BT Managed Services Ltd v (1) Mr G Edwards (2) Ericsson Ltd
The EAT found that an employee on long-term sickness absence with no identifiable prospect of return may stop being “assigned” to the service and, therefore, not transfer.
Mr Edwards was originally employed by Orange. His employment subsequently transferred to BT Managed Services Limited (BTMS) under TUPE. He was a member of a team dedicated to a domestic network outsource (DNO) contract providing operational maintenance for mobile phone networks operated by Orange or EE.
Mr Edwards was on long term sick leave due to various illnesses including a cardiac condition. He was regarded as permanently incapacitated. He remained an employee of BTMS so he could continue to enjoy payments under a permanent health insurance scheme. After the liability of the insurers was extinguished, BTMS continued to make payments to Mr Edwards.
The DNO contract was transferred to Ericsson and a service provision change occurred under TUPE.
BTMS argued that Mr Edwards’ employment transferred to Ericsson on the basis that, dispute his five year absence, he remained part of the DNO division, which transferred. However, Ericsson refused to accept Mr Edwards on the grounds that his long-term absence prevented him from being “assigned” to the division at the time of the service provision change.
The issue before the tribunal was whether Mr Edwards was assigned to the grouping of employees affected by the service provision change. The tribunal held that because he did not contribute to the economic activity of the grouping he was not assigned to that grouping within the meaning of TUPE.
BTMS appealed the decision and argued that Mr Edwards was assigned. The EAT held that:
- the question whether an employee absence from work at the time of a service provision change was assigned to the relevant grouping was a matter of fact to be determined according to the circumstances of the case
- although absence from work, even lengthy absence, at the time of the service provision change would not necessarily mean that an employee was no longer assigned to the grouping; an employee who had no connection with the economic activity of the grouping and would never do so in the future could not be regarded as assigned to that grouping
- an employee who plays no part in the economic activities subject to the service provision change and will never do so is not assigned to that grouping
- mere administrative connection to a grouping is insufficient to constitute an employee as being assigned to the grouping in the absence of some participation in the grouping’s economic activity.
Points to note
This case demonstrates that employees on permanent sick leave may not transfer under TUPE. What is important is whether the employee contributes to or participates in the economic activity transferred and whether they are likely to in the future. Employers may consider more closely managing employees who are on long term sick leave to continually assess their chances of returning to work. Even if they don’t do so, this could suggest that they remain assigned to the relevant economic activities as there is, at least, some potential for them to return in the future, even if it is to a different role.
The case opens the door to arguments about whether the particular circumstances of a person’s long-term absence and likelihood of return takes them out of scope to transfer. In some circumstances (for example if the employee has the benefit of PHI cover) this outcome may advantage all. As ever, the key to resolving these issues will be clear communications between the various parties, existing employer, future employer and employee.