TUPE

Jeffrey Jupp's TUPE resource

May 14, 2020
by Jeffrey
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TUPE & CJRS Update – 14 May 2020

Further guidance has been issued by HM Treasury for employers to assist in identifying those employees for whom an employer is eligible to claim furlough payments.

See latest guidance here

The guidance does not changes the earlier guidance but makes the position clearer. In respect of TUPE it states:

Employee transfers under TUPE and on a change in ownership

A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28 February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

Read more guidance on TUPE rules.

Read more guidance on business succession.”

March 11, 2021
by Jeffrey
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Greater Glasgow Health Board v Nielson EAT – 16 February 2021

In a TUPE case, can an order for re-engagement be made against a transferee who is not joined in the proceedings? (Err? No!)  Could a compensation order also be made against a transferor when all liability passed to the transferee? (Again, No!)

The Background

Dr N was a partner in a GP practice (NMP). NMP provided GP services at the Dumbarton Health Centre. Separately from his position of partnership Dr N also held positions of employment with NMP. It had a contract to do so with the  Health Board. NMP was dissolved on 23 March 2017. The Health Board took over the provision of the GP Services whilst it secured another provider for the services. Employees transferred to it. Partners did not. Dr N was however given a fixed-term contract with the Health Board this expired on 31 July 2017. LP were appointed by the Health Board to take over the service with effect from 1 August 2017. All former employees of NMP transferred to LP. Dr N did not.  

Dr N brought a claim for unfair dismissal against the Health Board (the transferor). He did not bring a claim against LP for unfair dismissal. After a preliminary hearing at which it was determined that Dr N had sufficient continuity of service to bring the claim, the Health Board admitted liability and the matter was set down for a remedy hearing.

The Employment Tribunal Decision

Although set down for remedy, the issues canvassed at the hearing included such questions as whether: Dr N was assigned to the organised grouping; whether the employment was temporary i.e. of short term duration, whether or not LP was a “successor employer” under sections 115(1), 116(3)(b) and 235 of the Employment Rights Act 1996, and; whether the Tribunal should make an award for re-engagement against LP (who were not a party to the proceedings). In the event, the Tribunal made two orders: (i) that LP was required to reengage Dr N on a permanent contract and (ii) that the Health Board should pay the Dr N’s loss of earnings between the date of dismissal and date of reengagement.

The Employment Appeal Tribunal

There were various grounds of appeal, but of particular interest, are not the grounds of appeal but two preliminary issues raised by the EAT itself. These were:

  • Having regard to (a) Litster v Forth Dry Dock & Engineering Co. Ltd, was it competent for the Employment Tribunal to make any remedies order against the Health Board for a dismissal of Dr N that was unfair – as conceded by the Health Board – by virtue of Reg 7(1) of TUPE, 2006?
  • In any event, was it competent for the Employment Tribunal to order the re-engagement of Dr N as an employee of a legal entity that was neither a Respondent to the proceedings before it, nor independently represented at the remedies hearing?

On the first issue, the EAT held, unsurprisingly, that any liability for unfair dismissal transferred under Reg 4(1) and Reg 7(1) from the transferor (the Health Board) to the transferee (LP). Having determined that Dr N was assigned to the organised grouping that transferred to LP, there was simply no basis for a finding that the Health Board was liable for the loss of earnings arising from the admitted unfair dismissal.

The “successor employer” provisions which Dr N claimed had the effect that the re-engagement order could be made against LP, had no application to the case at all. The EAT observed that where a dismissal of an employee is automatically unfair by virtue of Reg 7, liability for the remedy of re-engagement will either pass solely to the transferee by virtue of Reg 4(1) or will remain solely with the transferor where the conditions in Regulation 4(1) are not met (e.g if the Claimant was not “assigned” to the relevant grouping). In either scenario, the “successor employer” provisions of sections 115, 116 and 235 ERA will not be relevant except perhaps (as was the position in Dafiaghor-Olomu v Community Integrated Care) where there is later a transfer of the ownership of the business of the party which originally bore the sole liability for the unfair dismissal.

On the second issue, no order for re-engagement could be made against LP unless and until it was joined as a party.

In addition, the Tribunal had only considered whether it was reasonably practicable for LP to reengage Dr N and not whether it was reasonably practicable for the Health Board to do so and it was the Health Board who was the only employer before the Tribunal.

