Transfer of undertaking

In this article, Kathy Daniels — FCIPD, SFHEA, Employment Law Author and Lecturer, looks at recent case law on Transfer of Undertakings (Protection of Employment) (TUPE) and the implications of the rulings.

The TUPE Regulations 2006 set out that an employee transfers to a new employer if all or part of a business is sold, or if there is a transfer of a service provision. A number of recent cases have explored the more specific question of who transfers in a TUPE situation.

It has long been established that, to transfer, an employee must be assigned to the work that is transferring. So, if employees work for a number of different clients and the work for just one client transfers they will not transfer, because they are not assigned to the work that is transferring.

What happens if employees are laid off, or are absent due to long-term ill health? Can it be argued that they are assigned to the work that is transferring?

Laid off employees

In the case of Inex Home Improvements Ltd v Hodgkins [2015], the employees had been working on a contract that had been subcontracted to Inex. The work was released in sections, one by one. There was a gap between the employees completing the work on one section and being issued with the work for the next section and the employees were temporarily laid off.

The client then decided not to give the next section of work to Inex, but to give it to another company called Localrun. The employees who had been laid off argued that they should transfer to Localrun. However, the employer argued that they could not be an organised group of employees assigned to the work that was transferring as they had been laid off.

The employees did transfer. It was ruled that the temporary lay-off did not mean that the employees were no longer assigned to the work that was transferring.

Point to consider

  • In a TUPE situation, you need to consider who has been assigned to the work that is transferring. If there has been a temporary cessation of work resulting in a lay-off, this will not exclude those employees from the transfer.

Unwell employees

In the case of BT Managed Services Ltd v Edwards [2015], the employee had been ill, and absent from work, for five years. He was nominally assigned to one particular division of BT which transferred to Ericsson.

The Employment Appeal Tribunal (EAT) ruled that he did not transfer to Ericsson. To be assigned to the work that was transferring, the EAT ruled that the employee “will generally require some level of participation or, in the case of temporary absence, an expectation of future participation in carrying out the relevant activities on behalf of the client”.

In this case, the absence was seen as more than temporary, and there had been no participation in the transferring work for five years.

Points to consider

  • It is important to note that we are seeing a very lengthy period of absence here. If the employee had been absent for a short period of time due to ill health this would not have affected the decision on whether the employee transferred.

  • If an employee is assigned to the work and on maternity leave the employee would transfer despite the absence.

Employees who should have been removed from the work

The employees who transfer in a TUPE situation are those who are assigned to the work that is transferring at the time of the transfer. An interesting question arose in the case of Jakowlew v Nestor Primecare Services Ltd t/a Saga Care [2015] as to exactly what that might mean.

Jakowlew worked on a contract that Saga had to provide services to the London Borough of Enfield. There were difficulties in the relationship between the management at Enfield and Jakowlew, and therefore, Saga had been asked to remove her from the contract. The contract then transferred from Saga to Westminster Homecare Ltd, before Saga had taken any action to remove Jakowlew. Jakowlew argued that she should transfer to Westminster, but it was argued that she was no longer assigned to the work because Saga had been asked to remove her.

Jakowlew won her argument. The question is, who is assigned to the work at the time that it transfers. At the actual time of the transfer, she had not been moved, and hence she was still assigned.

Point to note

  • If you are managing a transfer situation, it is very important to look at who is assigned at the specific date of the transfer. If there is an employee, for example, who is planning to move to another job in your company but has not actually moved, they will still be part of the employees who are transferring.

Employees who work for a subcontractor

A more complicated question arises when an employer has subcontracted work that it is contracted to provide, as in the case of Jinks v London Borough of Havering [2015]. Havering asked a company called Saturn to operate an ice rink and car park. In turn, Saturn asked a company called Regal to manage the car park. Jinks worked for Regal helping to manage the car park.

Havering then decided to transfer the car park to an NHS Trust and as a result of this, the contract with Regal was terminated. Jinks argued that he should have transferred from Regal to Havering when they took back the management of the car park. However, Havering argued that Regal provided the service to Saturn and hence there was no transfer.

The EAT ruled that this could be a transfer covered by TUPE. When deciding who transfers, the definition of a client must be interpreted quite broadly. In this case, the question that needed to be asked was on whose behalf the car park was being run. There is no requirement for a contractual relationship to be in place, and it is possible for there to be more than one client.

Point to note

  • In a situation where there are various contracts being subcontracted it is recommended that part of the commercial agreement specifies who is allocated to what work and hence who transfers.

Employees who work within a group

Another issue can arise if there is a transfer between companies within the same group. In the case of Hyde Housing Association Ltd and another v Jones [2015], the employee concerned worked for a company called Martlet Homes Ltd. While the employee was still working for Martlet, it became part of the Hyde Housing Association Ltd.

The employee was dismissed, but was then offered employment with another company within the Hyde Housing Association Ltd. He argued that his dismissal must have been automatically unfair because he was being transferred, and a dismissal due to a transfer is automatically unfair.

His argument was unsuccessful. This was not a transfer of undertaking because the employer did not change. If an employee moves within a group, there is no transfer of undertaking.