The claimants in Inex Home Improvements Ltd v Hodgkins had worked on refurbishment contracts which had been subcontracted to their employer. They were temporarily laid off while the next tranche of work was being sorted out but in the event that contract was given to a different subcontractor, under a TUPE service provision change.

The issue was whether the employees had transferred under TUPE to the new subcontractor. For this to happen, there would need to be an "organised grouping of employees" and for the claimants to be assigned to that grouping. The Tribunal thought that there was no organised grouping, because immediately before the date of the service provision change they were not working. 

The EAT allowed the appeal. There is no requirement that the employees must actually be engaged in any activity immediately before the service provision change, so a temporary absence from work does not automatically deprive employees who had been involved in the transferred activity of their status as an organised grouping; whether it does or not depends on the facts, in particular the length of, and reasons for, the cessation of work.

European cases going back to the 1980s make it clear that a temporary business closure does not necessarily mean that there cannot be a transfer of an undertaking under the European Acquired Rights Directive. Part of the rationale for those decisions is that the purpose of the Directive is to prevent workers from being in a less favourable position as a result of a transfer. The EAT's decision makes it clear that this rationale is equally applicable to the service provision change requirements of TUPE, despite that fact that these provisions do not stem from the Directive but are a product of domestic legislation.