Link to EAT decision

March 9, 2021
by Jeffrey
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Lewis v Dow Silicones UK Limited EAT – 4 March 2021

This case illustrates the difference between what amounts to a fundamental breach of contract for the purposes of unfair constructive dismissal and what amounts to a “substantial change to working conditions to working conditions to the material detriment of [the employee]” for the purposes of Reg 4(9).

The Background

L worked at a power plant in South Wales as an operations technician. He was transferred to D, the transferee, on 1 March 2018. The terms of his contract (which was by way of an incorporated Npower collective agreement) provided for the following: (i) a 37 hour working week; (ii) a management power to determine work patterns by reference to operational requirements; (iii) payment of a shift and unsocial hours allowance; (iv) a requirement that employees would “undertake duties and responsibilities commensurate with their grade and competency”, supplemented by an Npower “Contribution statement” that a key accountability was the “application of safe systems of work … which may include taking on the duties of Safety Controller/Safety Co-ordinator as required by the location manager”.

Over the years a practice had grown up whereby the operations technicians worked 168 hours over a 5 week shift pattern. Over the year this meant they were working less than the contracted 37 hours per week (1747 hours rather than 1924 hours). Further any work over the 168 hours was voluntary overtime and not accounted by reducing this shortfall. L worked 400 hours voluntary overtime 2017. 

D intended to change the callout arrangements. Each employee would be paid £9,000 for up to 150 hours irrespective of the actual hours worked  when called out. This was no longer voluntary. Previously L had earned £10,354 for the shift and unsocial hours allowance.

D also wished to introduce a system where operations technicians would issue “Safe Work Permits” relating to machine safety. This had previously been the responsibility of engineers. This was to involve training over a period of six months.

L’s case was that the transfer would involve substantial changes to his material detriment for the purposes of Reg 4(9). He also alleged the proposed changes were a fundamental breach of contract and resigned claiming constructive dismissal.

Employment Tribunal Decision

The ET held rejected his claims finding that: (a) that under his existing contract the employer was entitled to introduce the changes, and; (b) that the changes were not substantial change(s) in working conditions to L’s material detriment. In relation to the new standby/call out duties the ET held L was contracted to work 37 hours per week and that the proposed 150 hours per year cover was well within this number of hours calculated annually and also that the management had the right to determine work patterns by reference to operational requirements. In relation to the new safety responsibilities the ET held that the new duties were commensurate with L’s grade and competency and were within the key accountabilities mentioned in the Contribution Statement.

Employment Appeal Tribunal decision

The EAT (HHJ Shanks) rejected L’s appeal on the constructive dismissal issue but upheld his appeal under Reg 4(9). In doing so it restated the following principles established in Tapere v South London and Maudsley NHS Trust:

  • The regulation can apply even where there is no breach of the employee’s contract of employment;
  • Whether there is a change in working conditions and whether it is substantial are questions of fact;
  • The nature as well as the degree of any change needs to be considered in deciding whether it is substantial; and the nature (or “character”) of the change is likely to be the most important aspect in determining this;
  • The question whether a change in working conditions is to the “material detriment” of an employee involves two questions: (a) whether the employee subjectively regarded the change as detrimental and, if so, (b) whether that was a reasonable position for the employee to adopt.

In relation to the standby hours, even though these were within the terms of the contract, the change was a substantial and detrimental change because previously overtime had been entirely voluntary, now the employee was generally compelled to undertake it. In relation the new Safety Permit arrangements, again even if D was permitted to extend L’s duties within the terms of the contract, this was irrelevant to Reg 4(9) claim, and the fact training was being offered was also not determinative and did not mean there was not a substantial change to L’s detriment.

Employment Appeal Judgment

Employment Tribunal Decision

March 3, 2021
by Jeffrey
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McTear Contracts Ltd v Bennett EAT -2 March 2021

This is the first appellate case to apply the ECJ decision in Govaerts. It did so in the context of a service provision change (SPC) under Reg 3(1)(b) of TUPE.

The Background

Amey, the transferor, had a contract with NLC to install kitchens in social housing. The claimant employees worked on this contract. From March 2017 Amey split its workforce into two teams made up of the trades necessary to fit kitchens. Each team worked across the NLC geographical area. Most of the employees were allocated to one or other of the teams.

