Looks at the law governing transfers of undertakings and gives introductory guidance on managing a TUPE situation
These key cases show how the transfer rules are interpreted by courts and tribunals. We summarise the facts of the case, the court’s evaluation of what happened, and the decision’s implications for organisations.
They should be read alongside our Transfer of undertakings (TUPE) Q&As.
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McTear Contracts Ltd v Bennett and others | Employment Appeal Tribunal | March 2021
McTear Contracts Ltd v Bennett and others; Mitie Property Services UK Ltd v Bennett and others
UKEATS/0023/19/SS and UKEATS/0030/19/SS
Issue: TUPE- dividing employment obligations among transferees
For five years, Amey Services installed kitchens in social housing for a Scottish council. The Council retendered the contract, splitting it into north and south sections. The appellants in this case, McTear Contracts and Mitie Property Services, won the new contracts. The old employer said, under TUPE, all the employees’ contracts went to the two new companies and produced a spreadsheet dividing workers between each of the companies, based on the time employees spent in the north and south sections of the council’s regions. The key issue was whether the employees transferred in accordance with this spreadsheet because of the service provision change. Several employees brought claims against all three employers – the transferor and the two transferees.
The Employment Appeal Tribunal (EAT in Scotland) followed the ECJ decision in ISS Facility Services v Govaerts which involved a business transfer rather than a service provision change. In that case, the ECJ said where there was more than one transferee, the rights and obligations arising from a contract of employment were transferred to each company in proportion to the tasks performed by the workers concerned.
The EAT said that for both business transfers and service provision changes, employees could have two or more contracts of employment with different employers at the same time, provided that the work attributable to each contract was clearly separate and identifiable. The case was sent to a new employment tribunal to consider each employee individually, in order to determine whether they transferred to one of the transferee employers, or to both. It was possible that TUPE did not apply to some employees and that the old employer retained liability. The EAT said that while UK courts did not have to apply the ECJ Govaerts decision to the UK TUPE provisions on service provision changes, it would be preferable to apply those principles as it would be undesirable for approaches to be different.
Implications for employers
The EAT applying the ECJ decision in the Govaerts case means that:
- contractual rights and obligations transfer to transferees in proportion to the tasks performed by the employee concerned following a TUPE transfer
- this approach should be applied to both service provision changes and to the transfer of undertakings
- new employers may need to attempt an agreement with the transferor and other potential transferee employers about which employees they will each take on, in order to reduce the likelihood of claims
- employers will need to find solutions to how an employee’s contract is split, how time is divided between the two contracts, and how to split salary and expenses.
In a service provision situation involving more than one transferee, employers may either:
- split employees into different groups so that they are working 100% of their time for one transferee
- split the service provisions so that employees work part-time for more than one new employer.
Either of these scenarios can cause problems, as under TUPE employees may be deemed to transfer technically to two or more transferees simultaneously. Depending on the arrangements made, there is a risk that the employees may object, that there may be an impermissible change to their contracts, or that companies may be seen as contracting out of TUPE. Even if the employees agree to new arrangements, splitting service provision contracts will be tricky. After winning a new contract, if there are two or more competing businesses, they may not want to employ someone who is also working for a competitor. It may not be practical for workers to be employed by more than one transferee or to apportion liability for a percentage of their previous hours.
Employers involved in such transactions should try and agree which employees transfer to which transferee company, and if any remain with the transferor. It is preferable for employees to be organised into groups to avoid splitting employment contracts. If terms and conditions must be changed, this is risky unless employers can show an economic, technical or organisational reason for the change. As part of the arrangements, the old and new employers should negotiate warranties and indemnities to cover liability if employees make claims.
The EAT could have made a different decision from that reached in the ECJ Govaerts case but chose to apply it. TUPE is partially UK-derived law and partially law we chose to adopt from the EU. After Brexit, the UK chose to retain the EU part of the rules. Generally, this means at tribunal or EAT level, employment judges should continue to interpret the TUPE regulations consistently with ECJ decisions on the acquired rights directive. The Court of Appeal and Supreme Court judges can make different judgments, if appropriate. In this case, the TUPE provisions about service provision changes were not derived from the EU but came solely from UK law anyway. The EAT’s judgment applies to employers in England and Wales as well as in Scotland, because it is single appeal court even though this EAT was sitting in Scotland.
