Employment Law Watch : Employment & Labor Lawyer & Attorney : Reed Smith Law Firm

This blog was written by Ed Hunter and Ruth Bonino.

In Seawell Ltd v Ceva Freight (UK) Ltd and another UKEATS/0034/11, the Employment Appeal Tribunal (“EAT”) held that an employee who spent 100% of his time working for a single client was not an “organised grouping of employees” for the purposes of regulation 3(3)(a)(i) of the Transfer of Undertakings (Protection of Employees) Regulations 2006 (“TUPE”). Therefore when the client brought in-house work previously carried out by the Claimant’s employer, there was no service provision change.

• Print
• Comments
• Trackbacks
• Share Link

The Employment Appeal Tribunal (EAT) has held in Johnson Controls v Campbell and Anor that there was no service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) where a centralised taxi booking service was brought back in-house by the client. Although the client was still undertaking the activity of booking taxis, there was no “centralised service” in place following the transfer. As a result, there was held to be an essentially different activity in place and TUPE did not apply. 

This case follows another recent decision in Nottinghamshire Healthcare NHS Trust v Hamshaw and others which held that where care services transferred from the Trust to new providers there was not a service provision change because the services were not fundamentally or essentially the same, owing to the methods used to provide them.

• Print
• Comments
• Trackbacks
• Share Link

This post was written by Thomas Ince and Ed Hunter.

In Abellio London Ltd (Formerly Travel London Ltd) v Musse and others UKEAT 0283/11 and 0631/11, the Employment Appeal Tribunal (“EAT”) ruled that a relocation of six miles within central London which resulted in the employees having to travel an extra one to two hours to work following a service provision change amounted to a substantial change to employees’ working conditions to their material detriment entitling them to resign under regulation 4(9) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). As regulation 4(9) of TUPE deems an employee’s resignation to be a “dismissal” where it is in response to such a change, the employees concerned were entitled to claim automatic unfair dismissal and liability for their dismissals passed to the transferee. Since it would not have mattered had the contracts of employment contained valid mobility clauses, the decision is not good news for transferees in TUPE transfer situations. The decision sets a very low hurdle for employees to overcome in order to be able to resign in reliance on regulation 4(9) of TUPE. Transferees will need to consider the extent of this risk when negotiating transfer provisions with the transferor, and, if necessary, seek indemnity protection.

• Print
• Comments
• Trackbacks
• Share Link

This post was written by Ruth Bonino and Ed Hunter.

In the case of Eddie Stobart v Moreman & Others the Employment Appeal Tribunal (EAT) has provided welcome guidance on the meaning of “organised grouping of employees” for the purposes of a “service provision change” under regulation 3(3)(a)(i) of the Transfer of Undertakings (Protection of Employees) Regulations 2006 (“TUPE”). A group of employees who happened to work mainly for a particular client because they worked the day shift were found not to comprise an “organised grouping of employees” for “service provision change” purposes under TUPE. The EAT held that, when assessing whether employees will transfer to a new contractor following a service provision change, it is necessary to identify the existence of an “organised grouping of employees” the principal purpose of which is to carry out the relevant activities on behalf of the client, before analysing whether employees are assigned to that group. There will only be an “organised grouping” where the employees in question are “organised” for the purposes of the provision of services to the relevant client. 

• Print
• Comments
• Trackbacks
• Share Link

This post was written by Thomas Ince and Ruth Bonino.

A service provision change does not occur under TUPE where there is a change in the client on whose behalf the services are being carried out. This is the conclusion of the Employment Appeal Tribunal (EAT) in the case of Hunter v McCarrick, the first EAT decision to rule on this issue. The decision does not come as a great surprise but it provides welcome clarification on a point which occasionally arises in outsourcing situations. 

What happened in this case

The Claimant (Mr McCarrick) brought an unfair dismissal claim against the Respondent (Mr Hunter) when he was dismissed on 8 March 2010 after having allegedly been employed by Mr Hunter for 7 months since August 2009. Since 2005, Mr McCarrick’s job was to manage a property portfolio owned by Waterbridge Group (WG)(of which Mr Hunter was Managing Director). In order to succeed in his claim against Mr Hunter, Mr McCarrick needed to show that he had at least one year’s continuous employment and that his employment had transferred to Mr Hunter under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) from his previous employers. 

• Print
• Comments
• Trackbacks
• Share Link

This post was written by Ruth Bonino and Danny Bloom. 

