Employee on long-term sick leave was not “assigned” for TUPE purposes

The Employment Appeal Tribunal (“EAT”) has decided that an employee who was on long-term sick leave was not “assigned” to an organised grouping of employees and so did not transfer under TUPE when there was a change of service provider.

TUPE potentially applies where activities are moved from one service provider to another. A TUPE transfer will be triggered if, immediately before the transfer, there is an organised grouping of employees whose principal purpose is to carry out those activities on behalf of the client. The case of BT Managed Services Ltd v Edwards looked at the issue of an employee who was on long-term sick leave at the time of the transfer to a new service provider.

In 2009, Everything Everywhere (“EE”) decided to outsource its domestic network outsource (“DNO”) division. Following a tender process, BT Managed Services Ltd (“BTMS”) was appointed to provide DNO services to EE as a third-party service provider. The services were outsourced to BTMS in July 2009. Mr Edwards was a member of the team which was dedicated to those services and his employment transferred to BTMS by way of TUPE transfer.

Following a further tender process in 2012, Ericsson Ltd (“Ericsson”) was appointed to take over the services provided by BTMS. Both BTMS and Ericsson agreed that there would be a service provision change as defined by TUPE and that the BTMS team working on the EE contract represented an organised grouping of employees which would transfer to Ericsson.

At the time of the transfer (in June 2013), Mr Edwards was absent from work on long-term sick leave. He had not worked since January 2008, and there was also no prospect of him ever returning to work - BTMS had effectively kept him on their personnel records so that he could continue to receive income protection payments under a permanent health insurance (“PHI”) scheme. It was clear, however, that if Mr Edwards had been able to return to work, it would have been within the team that was transferring to Ericsson.

BTMS thought that Mr Edwards should be included in the transfer, but Ericsson refused to accept this. An Employment Tribunal was asked to determine whether Mr Edwards should transfer to Ericsson along with the rest of the team. The Tribunal found that Mr Edwards was not assigned to the organised grouping of employees because he did not contribute to the economic activity of the group, meaning that he should remain employed by BTMS notwithstanding the fact that his team had transferred.

This decision was appealed. The EAT also found that an employee who has no involvement in the economic activity of the relevant organised grouping, and who can never do so in the future, cannot be regarded as assigned to that grouping - “if the grouping is to be defined by reference to performance of a particular economic activity, the absence of any participation in that activity will almost, by definition, exclude persons in the position of [Mr Edwards]”. Something more than an administrative or historical link between the employee and the grouping is needed.

The EAT also rejected the idea that the question of whether an absent employee is assigned to a particular grouping can be answered in all cases by analysing to which grouping the employee would return if he or she were able to do so. While this question is helpful in circumstances where an employee is able to return to work at the time of the service provision change, or is likely to be able to do so in the foreseeable future, it has no relevance in circumstances where an employee is permanently unable to return.

While the facts in this case were unusual (with the EAT judge commenting that “this case is quite unlike any other that I have seen related to a service provision change”), the decision confirms that the question of whether an employee is assigned to an organised grouping must be considered carefully when preparing for a TUPE transfer.

Not every long-term absence will result in an employee not being assigned to a grouping for TUPE purposes. The EAT commented that temporary absences, such as long-term sick leave or maternity leave, would not be regarded in the same way. It is only where the absence is expected to be permanent that TUPE will not apply. Assignment to an organised grouping is a question of fact and employers should not simply assume or accept that an employee is assigned because he or she appears on a team sheet. This case is a valuable reminder that further investigation should always be carried out where employees are absent from the workplace at the time of a transfer.

BT Managed Services Ltd v Edwards and another UKEAT/0241/14 – click here for judgment