ISS Facility Services NV v Sonia Govaerts, Atalian NV, formerly Euroclean NV | European Court of Justice| March 2020
Issue: TUPE transferred employees becoming employees of more than one transferee
A project manager for a cleaning and maintenance company in Belgium managed work across three lots of work. Following a retendering, Lots 1 and 3 were awarded to a new contractor, Atalian, and Lot 2 was awarded to a company called Cleaning Masters NV. In line with the Acquired Rights Directive (ARD – from which much of the UK’s TUPE rules derive) the manager was told she would transfer to Atalian because 85% of her work related to that contract. Atalian did not agree that the employee transferred to it and terminated her employment. The manager claimed against both transferee companies, seeking compensation in lieu of notice, bonus and leave pay.
The Belgian courts found this was a transfer of an undertaking under the ARD and asked the ECJ if the employment elements of the contract could be split between transferees.
The ECJ held that where an undertaking transfers to more than one company, employment contracts can be split and staff can transfer to more than one employer.
The employee’s contract transferred so she would be 85% employed part-time by Atalian, and 15% by Cleaning Masters NV.
Implications for employers
This case is relevant to the interpretation of UK law on TUPE. Following Brexit, the UK is not bound to accept new ECJ case law. However, cases such as this, at the very least, give an indication of arguments that employees can make. This case has since been followed in the UK case of McTear Contracts Ltd v Bennett and others UKEATS/0023/19; and Mitie Property Services UK Ltd v Bennett and others. The cases enable transferees to argue that an employee’s previous workload should be split between more than one employer following a transfer. This is a significant development.
Previous UK case law on transfers with more than one transferee suggested that employment contracts normally transfer to the employer inheriting most of the pre-transfer activities. Employees transfer with the business they are most closely linked to; the time spent on different activities is an important factor in deciding their predominant role. Alternatively, there may be no transfer if the services become very fragmented.
Now this case has been followed in the UK it appears that:
- full time contracts could be split into several part time contracts following a transfer
- employers should determine how the contracts are divided based on an economic value or time basis
- employees’ rights and obligations could transfer to more than one company in proportion to the tasks performed.
The implications of this judgment are challenging. It is often very hard to split employees’ daily work. Effectively having two new employers may be detrimental for employees, especially if further TUPE transfers occur and activities are further fragmented. If dividing contracts is impossible or adversely affects worker’s conditions or rights, then claims may arise or the new transferee employers would be responsible for termination of their employment, meaning they may become liable for notice payments, unfair dismissal claims or redundancy costs.
Transferees could attempt to negotiate an indemnity against such liabilities with the transferor.
Hare Wines Ltd v Kaur | Court of Appeal | February 2019
 EWCA Civ 216
Issue: Reason for dismissal other than TUPE
When a wine and beer wholesale company got into financial difficulties, Hare Wines agreed to buy it. The manager was promoted to become one of Hare’s directors and all the existing employees, apart from Kaur, were transferred to Hare.
Kaur had a difficult working relationship with her manager. Her employment was terminated shortly before the transfer, and she was told that the reason for her dismissal was the business ceasing to trade. But Hare Wines later contended her dismissal was because she had objected to transferring, so any liability for it remained with the old business.
Kaur initially claimed redundancy and notice pay, but later amended her claim to include unfair dismissal. She asserted that the principal reason for her dismissal was the transfer of the business, so it was automatically unfair under TUPE.
The main issue to be resolved was whether the dismissal was because of the transfer, because she had objected to the transfer, or whether Hare Wines and her former manager did not want her to transfer because of the strained relationship.The Court of Appeal had to decide whether a dismissal for 'personal' reasons was still a dismissal related to a transfer.
The CA agreed that the Kaur was dismissed because the new employer did not want her, therefore the reason for dismissal was the transfer. If there was an economic, technical or organisational (ETO) reason for the dismissal connected with the transfer, the dismissal might be fair, but personal reasons for dismissal do not stop a transfer-related dismissal from being unfair. No action had been taken to address the poor working relationship before the transfer, so this suggested that it was the transfer, rather than the poor relationship, that resulted in the dismissal.
Implications for employers
In a TUPE situation, dismissals related to the transfer are automatically unfair. If employers try to dismiss employees around the time of a TUPE transfer, the closer the dismissal is to the transfer date, the greater the risk will be of a finding of an automatically unfair dismissal.
