Does TUPE apply where employees’ work has temporarily ceased or reduced before the transfer? Phil Allen reports on a recent EAT ruling.
Sometimes there can be a quiet period when the employees who are principally employed to work on a contract have little or nothing to do, just before it ends/is transferred. The Employment Appeal Tribunal has confirmed in its Judgment in Inex Home Improvements v Hodgkins that this does not stop the employees transferring under TUPE. As the TUPE Regulations are about the protection of employment, a temporary cessation of work does not disqualify employees from transferring.
Inex had a subcontract from another company, TV, to undertake painting and decorating works in a geographic area. Inex had a team dedicated to this work. In November 2012 Inex’s work under the contract was coming to an end and TV had not released the next tranche of work. As a result Inex put the group of employees on temporary lay-off, as they could under their contracts (which were the Construction Industry Joint Council terms). Temporary lay-off means that the employees were not required to work for a short period and did not receive pay, but remained employed. It is a provision/contractual power common to certain sectors where work is often subject to ebb and flow. The communications between Inex and the staff emphasised that this was expected to be temporary.
There was some falling out between Inex and TV, so that TV’s next works order in January 2013 was in fact issued to a different company. The Tribunal accepted that the activities carried out by that different company for TV were substantially the same as those carried out by Inex, and accordingly there was a service provision change for the purposes of TUPE. However as the staff had been laid off, the Tribunal found that no organised grouping of employees existed immediately before the transfer whose principal purpose was the work for TV (and so no TUPE transfer).
As is often the case with appeal decisions on TUPE, the EAT looked at the issue from a wider perspective. It concluded that lay-off should not be a way of defeating TUPE and therefore has upheld the appeal. The EAT say that as they are the Transfer of Undertakings (Protection of Employment) Regulations, their purpose is clear and a temporary cessation of work cannot stop them applying. The EAT does emphasise that it is not saying that lay off can never dissolve the organised grouping of employees and it will be a decision for the Tribunal in each case, but a period of lay-off just before the transfer does not preclude TUPE from applying.
What does this mean for me?
It is not unusual for a contract which is ending to have a period where the work runs down or reduces. This judgment re-emphasises that it is right to look at what the group of employees have been doing over a longer period, not simply what they did immediately before the transfer date. If employees who are laid-off can transfer (therefore literally doing no work at all on the contract immediately before it ends), so can others whose work on the contract has reduced. If you are looking to lose employees as part of a TUPE transfer, this case may well assist you.
However where you are gaining employees through TUPE, this judgment illustrates how difficult it is to contest the list of employees when it is presented to you. You may well not expect to gain staff who have ceased to be primarily working on the contract which you have won, but this judgment says that a broader view must be taken about what the employees used to do. Whilst Tribunals may be able to analyse this on a case by case basis, identifying the right answer when faced with a list of employees and limited details can be much harder.
In our experience Tribunals will often seek to reach a finding which protects employment and employee rights, when considering TUPE. This judgment spells out that it is legally correct for Tribunals to do so. In some circumstances it will be possible to argue that staff do not transfer under TUPE, but you must ensure that such arguments are carefully reviewed and the risks identified, before you place reliance upon them.