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TUPE and temporary lay-offs
In Inex Home Improvements Limited v Hodgkins and others, the EAT held that the temporary cessation of work does not prevent the existence of an organised grouping of resources having, as its principle purpose, the carrying out of activities on behalf of the client immediately prior to a transfer for the purposes of a service provision change under TUPE.
The Employment Judge had concluded that, because a number of staff had been temporarily laid off prior to the change in service provider, there was no service provision change because they were not an organised grouping of employees which was carrying out the activities immediately prior to the transfer.
The employees concerned carried out a series of works orders which were sub-contracted from an organisation called TV Limited. The work undertaken on the latest order was completed during December 2012 and it was anticipated that the next order would not commence until January 2013 – hence the employees were all temporarily laid off for a few weeks under the terms of their contract. Unfortunately the Respondent and TV Limited fell out and future works orders were given to another company. The employees concerned all brought claims against all 3 parties and the Tribunal held a Preliminary Hearing to determine whether there had been a TUPE transfer by way of a service provision change. The Employment Judge considered that it was crucial that they had not been working immediately prior to the transfer because there was no work for them to do; hence there were no activities to transfer and so he concluded that there was no “organised grouping of employees” to transfer. The Respondent appealed.
The EAT held that there is nothing in Regulation 3 of TUPE to indicate that the employees must be actually engaged in the activities concerned immediately before the transfer. It looked at the purpose of the TUPE regulations, which is the protection of employment, and considered that this purpose would be frustrated if the effect of a temporary cessation of work meant that there would not be a service provision change to transfer them to the new service provider and so protect their employment. It held that in situations like this the Tribunal should consider whether the organised grouping continued to exist in circumstances where it was not actively working at the time of the transfer. It should question the purpose, nature and length of the work temporarily ceased and the overall circumstances involved. The EAT was unable to determine the answer to these questions on the basis of the Tribunal’s findings of fact and so it remitted the question back to the Tribunal.
As and when this case is reported from the Tribunal the Update will advise accordingly.
This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.
For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.
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