Even if there is an issue relating to an employee’s conduct, capability or personality, if this problem was suddenly acted upon at the time of transfer, then the transfer might well still be the sole or principal reason for the dismissal.
If any dismissal is for an ETO reason entailing changes in the workforce and is handled properly the dismissal can be a fair one. However, employers that believe they have a non-transfer-related reason for a dismissal should be cautious – they may find they have automatically unfairly dismissed the employee, especially where the dismissal occurs close to the transfer date.
Jinks v London Borough of Havering | Employment Appeal Tribunal | 23 Feb 2015
unreported, UKEAT/0157/14 23 February 2015, EAT)
Issue: TUPE: sub contractors
The Council contracted out the management of the car park at an ice rink to a contractor Saturn Leisure Ltd (Saturn).
Saturn then sub-contracted the work to a Regal Car Parks Ltd (Regal). When the ice rink closed Saturn returned the site back to the Council who then closed the car park. The Council then licensed the car park to an NHS Trust for a short period before having it converted into a public car park.
The claimant worked in the car park and was employed by Saturn. His employment then transferred to Regal. The claimant argued that he had ultimately become an employee of the Council under TUPE. The Council refused to accept that TUPE applied and so the employee brought a claim for constructive unfair dismissal.
The employment tribunal struck out the claim on the basis that Regal’s 'client' was Saturn and could therefore the transfer could not be to the Council. This was overturned by the Employment Appeal Tribunal which said that that the nature of the 'client' is a question of fact and that there can be more than one 'client' in any given case. The case was remitted to a fresh employment tribunal to decide if the employee transferred to the Council under TUPE.
Implications for employers
- TUPE applies where services are outsourced to a third-party. For example when a local authority stops doing an activity itself and outsources to a third party to provide the services.
- TUPE also applies where services are outsourced to a new contractor to take over from another contractor known as “second-generation outsourcing”.
- TUPE also applies where an organisation, for example a local authority, brings outsourced services in-house and performs them itself, known as 'insourcing'.
- To avoid liability employers should assume that TUPE applies to any business sale, outsourcing and insourcing situations.
- Employees transfer under TUPE and often TUPE will apply to transfer the relevant employees to the ultimate subcontractor who then ends up with the services.
- Employers are at risk of inheriting employees of a sub-contractor when a relevant contract is terminated and activities are brought back in-house.
- The identity of the client in a service provision change is a question of fact for a tribunal to determine.
- Employers must decide on whose behalf the transferred activity is being undertaken.
Hazel v Manchester College | Court of Appeal | 5 Feb 2014
(unreported,  EWCA Civ 72 5 February 2014, CA)
Issue: TUPE transfers
Two employees joined Manchester College as the result of a TUPE transfer (ie within the rules of the Transfer of Undertakings (Protection of Employment) Regulations 2006).
The employer found that after the transfer there were additional costs that it had not known about and decided to make savings by staff reductions and reviewing terms and conditions of employment.
There were some voluntary redundancies and about 10 months after the transfer the claimants were given new terms and conditions which included a substantial wage cut. They objected and were dismissed. In due course the claimants agreed to the pay cuts and continued to work for the College on the new terms. They claimed ‘normal’ unfair dismissal because of the way matters were handled and an automatically unfair dismissal under the TUPE.
The key issue in deciding if there were automatically unfair dismissals was whether there was a change in the workforce necessitating the changes, or if there was just an attempt at harmonisation of terms as a result of the transfer.
The Employment Appeal Tribunal and the Court of Appeal confirmed that the claimants were dismissed because they refused to accept the new terms and that was not a change in the workforce. The dismissals were automatically unfair.
Implications for employers
- TUPE gives employees the right to transfer to the new employer on the same terms and conditions that they enjoyed before the transfer.
- After a TUPE transfer employees can and do have, different terms to other employees.
- Employers cannot just harmonise these terms of employment after a transfer, except in certain very limited circumstances.
- Any post-transfer dismissals are likely to be automatically unfair unless they are:
- not connected to the transfer, or
- for a reason connected with the transfer that is an economic, technical or organisational (ETO) reason entailing changes in the workforce.
- There is no safe period of time post-transfer after which terms can be altered.