In Enterprise Managed Services Ltd v Dance and Others, a case concerning a TUPE transfer, the Employment Appeal Tribunal (EAT) held that a decision to ‘harmonise’ the incoming employees’ terms with existing employees could have been legitimately made to improve productivity, so that subsequent dismissals based upon the ‘harmonised’ terms may not have been for a reason connected with a transfer, and would therefore not be automatically unfair under TUPE. Although this case should be viewed with caution, it gives transferees some hope that where the reason for post-transfer harmonisation of terms and conditions takes place for a business decision such as to improve productivity, rather than for administrative tidiness, such changes may be lawful.

Regulation 7(1) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) provides that any dismissal of an employee either before or after a relevant transfer will be automatically unfair where the sole or principal reason for the dismissal is either; (i) the transfer itself; or (ii) a reason connected with the transfer, that is not an economic, technical or organisational (‘ETO’) reason. Whether a dismissal is connected with the transfer is a question of fact and will be for the employer to prove that there is no causal link between the two events.

• Print
• Comments
• Trackbacks
• Share Link

Employers could face significant unanticipated penalties under TUPE and collective redundancy legislation as a result of the Agency Workers Regulations 2010 (AWR) which came into force on 1 October 2011.

The AWR adds to the list of mandatory information to be provided to employee representatives under TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006) and collective redundancy legislation (s.188 of TULR(C)A 1992). From 1 October 2011, the AWR requires that employee representatives also be given information about the use of agency workers by the transferor including:

• the number of agency workers working temporarily for and under the supervision and direction of the employer;
• the parts of the employer's undertaking in which those agency workers are working;
• the type of work those agency workers are carrying out.

The requirement is extensive since information is required in respect of all agency workers working "temporarily for and under the supervision and direction" of the employer. Under TUPE, the employer is the employer of any affected employees which is widely defined to include not just transferring employees but also those affected by the transfer, or those who may be affected by measures taken in connection with it. Hence, if only part of a business is transferred, it is not only necessary to provide information about agency workers working in the relevant part but also those working in all other parts of the employer’s business, provided they are under the supervision of the transferor. Agency workers working temporarily in the business or part that is transferred will not, however, transfer along with the employees of the transferor who are wholly or mainly assigned to the business. Nor does TUPE give them the right to participate in the election of the employee representatives.

However, a failure to comply with this new requirement could result in the employer receiving a punitive award of compensation of up to 13 weeks' actual pay per affected employee under TUPE and 90 days' actual pay per affected employee under the collective redundancy legislation.

The AWR makes no allowance for employers who had already complied with their TUPE/S.188 obligations prior to the additional requirements of the AWR coming into force on 1 October 2011. It follows that an employer risks incurring such penalties unless they comply with these extended requirements to provide information prior to the TUPE transfer or the collective redundancies taking effect. Further, to comply with the AWR it would be prudent for an employer to update the information provided to employee representatives if the number of agency workers fluctuates prior to the transfer date (in the case of TUPE transfers), or the date the redundancy dismissal take effect (for collective redundancy dismissals).

For further information, contact Ruth Bonino or any member of the Reed Smith employment team with whom you normally deal.

• Print
• Comments
• Trackbacks
• Share Link

It is common in an outsourcing situation for the incoming service provider to undertake the service at a different location to the client or the existing service provider. In this situation, case law now exposes the incoming service provider to a risk of automatically unfair dismissals.

The change in location will amount to a redundancy situation unless the employer is able to invoke clear and unambiguous mobility clauses. However, according to an Employment Tribunal decision this year, the change in workplace location of itself will not be an economic, technical or organisational reason entailing a change in the workforce (an “ETO reason”). If there is no ETO reason, any dismissal due to an employee refusing to move to the new workplace will be automatically unfair as such a dismissal is connected to the transfer.

This seems to lead to the absurd conclusion that in any outsourcing situation where the new service provider undertakes the service at a new location and attempts to move the workforce from the existing location to the new location, there will be a risk of employees claiming automatically unfair dismissal.

What can an incoming service provider do about this? For information on strategies to minimise the risk of automatic unfair dismissal claims in this situation, please contact Thomas Ince at Reed Smith on 020 3116 2998.

• Print
• Comments
• Trackbacks
• Share Link

The past 18 months has seen a significant number of TUPE related cases. The following is a summary of some of the key decisions.

The meaning of the term `activities’ (Service Provision Change)

A TUPE transfer will occur when there is a ‘service provision change’. In a first-generation outsourcing, where a client outsources an activity to a contractor for the first time, the conditions to be met in order for there to be a service provision change include a requirement that ‘activities’ cease to be carried on by the client for itself and are instead carried on by the contractor on the client’s behalf. As TUPE does not include a definition of ‘activities’, it has been for the Courts and Tribunals to consider how this issue should be approached.

