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Does the benefit of a non-contractual share incentive plan transfer under TUPE?

Yes, held the Inner House of the Court of Session in Ponticelli Ltd v Gallagher.

The case was about whether the Claimant’s employer share incentive plan transferred under TUPE meaning the Respondent was obliged to provide a plan of ‘substantial equivalence’. The employer argued that a share incentive benefit plan did not arise ‘under’ or ‘in connection with’ the Claimant’s contract, so the benefit did not transfer under TUPE. The Court of Session rejected this, noting that the restrictive interpretation of TUPE proposed by the employer would permit employers to subvert TUPE protections by creating side contracts for benefits additional to salary.

The Court noted that the long-standing and controversial Court of Appeal decision in Chapman v CP Computer was properly about a specific contract applying to stock options rather than TUPE.

Thanks to Ed McFarlane for preparing this case summary.