- If an employer wishes to harmonise terms and conditions following a TUPE transfer, it cannot say the changes were justified by an ETO reason entailing changes in the workforce, just because some employees were made redundant.
- This case was decided under TUPE 2006 which has now been replaced by TUPE 2014. The new Regulations are slightly different in that a dismissal is now only automatically unfair if the reason for the dismissal is the transfer itself (and there is no ETO reason). Under the Regulations if the reason for dismissal is connected to the transfer (but the reason is not the transfer itself) then a dismissal will not be automatically unfair, unlike under TUPE 2006.
- Therefore, if a dismissal is connected to, but is not by reason of, the transfer, a fair dismissal may be possible in the context of a harmonisation programme.
- However, the safest approach in any harmonisation exercise is for any changes to be entirely totally unconnected with the TUPE transfer. A supervening event, or a long delay can help to break any link with a transfer.
- Under TUPE 2014 it may be possible to dismiss an employee in a post-TUPE harmonisation exercise without that dismissal being automatically unfair, but this depends on how the courts interpret the expression 'by reason of the transfer'.
Swanbridge Hire and Sales Ltd v Butler | Employment Appeal Tribunal | 13 Nov 2013
(unreported, UKEAT/0056/13 13 November 2013, EAT)
Issue: TUPE service provision change - single specific event exception (guidance provided by EAT)
A company had a contract to build boilers at a power station and subcontracted the task of insulating the boilers to a second company. After 10 months the two companies had a dispute and the second company engaged Swanbridge to finish the insulation which took eight months.
The second company's employees had outstanding wages, but the company refused to pay arguing that there had been a service provision change under TUPE. It said that the employees and any liability for their claims had transferred to the new contractor, Swanbridge.
Swanbridge argued that there was no service provision change as the ‘single specific event’ exception to TUPE applied. This exception states that there will not be a service provision change if the client intends that the relevant activities (in this case insulating boilers) will be carried out in connection with a single specific event or task of short-term duration.
The Employment Appeal Tribunal (EAT) disagreed with the employment tribunal decision, deciding that the task was of short term duration and so liability for the claims potentially remained with he second company and did not transfer to Swanbridge. The EAT said the focus should have been on the work that Swanbridge was required to do to finish the remaining 8 months work on the boilers (not the 18 month period of general insulation work). The case was then sent to be re-considered by a different employment tribunal to see if there was a service provision change. However the EAT summarised what should be considered when deciding whether the 'short-term duration' exemption applies namely:
- The client’s intention as to how long it would take to complete the works.
- Whether the activities were in connection with a single specific event or task and what that single specific event or task was.
- Whether that single specific event or task was of short-term duration.
Implications for employers
- This case gives guidance to employers considering an exception to the TUPE service provision change rules.
- The intention of the client is paramount as to whether this exemption applies.
- The key question is whether the client intends the activities to be carried out in connection with a task or event of short term duration.
- It is the event or task that needs to be short term, not the activities.
- Employers and tribunals need to consider the client’s intention at the time it enters into the contract to see whether it intends that the activities will be in connection with a single specific event or task of short-term duration.
Ceva Freight (UK) Ltd v Seawell Ltd | Scottish Court of Session | 21 Jun 2013
(unreported,  CSIH 59 21 June 2013, CS)
Issue: TUPE transfers
An employee was a logistics coordinator in Ceva Freight (UK) Limited’s warehouse. The company provided logistics and freight forwarding for Seawell Limited. The employee and seven others were in the team dealing with outbound goods. He worked all the time for the Seawell account, while other outbound employees spent between 10-30 per cent of their time on that account.
Seawell moved the work carried out by Ceva back in-house. Ceva therefore no longer needed the employee and claimed that TUPE applied, so his employment should transfer to Seawell and therefore terminated his employment with them. Seawell disagreed that TUPE applied and did not take the employee on. The employee claimed unfair dismissal against Ceva and Seawell.
The key issue was whether there was a service provision change. This requires an 'organised grouping of employees', the principal purpose of which is carrying out the relevant activities on behalf of the client.
