Transport for London (TfL) contracted out highway maintenance work to Amey, which in turn subcontracted traffic management services to Trek Highway Services Ltd. TfL retendered the highway maintenance contract, and the work transferred to different providers with effect from 1 April 2013. It was accepted that this second generation outsourcing would amount to a TUPE transfer.
However, on 8 March 2013 a commercial dispute arose between Amey and Trek, at which point Trek suspended operations and sent staff home. The sub-contract was terminated by agreement on 20 March. The incoming contractors argued that TUPE did not apply to transfer the Trek employees to them in those circumstances. The employment tribunal agreed, concluding (amongst other things) that the cessation in the activities between 8 and 20 March meant that there was no longer an economic entity that was capable of transferring.
The EAT overturned the decision. There was an economic entity, including employees and resources, providing traffic management services. The fact that there was a temporary cessation of those activities prior to 20 March did not mean that there could not be a TUPE transfer. There was nothing to suggest that the economic entity was no longer in existence at the point the sub-contract terminated. What was required was an assessment of whether there had been the transfer of an economic entity (or a service provision change) either to Amey and then to the new contractors, or directly to the new contractors. The fact that the activities had ceased to be carried out before the point of transfer was a factor that was relevant to that assessment but should not have been treated as determinative.