There have been a number of significant developments and refinements in TUPE case law in 2015.
Meaning of ‘client’
One significant development concerned the issue of who is a client under Reg 3(1)(b). It was generally understood that there could only be one client in a service provision change (SPC). HHJ Eady QC in Ottimo Property Services v Duncan held that was not the case and provided that; the clients remained the same before and after a transfer, they retained the same identity, and, crucially, had a commonality of interest, there could be more than one client. This has potentially significant implications widening the scope of contractual arrangements which may fall within the SPC provisions.
Meaning of ‘contractor’
In Jinks v Havering LB the EAT held that it was not necessary for the contractor to be in a direct contractual relationship with the client for there to be an SPC. The issue was determined by asking on whose behalf was the service being carried out? In some cases this may mean that the services was being carried out on behalf of the client even though there was no direct contractual relationship between the contractor and client.
Disciplinary Action and TUPE
Two cases explored the interaction of TUPE and disciplinary proceedings. In Salmon v Castlebeck Care Ltd the employee was dismissed before the transfer but a successful appeal was held after the transfer. Langstaff P held that as the effect of a successful appeal is to retrospectively revive the contract of employment it follows that the employee was employed as at the date of transfer and therefore transferred to the transferee.
In Jakowlew v Nestor Primecare Services, the employee was suspended some months before the service was due to transfer to another contractor. The client did not want the suspended employee to transfer to the new contractor and about 10 days before the transfer raised this with her employer, the transferor. The transferor resisted this. Three days before the transfer the employee was disciplined and her suspension lifted. An issue arose as to whether she had transferred to the incoming contractor. It was held that she had transferred because as at the date of the transfer her employer, the transferor, had not accepted the client’s demand to remove her from the contract and also because the disciplinary proceedings had concluded.
Sickness absence and TUPE
In BT Managed Services Ltd v Edwards the EAT gave guidance on how to determine whether an employee who is on sickness absence at the date of transfer is assigned to the part of the business that transferred. It held that the issue is not always resolved by asking the question, which entity would the employee be required to work in if he returned to work? Where an employee is unlikely to return to work in the foreseeable future that question is not necessarily relevant. Rather, it is necessary to consider how the organised grouping is identified and enquire whether there is a link between that and the employee. If the grouping is defined by reference to a particular economic activity, the absence of any participation in that activity will almost, by definition, exclude a person on long term sickness absence who is unlikely to return to work.
No transfer where the employer remains the same before and after transfer
Hyde Housing Assoc Ltd v Layton held that there can be no transfer whether the employer is both the transferor and the transferee. In that case the employer was the transferor and also part of consortium making up the transferee.
There is a transfer where the major shareholder takes over an ailing business
In Ferreira da Silva v Estado Portugues an airline charter business went into insolvency. Its major shareholder took on some of the flight schedules using some of the aircraft and paying charges under leasing contracts. It also took over some office equipment and former employees of the charterer. The ECJ, unsurprisingly, held there was a transfer.
Should a purposive construction be applied to the SPC provisions?
In Inex Home Improvements Ltd v Hodgkins the EAT applied a purposive construction to Reg 3(1)(b). This is unlikely to be the final word on this point because it appears to be in conflict with the views of the Court of Appeal expressed in Hunter v McCarrick.
TUPE and the Burden of Proof
In Marshall v Game Retail Ltd the EAT consider the burden of proof in TUPE cases. A dismissal because of the transfer is automatically unfair. The same approach to the burden of proof as applies in other automatic unfair dismissal cases applies (as set out Kuzel). The claimant has to adduce some evidence to support his case that he was dismissed because of the transfer. If he does so the Respondent then as to prove that the reason or principal reason for the dismissal was a different reason. If the respondent does not do so then it is open to the tribunal to find that the reason was that advanced by the Claimant.
There was one Court of Appeal case principally concerned with TUPE this year, Rynda (UK) Ltd v Rhijnsburger . In this case guidance was given on how to approach the issues in SPCs. For reasons expressed in my post on this case, the earlier guidance of the EAT in Enterprise Management is probably more useful.
Thank you to the surprisingly large number of readers of this blog – and best wishes for Christmas and the New Year.