Ceva eventually appealed to the Scottish Court of Session which held that although in theory a single employee can be an 'organised grouping of employees', in this case there was not in fact an organised grouping. There must be an element of conscious organisation by the employer of a grouping (in the nature of a team) which has as its principal purpose the carrying out of the activities. The group of employees (of one) were not specifically organised for this particular contract. An 'organised grouping of employees' has to be put together deliberately for the principal purpose of carrying out the activities on behalf of the client. So an employee who happens to work 100 per cent of his time carrying out the activities is not necessarily assigned to an 'organised grouping of employees'. There was no service provision change and the employee did not transfer employment under TUPE when it brought its work in house. The teams were organised by inbound and outbound freight.
Implications for employers
- TUPE will apply to relevant transfers, namely ‘business transfers’ and ‘service provision changes’.
- A relevant transfer can occur when a business or undertaking or part of a business or undertaking is transferred from one employer to a new employer as a going concern that is, there is a transfer of an economic entity which retains its identity after the transfer.
- Where TUPE applies, employees assigned to the part of the organisation transferring and most employment rights and liabilities relating to those employees, will pass to the new employer.
- TUPE’s service provision changes only apply where, immediately before the transfer, there is an 'organised grouping of employees' situated in Great Britain whose principal purpose is the carrying out of activities on behalf of the client.
- This decision provides further guidance for employers on the TUPE service provision change test.
- How an employer organised employees at the outset will determine whether TUPE applies to a subsequent service provision change.
- An employee has to establish that there has actually been a service provision change, and that they were 'assigned' to an 'organised grouping of employees' which transferred.
- It is now clear that the grouping has to be planned and intentional. Employees who are grouped together incidentally or unintentionally may not form an organised grouping that attracts TUPE’s protection.
- This case supplements the clarification of the test for organised groupings of employees in Eddie Stobart v Moreman and others.
Alemo-Herron v Parkwood | European Court of Justice | 18 Jul 2013
(unreported, C-426/11 18 July 2013, ECJ)
Issue: TUPE transfers
The claimants worked for a London borough and many of their terms and conditions of employment (including pay awards) were determined through collective agreements with the trade unions. Following an outsourcing exercise the employees transferred to a private company under TUPE and then in May 2004, they were transferred again under TUPE to Parkwood Leisure. In July 2004 a new agreement was reached with the National Joint Council for Local Authority Services (NJC) that awarded a pay increase. As only public authorities can participate in the NJC Parkwood was not a party to the negotiations for the new agreement and did not honour the new NJC terms.
The employees brought claims for unlawful deductions from wages, arguing that, under TUPE, the contractual terms incorporating the NJC collective agreement had transferred to Parkwood and therefore their pay should increase.
The issue was when employees transfer into the private sector is the new employer obliged to award pay increases in line with the collective agreements under TUPE, even if the new agreement with the public sector transferor was concluded after the transfer took place? In such circumstances the new employer is not be a party to the collective agreements which are not incorporated into the contracts of the employees who transferred. There are two possible interpretations:
This interpretation says that it does not matter if an employer like Parkwood was not part of the collective agreement. The employer effectively ‘agrees’ to be bound by that when it acquires the contract with the council. The unions prefer this interpretation as members transferred from the previous employer still have the right to continue to benefit from the nationally agreed pay and terms set by pay negotiations. This interpretation of TUPE means future changes to collective agreements can be incorporated into transferred contracts.
This interpretation says that the new employer only has to abide by the terms of employment as they stood at the time of the transfer and not any future changes to collective agreements.
The Supreme Court referred the case to the European Court of Justice (ECJ) for clarification on this point. Initially the Advocate General gave his opinion on this matter and preferred the 'dynamic' approach, However in the end the ECJ preferred the static approach and held that employees who transfer to a new organisation are not entitled to the benefit of collectively agreed terms where:
- those terms are agreed to after the date of the transfer, and
- the new organisation was not a party to the negotiation of those terms.
The ECJ ruled that if the transferee employer did not have the opportunity to participate in the negotiations pursuant to a collective agreement concluded after the date of transfer, the outcome of these negotiations should not bind that transferee. Parkwood was not therefore bound by the pay increase set out in the NJC collective agreement which was agreed to after the transfer.
The ECJ also noted that the Acquired Rights Directive is not just to protect the rights of employees, but to seek a fair balance between the interests of the employees and the transferee. It recognised that the transferee must be in a position to make changes necessary to carry on its operations. In addition the Directive must be interpreted in accordance with the Charter of Fundamental Rights of the European Union which has provisions relating to freedom to conduct business.
