Whilst some of us may have been taking some time out and relaxing over the summer holidays, the Employment Appeal Tribunal has been busy shining a light into some of the darker corners of the TUPE Regulations. Sarah Lamont rounds-up the recent run of TUPE cases.
Relocation, relocation, relocation
In August, the Employment Appeal Tribunal (EAT) provided further guidance on the question of whether an employee is entitled to resign and claim constructive dismissal if their workplace is relocated following a TUPE transfer. In Cetinsoy v London United Busways Limited bus drivers were TUPE transferred to a new service provider, which required them to work out of a new depot, 3.5 miles from the original depot. Extra travel time to get to the new depot was around 30 minutes – 1 hour. The EAT said that this was not a substantial change to the drivers' material detriment, entitling them to claim that they had been constructively dismissed or dismissed for the purposes of regulation 4(9) of TUPE 2006. The EAT noted that the evaluation of whether a change is a material detriment is a question of fact for a tribunal to decide and the EAT found that the employment tribunal had properly reached its view, taking into account
- the lay members' experience of employment practice; and
- the fact that the bus drivers were subject to a contractual mobility clause which allowed their employer to require them to work at other depots. Although the depot to which they were relocated following the TUPE transfer was not mentioned in the clause, the new depot was no more difficult to reach than the other depots which were specifically mentioned.
The facts in this case are very similar to a case called Abellio London Ltd (Formerly Travel London Ltd) v Musse and others (2012), where a requirement for bus drivers to relocate 6 miles was held to be a substantial change to the drivers' material detriment. However, the EAT noted that each case must be considered on its own facts; cases with similar facts will not necessarily result in the same conclusion.
Note that this case was decided under 'old' TUPE. Under the amended 2014 TUPE Regulations, relocation on a TUPE transfer has been made a specific valid reason for dismissal, which may allow employers greater flexibility. However, we have yet to see how tribunals will apply this change. Please click here for a summary of the changes introduced by the 2014 amendments to TUPE.
The second generation game
A key provision of TUPE is that, in order for a service provision change to take place, the outgoing and incoming contractors must have been engaged by the same client. This can raise some tricky questions as to whether TUPE applies to second generation outsourcing, where services are being commissioned by different contractors for the benefit of the same underlying client. This was the case in Horizon Security Services Limited v (1) Ndeze and (2) the PCS Group where the London Borough of Waltham Forest owned an office complex, which was managed on its behalf by Workspace Plc, which in turn contracted security services through PCS Group. The site was then taken back by the London Borough of Waltham Forest, who appointed a new company, Horizon, to provide security services for 8-9 months, pending the demolition of the offices. The EAT said that there was no TUPE transfer of staff from PCS to Horizon for two reasons.
- First, the security services were being provided to two different clients: Workspace plc and then the London Borough of Waltham Forest. PCS was engaged by Workspace, and PCS had no relationship with Waltham Forest. The fact that Waltham Forest owned the building for which the services were provided did not mean that there was a single 'client' for the purposes of TUPE.
- Secondly, because the incoming contractor was only appointed for 8-9 months pending the demolition, this was a short-term contract which fell into the exemption in TUPE for a "single specific event or task of short-term duration" (regulation 3(3)(a)(ii) TUPE 2006).
Assign of the times
In Costain Ltd v Armitage, the EAT looked at the vexed question of assignment prior to a TUPE transfer – was an employee responsible for managing various projects, including the contract that was the subject of a service provision change, 'assigned' to the transferring contract? The EAT said that the correct approach in these circumstances is to
- define the organised grouping of employees; and then
- determine if the employee was assigned to that grouping.
In this case, the tribunal had fallen into error by conflating the contract that had transferred and ancillary contracts. Similarly to the other cases we have reported in this article, the EAT highlighted how TUPE case law is heavily fact dependent; it declined to provide any overarching principles on assignment, as the facts will vary from case to case. The EAT did underline, however, that
- an organised grouping must have an element of conscious organisation; it cannot be a matter of 'happenstance';
- assignment will be a question of fact and not every employee carrying out work for the relevant client will be assigned;
- employees who are carrying out the relevant activities immediately before the transfer will not automatically be assigned;
- an analysis of the percentage of time that an employee spends on a contract may be a useful management tool for working out who is in-scope to transfer, but tribunals (and employers) should not overly rely on this.
On the facts in this case, Mr Armitage spent 67% of his time on the transferring contract in the three months leading up to the transfer; but Costain (the incoming employer) argued that Mr Armitage was a project manager who became involved on particular projects on a troubleshooting basis, so his heavy involvement on the transferring contract did not automatically mean that he was assigned. As the tribunal had not given sufficient weight to this argument, the EAT remitted the case back to be reconsidered by a differently constituted tribunal.
Timing is everything
In Housing Maintenance Solutions Limited v McAteer, the EAT looked at when exactly a TUPE transfer takes place. Their conclusion was that the transfer takes place when responsibility for the management of the business or service transfers from one entity to another. The facts in this case arose from a contract for the repair and maintenance of housing association properties. The housing association terminated its contract with a company called Kinetic on 9 June 2011. A new company called Housing Management Solutions Ltd (HMS) was set up by the housing association, but it did not commence providing services until 1 July 2011. In the interim period between Kinetic ceasing to provide services on 9 June and HMS commencing provision of the services on 1 July, assurances were given to staff from HMS that they would employ the outgoing contractor's employees. The issue for the EAT to consider was: when did the TUPE transfer take place? It found that there was no TUPE transfer when the incoming contractor, HMS, 'assumed responsibility' for ex-Kinetic staff by making assurances about their continued employment. The EAT endorsed the approach of a 2006 case, Celtec v Astley, and confirmed that the date of the transfer is the date when legal assumption of responsibility for the transferor's business transferred. Taking 'responsibility' for staff does not trigger a transfer, regardless of the intention or the wishes of the parties.