In Jakowlew v Nestor Primecare Services t/a Saga Care and anor the EAT held that a unilateral instruction from a client to its service provider to remove an employee from working on a service provided to them did not have the effect of removing the employee from the organised grouping who were the subject of the transfer. The outgoing service provider's refusal to act upon their client's instruction meant that the employee remained assigned to the organised grouping until the transfer date. Therefore, she transferred to the new service provider.
In the context of service provision changes, TUPE operates to transfer the employment of the employees who are assigned to the "organised grouping" of employees who are the subject of the transfer. TUPE provides that immediately before the transfer the "organised grouping" must be situated in Great Britain and have as its principle purpose the carrying out of activities concerned on behalf of the client. An employee will only transfer where it can be said they belong to that organised grouping.
In this case, the EAT had to decide whether an employee was assigned to an organised grouping of employees in circumstances where the ultimate client had instructed the outgoing service provider to remove the employee from the organised grouping prior to the transfer date.
The Claimant was a care manager employed by Saga Care (Saga). She was part of a group of employees who worked mainly on a contract for the London Borough of Enfield (Enfield). The contract between Enfield and Saga was due to expire on 30 June 2013 and the service was to be reassigned to a new service provider, Westminster Home Care Ltd (Westminster), on 1 July 2013.
At the end of February 2013, the Claimant was suspended by Saga pending disciplinary proceedings. Several months passed and no action was taken. Enfield grew concerned that Saga appeared to be dragging its heels on the disciplinary process. On 14 June 2013, Enfield wrote to Saga expressing its concerns and stating that it wished to know the outcome of the disciplinary proceedings before deciding whether to invoke its contractual right to have the Claimant removed from the service. Saga did not reply to Enfield's letter and so, on 19 June 2013, Enfield instructed Saga to remove the Claimant from the group of employees working on their contract. However, Saga objected to the instruction and refused to remove the Claimant from the contract.
On Thursday, 27 June (one working day before the transfer of the contract to Westminster) Saga held a disciplinary hearing and issued the Claimant with a final written warning. Later that day, the Claimant was told by Westminster that her employment would transfer to them. Following this, there was some confusion as to whether the Claimant had, in fact, transferred to Westminster. Eventually, Saga and Westminster agreed that Enfield had been entitled to instruct Saga to remove the Claimant from the contract and, therefore, she had not transferred. Saga continued to pay the Claimant and eventually dismissed her as redundant on 20 September 2013. The Claimant brought an unfair dismissal claim against Saga and Westminster, asserting that her employment had transferred toWestminster.
The Employment Tribunal held that Enfield's instruction was effective to remove the Claimant from the group of employees providing the service at the time of the transfer. Therefore, she did not transfer and remained an employee of Saga. The Claimant appealed.
The EAT said that the sole question was whether the Claimant was assigned to the organised group of employees subject to the transfer immediately before the transfer date. The EAT noted that the concept of assignment is derived from European law and contemplates assignment by or with the authority of the transferor (in this case, Saga). They did not consider that the legislation contemplated assignment by the unilateral act of a third party without the employer's authority.
The EAT also recognised that this case was similar to the recent case of Robert Sage Ltd (t/a Prestige Nursing Care) v O'Connell. In that case, the client had instructed the contractor to remove an employee from the service and the employer accepted the instruction and removed the employee. It was decided by the EAT in that case that the employee was not assigned to the organised group at the relevant time and did not transfer.
However, the difference in this case was that Saga did not act upon Enfield's instruction. AlthoughEnfield had a contractual right to instruct Saga to remove the employee from the service, it could not enforce that instruction. The EAT held that the unilateral instruction of a third party did not have the effect of removing an employee from an organised grouping. Only the employer, Saga, had the authority to remove the employee. They didn't do so and continued to treat the Claimant as assigned to the contract until the transfer date. It was noted that Saga's refusal to act upon Enfield's instruction may have meant that they were in breach of contract, but that was not determinative for TUPE purposes. Therefore, it was held that the Claimant remained assigned and her employment transferred to Westminster.
It is also worth noting that the EAT said that the fact the Claimant was suspended from work immediately prior to the transfer should not be treated as removing her from the organised group. Absence by reason of suspension should be treated no differently to other temporary absences e.g. holiday or sickness. The expectation would be that the employee would return to the role in which she originally worked (unless demoted or dismissed) and so it could not be said that suspension alone equated to a reassignment.
How can clients manage the situation of contractors failing to comply with valid instructions to remove an employee from a contract? When entering into an outsourcing agreement it would be desirable to include provisions requiring the service provider to agree a list of transferring employees with the client and to indemnify the client in respect of any costs associated with the transfer of any unlisted employees.
Even without such an indemnity, the client may still be entitled to sue the service provider for breach of the terms of the outsourcing agreement if they failed to comply with a valid instruction to remove an employee. However, this would only be worth doing where the client sustained loss as a result of the service provider's breach. This may be the case where the client has had to indemnify the new service provider for the employment costs of the employee who should have been removed from the contract.