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TUPE: When is an employee to be regarded as assigned to a service?

13 Jan 2015

One question that frequently arises in the context of a service provision changeover is as to which employees should transfer with the service.

The TUPE Regulations state that any person who is “assigned to the organised grouping of resources or employees” should transfer to the transferee.

In deciding who is assigned to a service, it is important to look beyond the question of how much time an employee spends working in the service that is to transfer. It is necessary to consider whether the transferring service forms the organisational framework for the employment relationship. That in turn means it is necessary to consider a variety of factors, such as the operational and management structures and, importantly, the contractual arrangements applying to the employment, to establish if the transferring service does form the organisational framework for the employment relationship.

This is vividly demonstrated by the recent case of London Borough of Hillingdon v Gormanley. The three claimants were all employees of a family business, RG Limited, that carried out maintenance work on behalf of LB Hillingdon. The Council terminated the arrangement and the claimants contended that they should transfer to the Council by virtue of TUPE.

At the time of the transfer RG Limited had no customers other than the Council. The three claimants therefore worked almost exclusively for the Council. The Employment Tribunal concluded that the claimants were assigned to the service and should transfer to the Council under TUPE.

However, the Employment Appeal Tribunal disagreed. They pointed to the need to consider whether the transferring service formed the organisational framework for the employment and, in particular, the contractual arrangements regarding the employment.

The Employment Tribunal had given no consideration as to how RG Limited was organised and whether the three claimants had been deliberately assigned to the organised grouping of staff who carried out the Council’s work. The Employment Tribunal had also not looked at how the claimants’ work had been organised when RG Limited had had more than one client.

Importantly the Employment Appeal Tribunal stated that it was necessary to consider the terms of the employment contracts of the claimants and the duties that the employees could be called upon to perform under those contracts as well as those that they actually performed.

Conclusion

In deciding whether an employee is assigned to a service it is essential to consider whether:

  • there is a (deliberately) organised grouping of employees;
  • the employees in question have been (deliberately) assigned to that organised grouping by looking not only at how much time they spend working in the service but also by considering the operational and management structures and the terms of their contracts of employment.

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