In Metropolitan Resources Ltd v Churchill Dulwich Ltd, the Employment Appeal Tribunal (EAT) decided the activities carried out by the transferee must be ‘fundamentally or essentially the same’ as those that were carried out by the transferor in order for a TUPE transfer to occur. The EAT also indicated in its decision that in assessing whether the activities are similar, a more detailed rather than an ‘overview’ approach should be adopted (i.e. consideration should be given to the exact nature of the activities performed by each of the transferee and the transferor and the exact manner in which those activities are performed).

Further support for the adoption of a detailed approach can be found in the EAT’s decision in OCS Group Ltd v Jones and another. Here, the EAT decided that a contractor which provided catering services to a client by preparing hot and cold meals in on-site kitchens performed activities that were different to those of a contractor which only sold pre-prepared sandwiches and salads. The EAT rejected the ‘overview’ approach argument that the activities carried out by each of the transferee and the transferor in this case should be considered to be the provision of food or catering services and should therefore be considered to be the same.

• Print
• Comments
• Trackbacks
• Share Link

In the case of Parkwood Leisure Ltd v Alemo-Herron and others, the Court of Appeal has examined the effect of regulations 5 and 6 of Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE 1981) in relation to collective agreements. The Court has held that in circumstances where a contractual right to a pay increase is dependent on collectively agreed terms, the transferee of an undertaking transferred will not be bound by terms collectively agreed by third parties after the transfer. In making this decision, the Court declined to follow established UK case law and preferred instead to follow a 2006 decision of the European Court of Justice (ECJ).

Although the case involved an issue relating to the 1981 Regulations, the law as stated in it will apply to the current Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006).

• Print
• Comments
• Trackbacks
• Share Link

In an important decision concerning TUPE transfers, the Employment Appeal Tribunal (EAT) has given guidance in the case of Tapere v South London & Maudsley NHS Trust on, first, the interpretation of mobility clauses in the context of a TUPE transfer and, secondly, on Reg 4(9) TUPE, which allows a transferred employee to treat themselves as dismissed if a relevant transfer involves a substantial change in working conditions which is to the employee’s material detriment. The EAT held that "detriment" should be considered using the subjective approach which applies in discrimination law. The case will be particularly important to purchasers of businesses and transferees in outsourcing situations where transferred employees are required to move location after the transfer takes place.

• Print
• Comments
• Trackbacks
• Share Link

In Oakland v Wellswood (Yorkshire) Ltd, the Employment Appeals Tribunal (EAT) decided that an employee of a business in administration was unable to have the protection afforded to employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) when the business in which he was employed was transferred and continued as a going concern with the transferee. The decision is important news for administrators and purchasers of businesses in administration because it contradicts current Government guidance on this issue.

• Print
• Comments
• Trackbacks
• Share Link

The case of Sodexo Ltd v (1) Gutridge and others (2) North Tees and Hartlepool NHS Foundation Trust considers a transferee’s liability for equal pay claims made by transferred employees following a TUPE transfer. In this case, the Employment Appeal Tribunal (EAT) holds that following a TUPE transfer, claims for equal pay relating to discrimination in pay by the transferor must be made (against the transferee) within 6 months of the transfer. Claims for equal pay arising as a result of discrimination in pay by the transferee can, however, be brought within 6 months from the end of employment with the transferee. Significantly for transferees, where the transferring employees are in receipt of unequal pay at the time of the transfer, as compared to chosen pre-transfer comparators, they will remain entitled to the same pay as the comparator, even if the comparator is not transferred to the transferee.

In practice this means that after a TUPE transfer, transferees are at a continuing risk of significant claims of up to 6 years arrears of pay, even though they are ignorant of the fact that they are paying their employees less than they should because the persons with whom the employees are comparing their pay (the comparators) are not employed by the transferee. 

• Print
• Comments
• Trackbacks
• Share Link

In Kimberley Group Housing Ltd v Hambley and ors and Angel Services (UK) Ltd v Hambley and ors, the Employment Appeal Tribunal (EAT) has overturned an Employment Tribunal’s finding that where a service provision contract is performed by one company and is taken over by two companies, the liability for transferred employees should be apportioned between the two companies.

This is an important case, as it is the first guidance to be given by the EAT on the effect of service provision changes under TUPE.

• Print
• Comments
• Trackbacks
• Share Link