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Workforce reorganisation before a transfer
[ch 12: pages 463-465]Employers often use the run up to a transfer date to reorganise the workforce, making sure particular employees are (or are not) included in the group of employees who will 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, described in the box on page 466.
Regulation 4 of TUPE operates automatically on the transfer date to transfer the employment contract of any employee who remains inside the organised grouping at that date (Royal Mail Group Limited v CWU [2009] EWCA Civ 1045). To prevent this automatic transfer, the employee will need to agree with the employer a clear change to their work activities under the employment contract before the transfer date, so that they are no longer included in the organised group of transferring employees. Alternatively, the employee can object clearly before the transfer. However, objecting to a transfer carries significant risks, as explained on page 462.
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 below: Collective consultation rights, page 465.
Simply leaving staff in role at the transfer date but assigning them to work for the transferee on a straightforward “secondment” model will not prevent their employment transferring to the transferee automatically on the transfer date. This is regardless of the parties’ intentions, and can even happen without their knowledge, as the House of Lords (now the Supreme Court) ruled in this leading case:
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 acted accordingly.
The House of Lords 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
Here is another example:
Ms McLean was a BBC occupational health nurse. She was unhappy when the BBC proposed to transfer its HR Department to Capita, 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 worked the six-week “secondment”, 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 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 at the time that the employment had transferred.
Capita Health Solutions v BBC & McLean [2008] UKEAT34/07
Here is an example involving a member of staff who was suspended at the transfer date:
Saga Care held the contract to deliver care services to residents in the London Borough of Enfield (Enfield). Following a falling out among staff at Saga’s Enfield branch, three employees were suspended on full pay, including a care manager, Ms Jakowlew. Enfield tried to insist on Jakowlew’s removal from the team, relying on a contractual right under the service agreement to insist on the removal of any worker it regarded as “unsuitable”. Saga disagreed with Enfield’s assessment and tried to persuade the council to allow Jakowlew to stay in the team. Jakowlew remained suspended pending resolution of the dispute. Eventually, Saga decided that it no longer wanted to service the Enfield contract and when it lapsed, new providers took over, called Westminster Homecare.
After the transfer to Westminster, the dispute with Enfield over Jakowlew’s suitability continued, so Saga and Westminster decided to resolve matters between themselves. They agreed to behave as if Jakowlew’s employment contract had not transferred to Westminster. Since Saga no longer held the council contract, there was no work for her to do, so Saga declared her redundant. Jakowlew brought a tribunal claim.
The EAT confirmed that Jakowlew’s employment had transferred to Westminster on the transfer date automatically by law. It was not possible for two service providers to agree another outcome among themselves to avoid TUPE.
Jakowlew v Nestor Primecare Services Limited t/a Saga Care [2015] UKEAT/0431/14/BA
Where an employer fails to appreciate that a transfer has taken place until it is too late, they can be liable for a significant protective award for failure to inform and/or consult properly about the transfer (see page 471).