A couple of cases under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) in the EAT act as a reminder that a careful assessment of the facts in any particular set of circumstances is necessary to determine whether or not particular employees transfer or not.

Who is assigned to an organised grouping of resources?

For a TUPE transfer to apply, one of the conditions is that on a service provision change (SPC) there must be "an organised grouping of employees" whose "principal purpose" is carrying out the relevant activities on behalf of the client. The employment contracts of those employees assigned to the organised grouping of resources pass from the transferor to the transferee

In London Borough of Hillingdon v Gormanley and others UKEAT/0169/14, a company (RG) undertook repair and maintenance work for various clients but from 2008 it worked solely for the London Borough of Hillingdon (Hillingdon). When, "completely out of the blue", Hillingdon informed RG that it was not going to be given any further work under the contract, RG took advice. It took the view that this was an SPC situation and listed the 17 employees that would TUPE transfer to Hillingdon. This included the claimants: Mr Gormanley (a director), his wife (the company secretary) and his son Graham who also worked for RG. 

On the date of the transfer some of the employees (but not the claimants) went to Hillingdon's premises and were turned away by security guards. The three claimants continued to work for RG but six months later the father and son were made redundant.

All the RG employees including the claimants brought tribunal claims for unfair dismissal because of the transfer. At a pre-hearing review the tribunal decided that there was a TUPE transfer by way of a service provision change from RG to Hillingdon. The employees' claims against Hillingdon, other than those of the three claimants, were then settled. At the full tribunal hearing the claimants also won. The employment tribunal held that there was an organised grouping of workers in RG which had as its principal purpose the carrying out of housing maintenance for Hillingdon and that the three claimants were part of that organised grouping and therefore subject to the TUPE transfer. It awarded them compensation for unfair and wrongful dismissal and also for failure to inform and consult under TUPE

Hillingdon appealed to the EAT which allowed the appeal and sent the case back to a different tribunal to be looked at afresh. It disagreed that the claimants were assigned to the organised grouping. Essentially the EAT's argument was that just because it was found that there was an organised grouping of employees at the pre-hearing review did not mean that the full tribunal was bound by that decision in relation to the claimants and that it should review the evidence to decide whether in fact the manager claimants were part of an organised grouping of employees.

The EAT referred to the ECJ decision in Botzen Rotterdamsche Droogdok v Maatscappil BV [1985] ECR 519 in which guidance was given on this point.  In the context of the current case:

  • it is material to consider the way in which RG's organisation was structured and the claimants' roles within that structure to determine whether for the purposes of TUPE they were assigned to that part which transferred to Hillingdon carrying out relevant activities;
  • checking the terms of their contracts and ascertaining information on their roles especially their job description or statement of duties would be key. In particular, Robert and Graham continued to be employed for more than six months after the Hillingdon contract terminated. Anne's role as company secretary would have included administration for other customers so it was also not clear whether she was principally engaged to work on the Hillingdon contract either.

The differently constituted employment tribunal would need to look at the circumstances afresh.

On a service provision change care needs to be taken in checking both organisational structure of the service provider and contracts of employment to determine the extent to which managerial employees may be involved in both servicing the client and running the business as a whole. Only then is it possible to evaluate whether such employees are assigned to an organised grouping of employees subject to the service provision change.

What is the effect of a post-transfer appeal against dismissal?

The issue in Salmon v (1) Castlebeck Care (Teesdale) Ltd (In Administration) (2) Danshell Healthcare Ltd and others UKEAT/0304/14 was the effect of a post-transfer internal appeal against dismissal following a TUPE transfer.

In this case the claimant was summarily dismissed for gross misconduct by Castlebeck Care (Teesdale) Ltd (Castlebeck). She exercised her contractual right to appeal but before the appeal meeting took place the undertaking for which she had worked transferred from her employer Castlebeck to Danshell Healthcare Ltd (Danshell). Subsequently, the claimant's appeal was heard by Castlebeck's HR Director whose employment had transferred under TUPE to Danshell. Her dismissal was deemed "unsafe" but no express decision was taken to reinstate her or to indicate in clear and unequivocal terms that her original employment contract had revived as a result of the successful appeal. Instead, Danshell instructed its advisers to arrange a settlement agreement with her. A meeting that had been due to take place with the claimant was cancelled and she was not told of the outcome of her appeal.

The claimant brought unfair dismissal proceedings against both Castlebeck and Danshell. The employment tribunal upheld her claim against Castlebeck but dismissed her claim against Danshell on the ground that it had never been her employer. It found that the employment of an employee who had been dismissed before a transfer had not been revived because (a) the outcome of the appeal, which had taken place after the transfer, had not been clear and (b) had not been communicated to the claimant. This was in contrast to a previous case in which employees who had been dismissed by their employer before its business transferred but following a subsequent appeal were informed that it had been successful and were reinstated. This meant that they were retrospectively deemed to have been employed at the time of a relevant transfer and to have transferred to the transferee under TUPE.

The claimant appealed and argued that her employment had automatically transferred to Danshell under TUPE and that Danshell's behaviour towards her amounted to it subsequently dismissing her. The EAT agreed with her and held that her claim against Danshell succeeded and that the tribunal's judgment against Castlebeck was discharged. It referred to other cases which established that if an appeal succeeded the employee was reinstated with retrospective effect; if it failed the dismissal took effect from the original date. Further, unlike the need to communicate a decision to dismiss (not least to start time running for purposes of bringing a claim) a successful appeal decision has the effect of reviving a contract under common law and there was no need for that to be communicated to the claimant.

In summary, a post transfer appeal can be successful where an employee is dismissed prior to a TUPE transfer despite there being neither an express decision to reinstate nor communication of it following the appeal. If successful this then it brings back to life an employee's contract of employment so that they were employed immediately prior to a transfer and their rights transfer. Normally in such a case any appeal is heard by employees of the transferor, because they are aware of the facts. In this case it was heard by Danshell employees (who had formerly been employed by the transferor Castlebeck) but with transferee's apparent consent.