TUPE continues to remain an extremely complicated area of law creating continuous headaches for employers and business deals.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) themselves together with atypical working arrangements can create a confusing picture.
If an employer gets it wrong a transferee may end up inheriting employees and liabilities that were never expected and which can understandably have serious consequences and a detrimental effect on commercial business.
A difficult issue remains determining the group of transferring employees in a TUPE transfer.
Here is some helpful guidance for employers assessing who is in the pool for transfer:
- Only employees “assigned” to the undertaking other than on a temporary basis actually transfer.
- Employee liability information has to be provided by the transferor to the transferee detailing all employees assigned to the undertaking. This should be helpful to a transferee but in practice it is not always and a transferee should still undertake cautious due diligence.
- Remember “assigned employees” will include those on fixed term contracts but not agency workers.
- Whether or not seconded employees transfer can be a problem area and each case depends on its own facts. It will depend on the particular circumstances including the period of the secondment.
- There is no general rule when it comes to deciding whether seconded employees transfer as it will depend on the circumstances including the length of the secondment.
- Consider and evaluate the percentage of employees’ working time spent in the part of the business being transferred.
- It is particularly important in outsourcing or insourcing arrangements.
- If an employee spends at least 50% of his/her working time in the transferring business, this will be a strong indicator that an employee is likely to be part of the transferring group.
- This is a very subjective area of focus and case law varies. Each case depends on its own facts. Determination is dependant on the job role and assessing percentage time is contingent on this and may involve reviewing rota arrangements, timesheets and team and department structures.
- Don’t be too hasty to disregard other factors when assessing who transfers.
- While the percentage test is regarded by many as a useful rule of thumb, other elements still need to be evaluated.
- These should include considering the amount of value given by the employee to different parts of the business together with internal charging mechanisms.
- It is imperative to also consider the employee’s duties in the written contracts of employment or job descriptions. This in itself may influence the analysis however be mindful that these duties may differ in practice.
- Don’t forget about those employees who are away from work at the time of the transfer.
- A common mistake that we see in practice is employees who are overlooked as part of the transferring group because they are away from the business at that time.
- This extends to those employees on short-term absences, suspension, holiday and maternity leave who all are likely to be included in the transferring group.
- The situation is far from clear when dealing with those on sick leave and in particular those on permanent health insurance.
- The EAT case of BT Managed Services Limited v Edwards and Another held that an employee not working because of health problems but retained as an employee to receive permanent health insurance payments did not The Court of Appeal hearing this appeal takes place later on in 2016.
Farleys Solicitors LLP are experts in dealing with TUPE and related matters including business sales and acquisitions; service provision changes; employee liability information; who transfers; due diligence, warranties, indemnities, commercial contracts and the duty to inform and consult.
If you require any TUPE advice or assistance or if your business requires representation to defend an Employment Tribunal TUPE claim, please contact our HR and Employment Law team 0845 287 0939 or by email.
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