TUPE

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Inex Home Improvements Limited v Hodgkins EAT – 28 September 2015

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It has long been the case that under a traditional Reg 3(1)(a) transfer a temporary cessation of work did not prevent employees assigned to the organised grouping from transferring.  (see P Bork International Bork international A/S v Foreningen AF Arbedjdsledere I Danmark and Fairhurst Ward Abbots Ltd v Botes Building Limited ).  This case extends that principle to Reg 3(1)(b) service provision changes (‘SPC’).

The Facts

Inex were sub-contractors to Thomas Vale.  In November the work being undertaken on a particular sub- contract ceased.  It was expected that the work would recommence in January 2013.  There was a temporary lay-off of the Inex employees in November and December pursuant to the guidance under the Construction Industry Joint Council CIJC Working Rule Agreement.   During the temporary cessation of work Inex and Thomas Vale fell out with the result that the next tranche of the contract was given by Thomas Vale to a new sub-contractor, Localrun. Localrun commenced the contract but did not take on the Inex employees.

The ET Judgment

The EAT held that here was an SPC but when Localrun took on the contract, in early January 2013, there was no organised grouping of employees  situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client as required by Reg 3(3)(i).  This was because once they were laid off on the temporary cessation of the activity the employees were no longer part of an organised grouping.

The EAT Judgment

The EAT HHJ Serota QC held:

(i)                  A temporary absence from work or a temporary cessation of work did not deprive employees who had been engaged in the relevant activities of their status as an organised grouping

(ii)                Whether they remained an organised grouping was a question of fact dependent on the purpose of the lay of and its length and surrounding circumstances.

(iii)               The principles applied by the ECJ to old style transfers under the Directive should be adopted.

(iv)              A purposive construction should be given to TUPE which was to provide protection for employees of the original contractor.

 

Comment

An interesting feature of this case is the EAT’s willingness to apply a purposive approach to Reg 3(1)(b).  There is a clear divide in the EAT on this issue.  Slade J in Gormanley v Hillingdon LBC, in accordance with the approach of the ECJ in Botzen, applied a purposive construction to the meaning of ‘assigned’.  By contrast in Hunter v McCarrick, Eddie Stobart v Moreman and Horizon Securities v Ndeze the EAT was clear that in SPC cases a purposive approach is impermissible.

The approach in Gormanley is easy to understand because the concept of assignment is common to both Reg 3(1)(a) and Reg 3(1)(b) transfers and arguably does not conflict with the earlier authorities.  The approach in this case is more difficult because the purposive approach has been applied when determining whether the conditions in Reg 3(3), which relate, only to SPCs are satisfied.  On the face of it this decision appears to conflict with the view of the Court of Appeal in Hunter v McCarrick held:

There may be issues where a purposive interpretation is appropriate with respect to service transfer provisions and where the courts should approach matters as they would similar issues relating to transfers of undertakings. For example, it may be necessary not to be too pedantic with respect to the question whether the activities carried on before and after the transfer are sufficiently similar to amount to the same service; or to take a broad approach to the question whether an employee is employed in the service transferred: … But … there is no room for a purposive construction with respect to the scope of regulation 3(1)(b) itself. So far as that is concerned, there is in my view no conflict between a straightforward construction and a purposive one: the natural construction gives effect to the draftsman’s purpose. There are no underlying EU provisions against which the statute has to be measured. The concept of a change of service provision is not complex and there is no reason to think that the language does not accurately define the range of situations which the draftsman intended to fall within the scope of this purely domestic protection.

True it is that this case is concerned with Reg 3(3) rather than Reg 3(1)(b) which was specifically mentioned by the Court of Appeal, however, Reg 3(3) is concerned purely with SPCs and is one of the conditions necessary for Reg 3(1)(b) to apply.  It does not appear from the EAT judgment that Hunter was cited to it.

Link to EAT Judgment

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