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Who transfers?
[ch 12: pages 424-427]A difficult question for those caught up in any transfer is working out exactly who transfers and who does not, and what choices, if any, employees and employers have in deciding who goes and who stays. Regulation 4 of TUPE says that the only employees who transfer on the transfer date are those who are:
• employed immediately before the transfer (or who were dismissed unlawfully immediately before the transfer because of TUPE); and
• assigned to the organised grouping of employees or resources.
Employees who “object” to a transfer before the transfer date will not belong to the transferring group. There are significant risks to “objecting” to a transfer (see page 427).
When working out whether an employee transfers to the new business, the focus should be on the link between that employee and the activities carried out under the service contract or the part of the business being transferred. Hard questions are likely where someone’s time is normally divided between two or more different parts of the business and only one part transfers. The EAT has said that tribunals should look at where the employee is assigned to work in reality.
Relevant factors include:
• how much time is spent on the transferring part of a business;
• the employee’s tasks and duties under their employment contract;
• the work they do day-to-day;
• how the employer allocates costs associated with their employment across different parts of the business; and
• the employee’s position in the organisational framework. For example, a manager with responsibilities spread across the whole business, rather than just the part that transfers, is unlikely to be included in the transferring group.
There is no “percentage” test. Even so, the percentage of time someone spends assigned to the group carrying out the activities that transfer is not irrelevant. Whether someone is assigned to the transferring group is always a question of fact for the tribunal to decide.
To have a valid business transfer or service provision change, employees must have been assigned to the organised grouping immediately before the transfer or the ending of the service contract. Here, the focus should be on the activities being carried out immediately before the transfer or service provision change, not on how things used to be done in the past (Amaryllis Limited v McLeod [2016] UKEAT/0273/15/RN):
A group of employees was organised to care for a severely disabled client, CE. As CE’s condition improved, the number of staff needed to support his independence declined over time by around 60%. As a result, said the EAT, when the contract changed hands, caring for CE was no longer the group’s principal purpose. Instead, its dominant purpose had become caring for other service users in the unit. This meant that there was no service provision change when the identity of CE's care provider changed.
Tees Esk & Wear Valleys NHS v Harland [2016] UKEAT/0173/16/DM
There can be a transfer or a service provision change even if operations are temporarily suspended before a sale or contract change (Housing Maintenance Solutions Limited v McAteer [2014] UKEAT/0440/13/LA). In Wood v Caledonian Social Club Limited EAT/0528/09, a bar suspended operations when it lost its alcohol licence, and Wood was dismissed. When the bar reopened a few weeks later under new management, Wood could bring a claim for automatically unfair dismissal against the new business under TUPE.
A temporary lay-off will not prevent employees transferring when the service contract is eventually awarded to a new provider (Inex Home Improvements Limited v Hodgkins & Others [2015] UKEAT/0329/14/JOJ).
In Mustafa v Trek Highways Services Limited [2016] UKEAT/0063/15/BA, a case supported by Unite, activities were suspended for three weeks due to a dispute between the main contractor and the sub-contractor, after which activities were taken over by new contractors. The EAT ruled that despite the shutdown, the employees who worked on the old contract transferred to the new contractors when work resumed.
Employees who work temporarily for the transferring part of the business will not transfer (regulation 2, TUPE).
The mere fact that someone is doing lots of work on a particular contract in the run up to a transfer does not mean their employment necessarily transfers when that contract ends and a new service provider takes over:
Mr Armitage was a “trouble shooter”. His job involved supporting various network maintenance projects across his employer's business. An important contract for the Welsh Assembly came up for renewal, so in the three months before the tender date, he spent 67% of his time working on it. When the bid was lost to rival Costain, Armitage argued that he was part of the organised grouping assigned to the contract. His claim failed. It would not be unusual, pointed out the EAT, for someone who normally works across the business as a whole to be tasked with focusing all their efforts on a particular contract just before it comes up for renewal. But Armitage’s job was to respond to different projects across the business as the need arose. He was not part of the organised grouping assigned to the Welsh Assembly contract, so his employment did not transfer when that contract was lost.
Costain v (1) Armitage and (2) ERH Communications Limited [2014] UKEAT 0048/14/DA
Full-time union reps need to take particular care, as they may no longer be able to demonstrate that they are assigned to the organised grouping. Here is an example:
A full-time shop steward did not transfer when the maintenance division he was originally contracted to work for transferred. Although paid as a plumber, the only plumbing work he had done since becoming a full-time rep was on an out-of-hours rota. Instead, he worked full-time on union duties across several council departments. The EAT found that he did not transfer with the rest of the division because he was no longer assigned to work there.
Birmingham City Council v Gaston EAT/0508/03
Equally, someone’s employment could transfer even though they are not physically working on the transferring part of the business at the transfer date.
Someone who is temporarily absent from work immediately before the transfer will transfer on the transfer date if there is an expectation that they will rejoin the organised grouping of employees on their return to work. Their absence might be due, for example, to sickness, maternity or adoption leave (Fairhurst Ward Abbotts Limited v Botes Building Limited [2004] EWCA Civ 83), a disciplinary suspension (Jakowlew v Nestor Primecare Services Limited t/a Saga Care [2015] UKEAT/0431/14/BA), an irregular working pattern such as term-time only working, or a secondment. In each case, they should transfer to the new employer if there is an expectation that they will re-join the group as and when they return to work (BT Managed Services Limited v Edwards [2015] UKEAT/0241/14/MC). Note that this ruling is under appeal to the Court of Appeal.