A ruling by the Employment Appeal Tribunal has provided some clarity on the scope of “affected employees” who must be informed and consulted prior to a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). TUPE governs how the sale of a business or a change in service provider automatically transfers staff to the buyer/incoming service provider.
In 2007, Somerset County Council and Taunton Deane Borough Council (the Council) transferred most of the work undertaken by their respective resources directorates to a South West One Limited (South West One), a joint venture vehicle established with IBM. Nearly 900 relevant employees were given the choice to remain as Council employees and be seconded to South West One or to have their employment transferred to South West One under TUPE. All but one of the employees chose to remain employed by the Council.
Regulation 13(6) of TUPE provides that an employer who envisages that he will take measures in relation to an "affected employee" in connection with a relevant transfer must consult appropriate representatives of that employee with a view to seeking their agreement to the measures. The public service trade union Unison complained to an employment tribunal that the Council and South West One had not fulfilled this obligation.
After the original tribunal dismissed Unison’s complaint, one of the key issues for the Employment Appeal Tribunal to consider was the definition of "affected employee" and, in particular, whether Council employees at the time of the transfer who were not working in the resources directorate were "affected employees" for the purposes of TUPE.
Regulation 13(1) of TUPE defines "affected employees" as ".... any employees of the transferor or the transferee … who may be affected by the transfer or may be affected by measures taken in connection with it".
Unison argued that this should include employees in other departments of the Council as their future career prospects might be diminished due to the reduced possibility of promotion or transfer once the relevant part of the business was transferred. However, the Employment Appeal Tribunal determined that “affected employees” are:
"those who will be or may be transferred, those whose jobs are in jeopardy by reason of the proposed transfer, and those who have internal job applications pending at the time of transfer. The definition does not extend to everyone in the workforce who might apply in the future for a vacancy in the part transferred”.
As the tribunal noted, if Unison’s wider meaning were accepted it would lead to the conclusion in many, if not most, cases that every employee of the organisation concerned is potentially an “affected employee”. This supports prior guidance issued by the Department for Business, Enterprise and Regulatory Reform (now the Department of Business Innovation and Skills) and the narrower construction should provide employers with some comfort about the scope of their information and consultation obligations.