NLC retendered its contract. In doing so it split the contract into Lots defined by geographical areas, north and south. It did not want the same contractor to undertake both Lots. Lot 1 was awarded to McTear and Lot 2 was awarded to Mitie. Amey undertook an analysis of the geographical area in which team had operated in the previous 12 months. After undertaking detailed analysis it took the view that team 1 corresponded to Lot 1 and team 2 corresponded to Lot 2. The evidence in support of this analysis was geographical split was not strong. After awarding the tender, NLC swapped the geographical areas for each Lot because apparently they corresponded more closely to the Head Office or each transferee. 

Employment Tribunal decision

The Tribunal held that there had been transfers under Reg 3(1)(b) to each of McTear (team 1) and Mitie (team 2). In doing so it purported to apply Kimberley Group Housing v Hambley. Both transferees appealed.

There were numerous grounds of appeal relating to the manner in which the Tribunal had assessed the evidence and determined there was an SPC in accordance with Amey’s split into teams. However, of particular significance is that Govaerts was decided after the Tribunal decision and as a consequence Mitie’s Grounds of Appeal were amended.  A new ground of appeal was added; to the effect that following Govaerts it was not necessary for the transferred employee to transfer to only one employer but an employee could transfer to two employers in proportion to the tasks performed.

The Employment Appeal Tribunal decisions

It has been held that SPCs are a purely domestic construct and there is no obligation to apply EU law principles to them.

Nevertheless, Mitie advanced 4 reasons why Govaerts should be applied: (i) Reg 4 applies to both types of transfer, those under Reg 3(1)(a) and those under Reg 3(1)(b) and Reg 4 should have the same meaning for both transfers.  (ii) many transfers will meet the criteria for both kinds of transfer. (iii) the SPC provisions were introduced under powers under s. 38 of the Employment Relations Act 1999 provides the Secretary of State to make regulations with the same or similar provisions to the Directive. (iv) In Kimberley, it was held there was no principled reason for distinguishing between SPCs (Reg 3(1)(b)) and business transfers (Reg 3(1)(a))

The EAT allowed the appeal and remitted the case for the Tribunal, in doing so it held (para 41): “There is no reason in principle why an employee may not, following such a transfer, hold two or more contracts of employment with different employers at the same time, provided the work attributable to each contract is clearly separate from the work of the other(s) and is identifiable as such. The division along geographical lines, of work previously carried out under a signal contract into two new contract is, in principle, a situation where there could properly be found to be different employees on different jobs”.

Link to EAT decision

Comment

This case has the potential to cause serious difficulty in multi party SPC cases. There is no obvious mechanism for determining how employment contracts should be divided between employers. This is something which English law has generally sought to avoid (no servant can have two masters). There exceptions to this principle, see paras 39 and 40, but these are limited in scope.

July 9, 2020
by Jeffrey
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ISS Facility Services NV v Govaerts ECJ – 20 March 2020

G was employed by ISS from 2002. ISS is a cleaning and maintenance service provider to the local authority in Ghent, Belgium. It had a contract consisting of 3 lots. Lot 1: museums and historic buildings; Lot 2: libraries and community buildings; Lot 3: administrative buildings.  G was the project manager for all three areas of work.  Her time was therefore split between the three Lots. The contract was retendered. ISS were unsuccessful. Lots 1 and 3 were awarded to A and Lot 2 was awarded to CM. ISS told G she would transfer to A.  A refused, arguing there was no transfer. The Belgian labour court held there was no transfer and ISS were liable to G.  ISS appealed and the Belgian appeal court held there was a transfer to both A and CM. The matter was referred to the ECJ to consider three issues:

  1. Was there a transfer to both transferees in proportion to the extent the employee worked in each part of the undertaking transferred? Or
  2. Did the worker transfer to the part of the entity in which the worker was principally employed? Or
  3. Is there no transfer at all?

Judgment of the ECJ

The ECJ held that the option of there being no transfer could not apply as that would amount to excluding the safeguarding of rights on transfer and deprive the Directive of its effectiveness.

As to the option of the worker transferring to the transferee of the part of the undertaking in which the worker was principally employed, the ECJ held this would disregard the interests of the transferee who would be required to employ the worker on a full time basis when they worked only part time in the part of the business acquired by the transferee.

