30 September 2015

The Employment Appeal Tribunal in Inex Home Improvements Ltd v Hodgkins and others (i) recently considered the effect temporary lay offs have in connection with a relevant transfer under TUPE. The law states that for a service provision change to occur, there must, immediately before the change in service provider, be an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of activities on behalf of the client.

The employees in question carried out work under a subcontract. There was a break in activities during which time the employees were temporarily laid off. Their contracts of employment permitted lay offs. The work was subsequently transferred to another provider. At a preliminary hearing to determine whether there had been a TUPE transfer by way of a service provision change.

At first instance the Employment Judge held that there was no TUPE transfer principally because immediately before the transfer the claimants had not been working. They had been laid off given there was no work for them to do. This resulted in a finding that there was no organised grouping of staff as required.

On appeal, the Employment Appeal Tribunal determined that the Regulations did not require the organised grouping of employees to be engaged in the relevant activities immediately before the transfer. The Judge reasoned that the purpose of the legislation would be frustrated if a temporary cessation of work for those who were part of the organised grouping essentially resulted in there being no organised grouping of employees. Where there has been a temporary cessation in work, the Tribunal should consider whether the organised grouping continued to exist, considering, for example, the purpose, nature and length of the cessation in work. The fact that there has been a cessation of work does not, by itself, answer the point.

This is another example of the complexity of TUPE and emphasises the need for due diligence and advance consideration of the issues. Careful consideration as to the staff who may be affected by any transfer and the legal and practical issues arising is needed, and in good time prior to any transfer to allow planning. As ever, speak to your usual bto expert for further guidance.

To discuss further please contact one of our BTO employment lawyers on 0141 221 8012.

(i) Inex Home Improvements Ltd v Hodgkins and others http://www.bailii.org/uk/cases/UKEAT/2015/0329_14_2809.html