Where the transferor paid a particular mileage rate to transferred employees, is the transferee obliged to continue to pay them at this rate even though it is higher than its normal rate?

Whether or not the transferee must continue to pay a particular mileage rate depends on whether or not the agreed mileage rate is a term or condition of the transferred employees' employment. If it is, the transferee will be obliged to continue to pay them at this rate even though this may be higher than its normal rate for existing employees. This is because, when a TUPE transfer takes place, the transferee inherits the contracts of employment of the persons employed by the transferor immediately before the transfer and the employees have the right to transfer on the same terms and conditions of employment that they previously enjoyed with the transferor. (Special rules apply to the transfer of occupational pension rights.)

However, in many cases, mileage rates do not form part of an employee's terms and conditions of employment but are expressed as being non-contractual, giving the employer the right to increase or decrease the rates. In this situation the transferee would not be obliged to continue to pay the transferred employees at the transferor's mileage rate because it is not a term of the employees' contracts of employment.