This left the option of there being a transfer to both transferees. As to this the ECJ held that

  • it was for the “[national] court to determine how any distribution of the contract of employment might take place. In that regard, [it] may take into consideration the economic value of the lots to which the worker is assigned, as suggested by ISS, or the time that the worker actually devotes to each lot…”.
  • Further, “to the extent that such a possibility amounts to dividing one full-time employment contract into a number of part-time employment contracts, it must be borne in mind that, under [Art. 2(2)(a) of the Directive], the Member States may not exclude from the scope of that directive contracts of employment or employment relationships solely because of the number of working hours performed or to be performed. Consequently, such a division cannot be excluded merely because it involves the transfer to one of the transferees of a contract of employment that covers a small number of hours of work”.
  • And; “such a transfer of the rights and obligations arising from a contract of employment to each of the transferees, in proportion to the tasks performed by the worker, makes it possible, in principle, to ensure a fair balance between protection of interests of workers and protection of the interests of transferees, since the worker obtains the safeguarding of the rights arising from his or her contract of employment, while the transferees do not have imposed on them obligations that are greater than those entailed by the transfer to them of the undertaking concerned…. However, it is for the referring court to take account of the practical implications of that division of the contract of employment in the light of the objectives pursued by Directive 2001/23”.

By way of conclusion the ECJ held; “where a transfer of undertaking involves a number of transferees, [Art 3(1) of the Directive] must be interpreted as meaning that the rights and obligations arising from a contract of employment are transferred to each of the transferees, in proportion to the tasks performed by the worker concerned, provided that the division of the contract of employment as a result of the transfer is possible and neither causes a worsening of working conditions nor adversely affects the safeguarding of the rights of workers guaranteed by that directive, which it is for the referring court to determine. If such a division were impossible to carry out or would adversely affect the rights of that worker, the transferee(s) would be regarded as being responsible for any consequent termination of the employment relationship, under Article 4 of that directive, even if that termination were to be initiated by the worker”.

Link to Judgment

Comment

On any view this is remarkable departure from the orthodox understanding of TUPE. In order for TUPE to apply the employee must be assigned to the organised grouping resources subject to the relevant transfer (Reg 4(1)). Although this is not expressly specified in the Directive it was the test developed in Botzen and others v Rotterdamsche Droogdok Maatschappij BV which held: “An employment relationship is essentially characterized by the link existing between the employee and part of the undertaking or business to which he is assigned to carry out his duties. In order to decide whether the rights and obligations under an employment relationship are transferred under [the  Directive] … it is… sufficient to establish to which part of the undertaking or business the employee was assigned”. It is difficult to see how the test for assignment can be met with an employee in the position of G in this case. Is the ECJ to be taken to have overruled Botzen?  Furthermore, the practical suggestion that the employment contract be split raises a number of practical issues. Is it legally possible to split the contract in this way?  Is the employee to be contracted part time by both transferees? Whilst, it can be argued that Service Provision Changes under Reg 3(1)(b) are a purely domestic creation and therefore this decision has no application to SPCs, this is not the case for Reg 3(1)(a) transfers.

Postscript

The EAT in McTear Contracts Ltd v Bennett has applied this case to SPCs.

May 22, 2020
by Jeffrey
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TUPE & CJRS Further update 22 May 2020

A new Treasury Direction (No. 2) has been issued. This makes a small but significant change to the eligibility to include employees in a CJRS claim if they are transferred after 28 February 2020.

A new employer (i.e. the transferee) can now make a CJRS claim if the employee’s employment transferred after 28 February 2020. This is whether or not an RTI PAYE submission was made before 19 March 2020 (i.e. whether or not the new employer put the transferred worker through its payroll before the 19 March 2020).

The requirements to be a “relevant employee” are in §9.4 of the new Treasury Direction and are (in summary):

(a) on 28 February 2020 the employee was employed by the transferor.

(b) After 28 February 2020 the business transferred to the transferee and the employee remained employed.

(c) The transferor had a qualifying PAYE scheme at the time of the transfer.

(d) Any of the following applies: (i) The change of employer is one that for the purposes of PAYE is not treated as a cessation of employment (i.e no P45 is issued); (ii) the transfer did not operate to terminate the employee’s contract of employment (iii) the transfer did not break the continuity of employment.

Link to Treasury Direction (No.2)

May 15, 2020
by Jeffrey
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Ferguson & Others v Astrea Asset Management Ltd EAT – 15 May 2020

The most interesting issue in this case is concerned with what happens when senior employees of the transferor substantially improve the terms and conditions of their employment just before the transfer so as to seek to fix the transferee with these enhanced terms.

Are such changes void under Reg 4(4) or for some other reason.

