There is relatively limited case law dealing with a temporary cessation of work in a TUPE context. However, in the case of Mustafa, the Employment Appeal Tribunal (EAT) considered whether there had been a business transfer or service provision change (SPC) under TUPE 2006 where a subcontractor had suspended its operations shortly before the main contract was awarded to a new contractor.
Amey Services (Amey) was appointed by Transport for London (TfL) to carry out road maintenance services. It subcontracted the traffic management element of its services to Trek Highways Services Ltd (Trek) and the claimants TUPE transferred from Amey to Trek.
In 2012, TfL carried out a re-tendering exercise and it was agreed that relevant employees would transfer from Trek to the new subcontractor. The new contracts were due to start on 1 April 2013. However, in early March 2013 a dispute arose between Amey and Trek. As a result, on or about 8 March 2013, Trek suspended its operations and sent its staff home. On 20 March 2013, the subcontract was terminated by consent.
When the claimants commenced proceedings, one of the key issues to be determined was whether they had TUPE transferred from Trek back to Amey.
The Employment Tribunal (ET) concluded that there was no business transfer from Trek to Amey because there was no work being carried out by Trek under its contract with Amey during the period 8 to 21 March 2013. The EAT held that this was the wrong approach – despite the suspension of work, there were no findings that the entity did not continue to exist in the form of the dedicated staff, vehicles, equipment and the subcontract itself. The temporary cessation of activity did not have the effect of destroying the entity.
Service provision change
In order for an SPC to occur, immediately before the transfer the following conditions set out in regulation 3(3) of TUPE 2006 must be satisfied:
- there must be an organised grouping of employees situated in Great Britain that has as its principal purpose the carrying out of the relevant activities on behalf of the client;
- the client must intend that the activities will be carried out by the contractor (or subsequent contractor) other than in connection with a single specific event or task of short-term duration; and
- the activities must not wholly or mainly consist of the supply of goods for the client's use.
The EAT found that the ET had taken the wrong approach in determining whether there had been an SPC. Applying the EAT's recent decision in Inex Home Improvements Ltd v. Hodgkins and others UKEAT/0329/14, the EAT held that there is nothing in TUPE 2006, or in any of the relevant authorities, that requires the organised grouping of employees to be actually engaged in the activity immediately before the SPC, or that suggests that a temporary cessation of activities precludes the continued existence of the organised grouping.
The ET had also suggested that the intention of the client was that Amey's involvement would be a matter of short-term duration, because of the new contracts coming into force on 1 April 2013. The EAT found that this was irrelevant. The issue that should have been addressed was whether the task in respect of which Amey was involved was intended to be short term.
The decision in this case reinforces the EAT's comments in Inex, which cautioned against placing too much reliance on a temporary cessation. This is just one of the relevant factors that Tribunals will take into account when deciding whether a transfer has occurred.
In respect of whether an organised grouping of employees retains its identity notwithstanding a cessation, each case will turn on its facts. Tribunals must look at the length of the cessation and the reason behind it.