibson also signed a new contract shortly after the transfer of the business. She subsequently changed to part-time work and towards the end of her employment with BA she also showed an interest in early retirement, in response to a general invitation from the company. However, she later withdrew this application after considering the terms being offered.

Many years after the original business transfer, BA required Mr Cross and Mrs Gibson to retire at age 55, in accordance with its policy. Even though they had earlier agreed to the lower retirement age, they maintained that they were entitled to continue working until the age of 60 and that they had been unfairly dismissed. Their argument was that their acceptance of the change in retirement age was negated by TUPE Regulation 5 which states that on the completion of the relevant transfer, ‘all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract, shall be transferred …. to the transferee…’.

Mr Cross and Mrs Gibson maintained that their contractual retirement age at BCal was also their normal retirement age there and that under the TUPE legislation both transferred with them to BA, thus freezing their BCal normal retirement age on and after the transfer.

The question for the Court of Appeal was whether, at the time of their respective retirements, Mr Cross and Mrs Gibson were protected by those Regulations (read with section 109 of the Employment Rights Act 1996) from unfair dismissal.

The Court ruled that a ‘normal retirement age’ is not the same as a ‘contractual retirement age’ and is not one of the ‘rights, powers, duties and liabilities’ capable of being transferred under TUPE. It is not capable of being frozen at the moment of transfer but is determined by the normal retirement age for those in the position of the employee in question at the time of his or her dismissal.

As Mr Cross and Mrs Gibson had reached the normal retirement age of 55 at BA, they were not entitled to claim unfair dismissal.