The Background

L Ltd is a property asset a management company managing  a substantial property portfolio in Mayfair, London on behalf of BSE.  The claimants were the directors and senior employees of L Ltd.  K was the CEO, F was head of Asset Management. Other claimants held senior positions. In September 2016 BSE gave the required 12 months’ notice to terminate L’s management agreement.  AAM was to take over management of BSE’s portfolio from the end of September 2017.  In July 2017 the claimants decided to ‘update’ Ls’ staff contracts. These updated contracts gave:

  • new rights to guaranteed bonuses of 50% of salary;
  • New entitlements to termination payments of a months’ salary for each year worked;
  • in some cases, enhanced notice periods.

These updated contracts were supplied to AAM after the employee liability information was supplied in August 2017. In an email sent to other directors of L Ltd, K said that if any of them did not transfer to AAM then they would revert to their previous terms, and all agreed to this.  When the changes came to light around the time of the transfer all the claimants were dismissed for gross misconduct by AAM. They brought claims for unfair dismissal, notice pay, and unauthorised deduction from wages and reserved the right to bring further claims in the civil courts.

The Employment Tribunal Decision

There were various findings in relation to unfair dismissal and failure to consult but the significant feature of this case concerns the contractual change implemented shortly before the transfer.

The ET held that two of the claimants had not transferred to AAM and in respect of F and K, who had transferred, the terms of the new contracts were void under Reg. 4(4) because they were varied by reason of the transfer.

The Employment Appeal Tribunal Decision

The claimants appealed on the contract issue on  the following grounds that Reg 4(4) only applies to changes adverse to the employee (having particular regard to Power v Regent Security Services Limited [2008] ICR 442). Further insofar as AAM sought to rely on the EU ‘abuse principle’, (on which there were unclear findings by the ET), this had no application on the facts.

The EAT (HHJ Shanks) held 

That Reg 4(4) applies to any change and not just those adverse to employees. This interpretation is: (i) Consistent with the Directive which is to safeguard employee’s rights; (ii) Not contrary to English of EU case law, (Regent was distinguished on the basis that the contractual variation occurred after the transfer and Reg 4(4) was not in force at that time and reg 12 of the 1981 TUPE regs was not the same wording, and nothing said by the Court of Appeal suggest that advantageous changes cannot be deemed to be void); (iii) Avoids difficult questions about whether a change is or is not advantageous; (iv) Does not prevent the employee enjoys other protections within TUPE; (v) Consistent with purpose of TUPE and; (vi) the literal wording of Reg 4(4).

Turning to the EU abuse principle, this is the principle in EU law that EU law cannot be relied on for abusive or fraudulent ends. It was not disputed that this principle could apply to TUPE claims but the claimants’ case was that it did not apply on the facts. 

There are essentially two requirements for the abuse principle to apply. First there must be objective circumstances which show that, despite formal observance of EU rules, the purpose of the rules had not been achieved, and; secondly, a subjective element consisting of an intent to obtain an advantage from the EU rules by artificially creating the conditions necessary for their application.

The EAT held that both of these requirements applied.  The contractual changes did not in fact safeguard the employees rights but enhanced them therefore the purpose of TUPE had not been achieved rather some other purpose had (namely to enhance terms and conditions). Further, there was ample material to satisfy the second condition that there was an intent to obtain an advantage.

Link to EAT Judgment 

Link to ET judgment

April 15, 2020
by Jeffrey
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TUPE CJRS Latest Guidance & Treasury Direction to HMRC – 15 April 2020

The latest Guidance on the CJRS provides:

A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

Also under sections 71 and 76 of the Coronavirus Act 2020 the Chancellor of the Exchequer has issued a Direction to HMRC on the operation of the Coronavirus Job Retention Scheme.

For the purposes of TUPE, summarised below are the most important points which are set out in §§9 to 11 of the Direction.  

To understand these points the reference to a “qualifying PAYE scheme” is a PAYE scheme registered on HMRC’s real time information system for PAYE on 19 March 2020.

The Direction deals with two scenarios. 

First, (see §§ 9.1 to 9.3), is where the new employer (transferee) has no qualifying PAYE Scheme solely because its PAYE scheme was registered on the HMRC real time information for PAYE after 19 March 2020.

If:    (i) an employee was on the payroll of the transferor on 19 March; (ii) the transferor has a qualifying PAYE scheme, and; (iii) there is a transfer after that date then the employee will qualify if:

  • Reg 102 of the PAYE regulations applies – i.e. the transfer is not treated as a cessation of employment.
  • TUPE applies so that the employment does not terminate on transfer .
  • The transfer does noes not operate to break the continuity of employment.

