The application of The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) may not always be straightforward when subcontractors are involved. Although TUPE recognises that subcontractors may be engaged in outsourcing arrangements, difficulties can arise.
Difficulties can arise where there is a change in contractor or subcontractor, as well determining who the "client" actually is, which will ultimately depend on the facts in each case. A recent case in the Employment Appeals Tribunal (EAT), Mustafa and another v Trek Highways Services Ltd, looked at another potential difficulty in this area where there was a temporary cessation of work following a dispute with sub-contractors.
Amey were appointed by Tfl to carry out road maintenance services in London. Amey subcontracted the traffic management element of its services to Trek in 2011 and the Claimants transferred from Amey to Trek. In 2012, TfL carried out a re-tendering exercise and new service providers were appointed to commence work on 1 April 2013. The new contractors accepted that the Trek employees would transfer to them under TUPE. However, about a month before the contract was due to change hands, there was a dispute between Amey and Trek. As a result, Trek suspended its operations and sent its staff home. On 20 March 2013, the subcontract was terminated by consent.
Both Amey and the new contractor refused to take Trek's employees. The new contractor argued that TUPE did not apply as the contract was not terminated at TfL's request but because of a commercial dispute.
We considered a number of these issues last year in our In Focus article, which looked at the impact of recent TUPE decisions.
The EAT overturned the Tribunal's decision that there had been no business transfer or service provision change between any of the parties and remitted the case back to the Employment Tribunal.
The EAT found that there was nothing to suggest that the service provided by the new contractors from 1 April would be different in any material way than the services provided by Trek. TfL had hired a new contractor to undertake the same provision of services and the activities to be carried out were for more than a single specific event or task of short duration. As such, the function of providing traffic management services was to continue after 1 April – the fact that there was a temporary cessation of work did not mean that TUPE could not apply. Any temporary cessation must be considered alongside all other factors in assessing whether there was an organised grouping of employees at the relevant time.
Take away points
Employers should be alert to the fact that there is nothing in TUPE 2006 itself, or in any of the relevant authorities, requiring the organised grouping of employees to actually be engaged in the activity immediately before the service provision change. It is a question of fact whether an organised grouping of employees retains its identity even though work has come to a halt.
The key aspect to take away from this case is that a temporary cessation is just another factor to consider when deciding whether a transfer has occurred, as well as considering the length of the cessation, the purpose behind it and the wider factual matrix. The fact that there is a cessation does not result in a clear cut answer by itself.
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