LRD guides and handbook May 2015

Law at Work 2015

Chapter 12

Workforce reorganisation in the run up to a transfer

[ch 12: pages 385-387]

Employers often use the run up to the transfer date to reorganise the workforce, making sure particular employees are (or are not) assigned to the transferring group (also referred to as being “in scope” for the transfer).

Sometimes this is done to enable employees to remain with their existing employer after the transfer date. The BIS TUPE guidance 2014 says: TUPE “does not prevent the transferor from retaining those individuals whom they had permanently reassigned to other work outside the organised grouping in advance of a transfer”.

One mechanism used has been the Retention of Employment Model summarised on page 387.

Regulation 4 of TUPE operates automatically on the transfer date to transfer the employment contract of any employee who remains in the organised grouping on that date, whether or not this is what any of the parties want (Royal Mail Group Limited v CWU [2009] EWCA Civ 1045). The only way of preventing this is to object clearly before the transfer. However, objecting to a transfer also carries significant risks, explained on page 384. Objecting is not sensible without first taking proper advice.

Employees who are inside the organised grouping on the transfer date cannot be forced to remain with their employer.

Employees should be informed and consulted in good time about any planned pre-transfer reorganisation. Where there is a recognised union, the consultation must be with the union. The duty to consult in relation to TUPE is explained on page 387.

Simply leaving staff in place at the transfer date but assigning them to work for the transferee on a straightforward secondment model will not prevent the employment transferring to the transferee automatically on the transfer date. This is regardless of the parties’ intentions, and can even happen without their knowledge:

In 1990, three civil servants were sent to work for the Training and Enterprise Council (TEC), on what they (and their civil service employer) understood to be a straightforward “secondment” arrangement. For three years, all the parties believed that the individuals were still employed by the Civil Service and behaved accordingly.

The House of Lords (now the Supreme Court) decided, following a European Court ruling, that their employment contracts had in fact transferred automatically to the TEC in 1990, even though nobody appreciated this at the time, or for the following three years.

North Wales Training and Enterprise Council Limited t/a Celtec v Astley [2006] UKHL 29

www.bailii.org/uk/cases/UKHL/2006/29.html

Here is another example:

Ms McLean was a BBC occupational health nurse. When the BBC proposed to transfer its HR Department to Capita, she was unhappy but she, the BBC and Capita agreed that she would be “seconded” to Capita for a six week trial period during which she would be paid by the BBC. She resigned her BBC role on this basis and then worked the six-week “secondment” with Capita, during which the BBC paid her salary, believing she was still their employee. At the end of the six weeks, she brought proceedings for unfair dismissal against the BBC and Capita. The tribunal dismissed the claim against the BBC, on the basis that the employment contract had already transferred to Capita automatically on the transfer date.

The EAT agreed, confirming that McLean’s employment transferred to Capita on the transfer date. “She was, clearly, only prepared to work for them for a limited period of six weeks but that being so, she cannot, at the same time, insist that she objected. What her approach shows is that she was in fact agreeable to working for the second respondents, albeit only for a short period.” She lost her right to object even though nobody realised that the employment had transferred.

Capita Health Solutions v BBC [2008] UKEAT34/07

www.bailii.org/uk/cases/UKEAT/2008/0034_07_0105.html

Where an employer fails to appreciate that a transfer has taken place until too late, they are likely to be liable for a significant protective award for failure to inform and/or consult properly about the transfer (see page 392).