This case concerns the meaning of the expression, ‘the time of the transfer’ within s. 218 of the Employment Rights Act 1996 which provides:
(1) Subject to the provisions of this section, this Chapter relates only to employment by the one employer.
(2) If a trade or business, or an undertaking (whether or not established by or under an Act), is transferred from one person to another—
(a) the period of employment of an employee in the trade or business or undertaking at the time of the transfer counts as a period of employment with the transferee, and
(b) the transfer does not break the continuity of the period of employment.
C was a sessional music teacher employed by the Council on a series of contracts corresponding to the academic year. His last contract expired on 31 July 2013. There was an expectation of a fresh contract in September 2013 but not a guarantee. The music services provided by the Council transferred to S4E on 1 September 2013. The transfer process had been extremely protracted and extended for well over a year before finally concluding with the agreement on the 1 September. C commenced working for S4E in September 2013 after the transfer. In due course C brought claims of unfair dismissal and for unpaid holiday pay. S4E’s case was he had insufficient continuity of service.
S4E’s case was that as C’s contract terminated on the 31 July 2013 he was not employed immediately before the transfer and Reg 4 of TUPE did not apply. C’s case was that he was only absent from work because of a temporary cessation of work and his continuity was preserved throughout August 2013 up to the transfer by section 212(3)(b) of the ERA. S4E’s case on this point was that section 218 only applied to employment by one employer and could not apply here because he was not employed by the Council at the time of the transfer.
The ET held that C been dismissed by the Council on the 31 July 2013. Had he not been dismissed he would have been employed between the 31 July 2013 and the transfer date. His absence from work was due to a temporary cessation of work within the meaning of section 212(3)(b) of the ERA and that he was employed at the time of the transfer under section 218(2).
The EAT Judgment
The EAT (Slade J) held that in deciding whether section 218(2) applied there is a composite question: This is whether the employee has a “period of employment with the employer at the time of the transfer”. This in turn is answered by considering the provisions in Chapter 1 of Part XIV of the ERA which deal with continuity of service.
The EAT held that section 212(3)(b) could not fill the gap between the end of C’s employment on the 31 July 2013 and the transfer. This was not permitted by the wording of section 218(1) which clearly provided that it only applied to employment by one employer. The ET erred in this respect but it was an immaterial error because the latest date that C was employed by the Council was a ‘date during the time of the transfer’ within section 218(2). In reaching this decision the EAT applied Clarke & Tokeley Ltd v Oakes  ICR 276 which held that the expression ‘at the time of the transfer’ did not refer to a specific point in time but rather it referred to the transfer process which may last some time.
The date of the transfer for the purposes of TUPE is not necessarily the same as the time of the transfer for the purposes of s 218. In this case the transfer process predated C’s dismissal by the Council on the 31 July 2013 and therefore he was employed at the time of the transfer.
The distinction between the requirement under TUPE to establish that a transfer occurred on particular date (Celtec v Astley) and the time of the transfer under section 218 of the ERA is best understood by considering that the former is concerned with fixing a date when all rights and liabilities under the employment contract are deemed to transfer, whereas the latter is concerned only with establishing continuity of service.