TUPE Update

There have been some interesting developments in TUPE law in recent months. We set out below a brief summary of 3 of the most interesting cases.

When does a transfer take place?

Sometimes it’s not whether a TUPE transfer has taken place but when it happened that can cause a dispute between parties.  It is well established law that the intentions and expectations of the parties do not determine the fact of when a transfer has taken place. That is, ultimately, a matter for the courts to determine.

In the recent case of Housing Maintenance Solutions Ltd v McAteer and others the Employment Appeal Tribunal (the EAT) had to decide when a TUPE transfer took place between two repair and maintenance companies. The existing provider (Kinetics) became unable to provide the service and it was awarded to HMS. HMS could not, however, immediately start providing the service and informed the affected employees that there would be a brief cessation of the service but assured them that they would be responsible for them and would employ them as soon as they were able. In the end the cessation lasted a few weeks.

A number of employees then pursued Employment Tribunal (ET) claims for salary for those few weeks.

The ET were persuaded that the TUPE transfer took place when HMS informed the employees that they would accept responsibility for their employment, rather than when HMS started to provide the service.

The EAT took a different view. It was not the wishes, actions or intentions of the parties that mattered but rather when did, as a matter of fact, HMS become responsible for the service. The case has been referred back to the ET to determine the actual date of transfer.

What it means for employers

The key point is that employers need to be careful about giving assurances to transferring employees where those assurances could give rise to a claim that a TUPE transfer happened sooner than the actual transfer date.

Who transfers?

It is important with any TUPE transfer to work out which employees transfer across (i.e. which employees are “assigned” to the service/undertaking). This can give rise to difficulties with the incoming provider often wanting to narrow down the list of assigned employees as much as possible and the outgoing provider arguing for a broader list.

In ascertaining which employees are assigned it is common for employers to rely upon the amount of time an employee spends on the transferring service. Whilst time spent is likely to be a relevant factor it is not the only factor.

This was recently illustrated in the case of Costain Ltd v Armitage. Mr Armitage was a project manager for ERH Communications.  As part of his role he worked on a project for the Welsh Assembly. The contract for this piece of work was transferred to Costain and Mr Armitage argued that he should transfer to Costain with the service.

The ET found that he had spent 67% of his time working on the Welsh Assembly contract and found that he had transferred to Costain. Costain appealed to the EAT.

The EAT found that the ET had not properly determined the issue. The first question was whether there was an organised grouping of employees providing the service.  This must be a deliberate putting together of a group of employees. The ET should have determined this point before going on to consider whether Mr Armitage had been assigned to the service.

In reaching a decision on assignment the ET placed too much reliance upon the amount of time Mr Armitage spent on the contract. It was a relevant factor but was not the only factor to be taken into account. Other factors that were likely to be relevant were the amount of value given to each part of the employee’s responsibilities, the terms of the contract and how costs of the employee’s services had been distributed within the business. The EAT sent the claim back to a different ET to determine afresh whether Mr Armitage had been assigned to the service.

What it means for employers

Employers commonly rely upon a percentage threshold when determining whether an employee TUPE transfers across to a new provider. This case is a good reminder that the time an employee spends working on a service may be a good starting point but there are other factors to consider when reaching a decision on assignment.

Change in Location

It is very common for an employee’s place of work to change following a TUPE transfer. Where the change in location is significant an employee can argue that this is a substantial change in their working conditions to their material detriment and bring a claim for constructive dismissal.

In the recent case of Cetinsoy v London United Busways a transfer of a bus route from one provider to another led to ET claims. The new provider intended to change the place of work of the affected employees to a new bus station approximately three and a half miles away. The claimants alleged that this change amounted to a substantial change in their working conditions and/or was a breach of contract.

The ET and the EAT disagreed. The EAT noted that although the change added as much as 30 minutes to the commute for the drivers this was “relatively slight”. They also noted that the drivers had mobility clauses in their contracts and so they could have been lawfully assigned to a different base by their previous employer. The proposed relocation by London United Busways was more advantageous to them than if their employer had relied upon the mobility clause.

What it means for Employers

The facts in this case are similar to the facts in the case of Musse v Abellio. In that case the distance was further (6 miles) which the EAT accepted was, on the facts of the case, a substantial detriment.

This case gives some comfort to employers who acquire services and propose to relocate transferred staff but it is also a reminder that it will always be for the courts to determine what amounts to a “substantial change” in working conditions.

TUPE has recently been changed to allow a change in work location to qualify as an economic, technical organisational (ETO) reason, which may give further flexibility to incoming service providers with this tricky but common issue.

Click one of our articles to continue reading about duty to make reasonable adjustments and dependants leave and disappearing employees. Binding communications about pay, when employees strike, the on-call conundrum, the future of Employment Tribunal fees, the scope of reasonable adjustments and finally In a nutshell.

Click here to read our newsbrief in full.