Implications for employers
- This decision provides clarification for employers on the impact of collective agreements following a TUPE transfer.
- If a transferee employer is not a party to collective negotiations it should not be bound by the outcome of those negotiations.
- Where a collective agreement originates from the public sector and the transferee operates in the private sector (as is often the case), the 'static' approach is to be preferred.
- In 2006 an ECJ case (known as Werhof) had preferred the 'static' interpretation and decided that in Germany the Directive only protected the transferring employees’ terms and conditions as at the date of transfer and not changes from future collective agreements. It appears that this case has been followed.
- For employers, especially those providing services to the public sector, this is a welcome decision because certainty and control over salary costs will help when operating existing contracts and when tendering for new contracts in the future.
- Some 'dynamic' clauses may still be enforceable against a transferee employer according to the ECJ.
- UK private sector employers (who inherit staff from the public sector in a transfer situation) do not have to pay increases in wage levels decided by national pay bargaining agreements which are concluded without the employer’s involvement after the transfer to the private sector has taken place.
Gabriel v Peninsula Business Services | Employment Appeal Tribunal | 2 Feb 2012
(unreported, UKEAT/0190 23 February 2012, EAT)
Issue: TUPE transfers - criteria for TUPE to apply
An employee worked as a marketing consultant for Peninsula which acquired a company known as Taxwise. The employee moved to the Taxwise payroll, but she remained on her existing terms and conditions and did not receive any notification that the identity of her employer had changed. She brought claims for sex and race discrimination against both companies and for her claim to succeed against Peninsula as well as Taxwise she had to show she was employed by Peninsula over the relevant period.
The Employment Appeal Tribunal held that TUPE did not apply in this instance. The claimant had not consented to the transfer and her employment therefore remained with Peninsula Business Services. She remained an employee of Peninsula as she had not agreed to her contract transferring to Taxwise. She was therefore able to bring a separate sex and race discrimination claim against Peninsula as her 'general employer'.
Implications for employers
- Employees need to be informed of any change of employer and expressly consent to it in writing for a transfer to take effect.
- Implied consent to a transfer may be inferred in some circumstances, but assuming that an employee will notice that the name of their employer has changed on their pay slip is insufficient.
- If TUPE applies to the transfer of an employee’s contract of employment then the transferee assumes all assets and liabilities of the transferring business. This includes the contract of employment of employees of the transferor.
- Employers must must inform its employees that TUPE applies to the transfer of their employment. If there is no notification then TUPE will not necessarily apply to the transfer and the employee’s contract of employment may not transfer automatically to the transferee.
- Employers may consider having a clause in their contracts giving express consent to any potential transfer and/or ensuring that all employees consent to the transfer.
- Transfers by way of a share transfer fall outside TUPE.
Abellio London Ltd (Formerly Travel London Ltd) v 1 Musse and Others (2) Centrewest London Buses Ltd v Musse and Others | Employment Appeal Tribunal 12 January 2012
(unreported, EAT/0631/11 12 January 2012, EAT)
Issue: TUPE transfer - changes to an employees' terms and conditions
Five bus drivers worked for a bus company that ran a particular route in London. They all worked from the Westbourne Park depot, although there was a mobility clause in their contracts. The route was transferred to Abellio which was a service provision change and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) applied. Abellio intended to operate this route from its Battersea garage. The bus drivers objected to the new location as it would mean between one and two hours extra travelling per day. They resigned on the date of the TUPE transfer and brought claims for constructive, automatically unfair dismissal on the basis that their dismissals were related to a TUPE transfer.
The Employment Appeal Tribunal (EAT) agreed that there had been a substantial change to the bus drivers’ working conditions to their material detriment which was a repudiatory breach of contract as the mobility clause in the employment contract did not extend to the Battersea location six miles away. The bus drivers were constructively automatically unfairly dismissed by reason of the transfer.
Implications for employers
If employers alter a work location or other working conditions after a TUPE transfer then they are likely to be exposed to TUPE and unfair dismissal claims.
Employers may be able to protect themselves against constructive unfair dismissal claims by including a very wide mobility clause in contracts of employment requiring employees to move to a new location including on a TUPE transfer.
However, TUPE claims may still arise as a substantial change in working conditions under TUPE gives rise to another claim regardless of a breach of contract.
