The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) can apply where there is a transfer of an undertaking or business (such as on an asset sale), or a service provision change (where services are outsourced, transferred to a new provider or brought back in-house). If TUPE applies any employee “assigned” to the organised grouping of resources or employees that is subject to the relevant transfer will be in scope to transfer with it.
Assignment for TUPE purposes is a question of fact and degree, typically involving an assessment of a number of factors, including the percentage of time the employees spend working in the organised grouping. Any other relevant factors should also be taken into account – e.g. how the value and cost of each employee is allocated and what they are contractually assigned to do.
These issues were considered recently in BT Managed Services Ltd v Edwards & Anor, in which the EAT held that an employee on long-term sick leave was not assigned for TUPE purposes.
Mr Edwards was a telecoms engineer and part of a team dedicated to a domestic network outsource (DNO) contract for providing operational maintenance to mobile phone networks. He went on sick leave in 2006 and by 2008 there was thought to be no prospect of his returning to work. However, he was retained as a nominal employee of BT Managed Services Ltd (BTMS) so that he could take advantage of a permanent health insurance scheme. In December 2012, the DNO contract was transferred to Ericsson. This was a service provision change and TUPE applied to transfer the dedicated BTMS team with the contract.
Ericsson argued that Mr Edwards was not assigned and so did not transfer. The ET agreed, holding that because he did not contribute to the economic activity of the team, Mr Edwards could not be assigned to it for the purposes of TUPE. BTMS appealed.
The EAT re-confirmed that whether an absent employee is assigned for TUPE purposes is a matter of fact to be determined according to the circumstances of each case. A lengthy absence from work will not necessarily prevent an employee from being assigned. However, an absent employee who does not contribute to the economic activities which are the subject of the transfer, and would never make such contribution in the future, will not be regarded as assigned: mere administrative connection is insufficient if there is no participation in the relevant economic activity.
Where a TUPE transfer is anticipated, it is vital to analyse as early as possible whether any employees – including any absentees – are assigned to the entity or services which will transfer. A key factor will be distinguishing between employees who are temporarily unable to work and those who are never expected to return. Any assumption that long-term sick employees will not transfer is inherently risky – as long as the individual retains an active connection to the relevant economic activities, there must be reasonable prospects that they will be assigned and so in scope to transfer.