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Who transfers?
The next difficult question in the context of TUPE is — when the business transfers, or the service is moved from one provider to another — who goes with it?
Under regulation 4 of TUPE, only employees who are assigned to the organised grouping of employees or resources will transfer on the transfer date.
An employee working temporarily for the part of the business that transfers will not transfer. “Assigned” means “assigned other than on a temporary basis” (regulation 2).
There is confusion about this issue, and fresh guidance has been promised.
There is no “percentage” test. Although the percentage of time someone spends assigned to the transferring tasks is useful as one factor in deciding whether someone is assigned to the transferring group, it is by no means decisive. It is a question of fact for the tribunal, looking at all the surrounding factors (Buchanan-Smith v Schleicher & Co International Limited UKEAT/1105/94).
Just “being involved” in the carrying out of the relevant activities immediately prior to the transfer is not enough. Relevant factors include:
• how much time is spent on the part of a business that transfers
• the employee’s tasks under the employment contract
• how the employer allocates costs associated with the employee across different parts of the business; and
• The organisational framework.
In any tribunal claim, the onus is on the employee to prove they were assigned to the organised grouping. Difficult questions can arise where time is divided between two or more parts of the business only part of which is transferred. When deciding whether an employee is “assigned” to the transferring group in any business transfer, the tribunal should remember that the purpose of the Directive is to protect employees (Duncan Web Offset (Maidstone) Ltd v Cooper [1995] IRLR 633).
In Skillbase Services Limited v King ([2004] UKEAT0058/03/1201), a manager did not transfer when the council’s maintenance contract, which was serviced by one branch of Skillbase was reassigned to another service provider, even though King gave evidence that he spent 80% of his time dealing with the contract. The tribunal decided that his employment did not transfer because he had lots of other responsibilities as manager of all the branches of Skillbase, not just the branch responsible for operating the council contract.
These issues were considered in detail in the following recent case:
Two voluntary organisations provided services to homeless people in Edinburgh under service agreements with the Council, their only client. As well as 30-40 staff engaged in direct service delivery, the organisations employed two directors whose roles were strategic and included work on the re-tendering process, liaising with the board of trustees and making sure the organisations met regulatory standards. When the Council took the work back in-house, they took all the operational staff, but not the two directors. They brought tribunal claims arguing that they too were “assigned” to the organised group of employees whose contracts transferred to the Council.
The directors lost because the EAT concluded that their activities were strategic and concerned mainly with maintaining the organisation, tendering for the contract and so on, as opposed to “front-line” service delivery of the Council’s contract. They were not assigned to the organised grouping.
Edinburgh Home-Link Partnership v City of Edinburgh Council [2012] UKEATS/0061/11/B1:
For an example involving a full-time union rep:
A full-time shop steward did not transfer when the department he was paid to work in transferred. Mr Gaston, who was a full-time union rep at Birmingham City Council, continued to be paid as a plumber, but the only plumbing work he did was on an out-of-hours rota. The EAT found that he did not transfer with the rest of the department because he was not assigned to that department.
Birmingham City Council v Gaston EAT/0508/03
Under regulation 4(3) of TUPE, employees who would have been part of the “organised grouping” immediately before the transfer if they had not been dismissed for a transfer-related reason are also protected.
In practice employers often try to use the run up to a transfer to reorganise or rotate the workforce, to make sure that any employee they wish to retain is removed from the organised grouping of transferring employees. The employment contract of any employee who remains within the organised grouping at the transfer date will transfer automatically (Royal Mail Group Limited v CWU UKEAT/0338/38) — unless they object before the transfer — see below. This includes all employees off sick or on maternity leave at the transfer date. This is because TUPE operates automatically to transfer the contract of employment on the transfer date, regardless of the parties’ intentions and sometimes without them even realising, as the following case demonstrates:
Ms McLean was employed as an Occupational Nurse by the BBC who decided to transfer the HR Department where she worked to Capita. Ms McLean was unhappy about the proposed transfer 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 handed in her resignation to the BBC on those terms. She worked her six week secondment with Capita, during which the BBC paid her salary, believing she was still their employee. At the end of the six week secondment, she brought proceedings for unfair dismissal against the BBC and Capita. The Tribunal dismissed the claim against the BBC, on the ground that her employment had already transferred to Capita.
The EAT agreed, confirming that Ms 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.”
Capita Health Solutions v BBC [2008] UKEAT34/07
The fact that none of the parties in the Capita case had realised that TUPE had operated to transfer the employment on the transfer date, and that everybody was under the impression that Ms McLean had been “seconded”, made no difference to the question of whether she had preserved the right to object. A similar conclusion was reached in North Wales Training and Enterprise Council Limited t/a Celtec v Astley ([2006] UKHL 29):
In 1990, three civil servants were “seconded” to a Training and Enterprise Council (TEC), believing themselves to be still employed by the Department of Education. The House of Lords (now the Supreme Court) decided, following a ruling of the European Court, that the claimants’ employment had in fact transferred automatically to the TEC in 1990, regardless of what the parties believed.
North Wales Training and Enterprise Council Limited t/a Celtec v Astley ([2006] UKHL 29
One mechanism that is sometimes used to enable employees to remain contracted to their employer under their existing terms and conditions, including as to pensions, even though they go to work for a third party after the transfer date is known as the Retention of Employment Model. This approach requires joint cooperation and trust between the employer and the union and careful legal advice. The model involves the following steps:
• the parties follow the normal steps in relation to a TUPE transfer, including as to information and consultation;
• there must be a fixed day for the TUPE transfer;
• immediately before the transfer, the employees object to the transfer;
• immediately after objection, employees sign new contracts with the transferor, containing a secondment clause.