A geographical move that is short, for example across London, can still be to an employees' material detriment if their travelling time is increased substantially which will therefore be a breach of the TUPE regulation 4(9).
Whether a material detriment arises will depend on the facts of each case. Here travelling at unsociable hours added to the claim that the change was detrimental and meant the bus drivers’ claims were successful.
Eddie Stobart v Moreman and others | Employment Appeal Tribunal | 17 Feb 2012
(unreported, UKEAT/0223/11/ZT 17 February 2012, EAT)
Issue: TUPE transfers - criteria for service provision change
At the time when its Nottinghamshire meat warehouse closed, Eddie Stobart was providing logistics services to two clients. The day-shift employees at the depot worked mainly on one contract (Vion) and the night-shift employees worked mainly for the other client (Forza). The new service provider did not accept that TUPE applied. Eddie Stobart thought that TUPE should apply on the basis that the work in question had been carried out by an organised grouping of employees whose principal purpose was to carry out the work required by the Vion contract. It identified the day-shift employees and other employees who spent at least half of their time performing Vion work and notified them that they would transfer, but as the new provider did not want them. Eddie Stobart then dismissed them. The employees brought claims for unfair dismissal against Eddie Stobart and the new service provider.
The Employment Appeal Tribunal held that even though the majority of the employees’ time was spent working for a particular client, they were not an organised grouping for the purposes of the TUPE Regulations. Eddie Stobart's organisation of work was not by reference to its customers, but by reference to the shift system. The employees did not regard themselves as being assigned to one contract.
Implications for employers
- This case concerns what is meant by an ‘organised grouping of employees’.
- To be an organised grouping under TUPE, the regulations require activities for a particular client to be the principal purpose of a grouping of employees.
- The fact that a number of employees only do work for the particular client, on its own, will not however necessarily be enough to show an organised grouping of employees.
- If an organised grouping is identified, then it must be considered which employees were assigned to that relevant grouping and should therefore transfer.
- The consideration of how much time the employee spent on the relevant contract happens once the grouping has been identified.
- If an employer wants to ensure there is a clear organised grouping of employees on a contract it should make this clear for example by designating and referring to them as 'contract X workers'.
- Merely organising employees by shift pattern is not enough to make them an organised grouping for the purposes of TUPE.
- It appears that the way employees are labelled by the employer and the way that the employees see their own organisation is relevant to whether there is an organised grouping for the purposes of TUPE.
Spaceright Europe Ltd v Baillavoine and another | Employment Appeal Tribunal | 1 Feb 2011
(unreported, UKEAT/0339/10 1 February 2011, EAT)
TUPE transfers - ETO reason for dismissal
The former CEO of a company was dismissed on the same day that it was put into administration. He was dismissed to enable a purchaser to acquire the business without the continued employment of its CEO. A month later the company was duly sold as a going concern to Spaceright Europe Ltd; this sale amounted to a TUPE transfer. The former CEO claimed automatically unfair dismissal as the dismissal was for a reason connected with the transfer. Spaceright alleged it was not unfair and that there was an economic, technical or organisational reason (ETO reason) entailing changes in the workforce which would render a transfer connected dismissal not automatically unfair anyway. The Employment Appeal Tribunal agreed with a tribunal that the dismissal was unfair and that there was no ‘ETO reason’.
Implications for employers
- If the main reason for a dismissal is a transfer, or a reason connected with it, then it will be automatically unfair under Regulation 7 (1) of the Transfer of Undertakings (Protection) Regulations 2006 (TUPE).
- If employers dismiss any employees in anticipation of a transfer, the dismissal can still be connected to that transfer for the purposes of TUPE.
- It does not matter if a precise purchaser (transferee) has not been identified at the time of the dismissal or if no specific transfer is in contemplation when the dismissal takes place.
- A dismissal will not be unfair if it can be established that the dismissal was for an economic, technical or organisational reason (ETO reason) entailing changes in the workforce.
- It is not an ETO reason entailing changes in the workforce to dismiss an employee where there is a continuing need for that role, (in this case the business was always going to need a CEO and indeed another employee replaced him showing that the dismissal was directly related to the sale of the business).
Please note: While every care has been taken in compiling these notes, CIPD cannot be held responsible for any errors or omissions. These notes are not intended to be a substitute for specific legal advice.