Second, (see §10), is where the new employer (transferee) already had a qualifying PAYE Scheme before 19 March 2019

If the transferee employer does not qualify to make a claim under §§9.1 to 9.3 of the Directions solely because it already had a qualifying PAYE Scheme then the entitlement to claim under the CJRS is determined as if the transferee employer had made earnings payments to the employee in the 2019-20 tax year shown on the real time return on or before 19 March 2020.

Comment

Previously the position under the Guidance v3 was that the CJRS applied to employees who transferred after 28 February 2020. Now under the Treasury Direction and Guidance v4 the Scheme applies to transfers after 19 March 2020. If an employee transferred on or before the 19 March 2020 then they will be on the transferee’s payroll on that date (assuming real time data had been provided) and therefore be a relevant employee for the purposes of the CJRS.

Link to Treasury Direction

Link to Guidance

April 9, 2020
by Jeffrey
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TUPE and the Coronavirus Job Retention Scheme – Updated 9 April 2020

The CJRS Guidance has now been updated to make it clear that any employee who transferred after 28 February 2020 is covered by the Scheme. The guidance now provides:

Employee transfers under TUPE and on a change in ownership

A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28th February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.”

Links:

The Scheme Guidance for Employers

The Scheme Guidance for Employees

HMRC PAYE Manual

March 30, 2020
by Jeffrey
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TUPE and the Coronavirus Job Retention Scheme – Updated 7 April 2020

Updated see post of 9 April 2020

The guidance for the Coronavirus Job Retention Scheme (‘the Scheme’) provides that in order to be a qualifying employee within the Scheme, “Furloughed employees must have been on [the employer’s] PAYE payroll on 28 February 2020…”.  If a transfer takes effect after that date, for example on 1 March 2020, are the employees qualifying employees for the purposes of the Scheme, after all they were not on the transferee’s payroll on 28 February 2020?

Under TUPE employment does not cease on transfer (see for example Mears Homecare Limited v Bradburn in the context of National Minimum Wage production obligations). In the context of PAYE this is reflected in regulation 102 of the Income Tax (Pay As You Earn) Regulations 2003 which provides that if the employee remains in the same business but the employer changes then the change will not be treated as a cessation of employment so that no P45 is issued. However, this does not mean that the employee is on the transferee’s payroll at a date earlier than the transfer.

Every employer has a HMRC Employer Reference number which is used for administering income tax and national insurance contributions on the payroll.  This is referred to in the Guidance as the ‘ePAYE’ reference. The ePAYE reference is required to make a claim under the Scheme.

On a business transfer there are two possibilities with regard to the payroll. Either there is a ’merger’ or there is a ’succession’. A merger is where two or more PAYE schemes are brought together for the same legal entity. However, just because a business merges does not mean that the payroll merges. A succession  is when the ownership of the business changes from one legal entity to another and the new owner takes responsibility for the pay records. In both cases there will be a new Employer Reference (ePAYE) number allocated by HMRC.  In any case, just as if a new employee is recruited, the transferred employees will not be on the transferee’s payroll before the date they are employed.

Finally, it is important to note that the issue of whether an employee is or is not covered by the Scheme is primarily an issue between the employer and HMRC and will, ultimately, in cases of dispute, be a matter that is resolved in a tax tribunal and not an employment tribunal. As matters stand, an employer would have good grounds for not offering those employees who transfer after 28 February 2020 an opportunity to be furloughed but it would be sensible for the employer to seek guidance from the HMRC prior to doing so.

It is likely that the position in relation to transferred employees under Coronavirus Job Retention Scheme is simply an oversight by the Government and if there is revised guidance this may well change.

First Update 06 April 2020

The Revised Scheme Guidance now provides:

If you made employees redundant or they stopped working for you after 28 February

If you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme.

What transferred employees can therefore do is ask the old employer (the transferor) to take them back and immediately furlough them.  It is of note that the Guidance does not refer to employment having ceased (which of course it does not under TUPE) it only refers to the employee having been made redundant by or ‘stopped working’ for the employer (eg. transferor) after 28 February 2020.

Second Update 07 April 2020

Following exchanges between employment lawyers on social media, it became apparent that HM Treasury have confirmed to a conservative member of parliament, David Johnston MP, by email of 6 April 2020 that the the Scheme will apply to those transferred after 28 February 2020. The email exchange is set out below.

Links:

The Scheme Guidance for Employers

The Scheme Guidance for Employees

HMRC PAYE Manual