Can employees on temporary lay-off transfer under TUPE?

Yes, held the Employment Appeal Tribunal in Inex Home Improvements Ltd v Hodgkins and others.

Background 

The effect of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) is, in short, that any employee “assigned” to an “organised grouping of employees” automatically transfers to a contractor on a change of service provider.  There have been a number of cases about what constitutes an “organised grouping” and how the concept of being “assigned to” relates to the concept of an “organised grouping”.  For example, in one recent case, BT Managed Services Ltd v Edwards and another, it was held that employees on long-term sick leave did not transfer when they only had an “administrative” connection with the service being transferred.  In this case, the court considers the position of employees who have been laid off because of a temporary down turn in work.

Facts

Inex employed the Claimants to carry out painting and decorating work, which was subcontracted to Inex by Thomas Vale.

The Claimants were employed by Inex on the terms of the Construction Industry Joint Council (“CIJC”) Working Rule Agreement for the construction industry – a national agreement approved by the CIJC.  The agreement provided that employees might be subject to temporary lay-off “where work is temporarily stopped or is not provided by the employer”.  In case of such a lay-off, the employees would receive remuneration for a limited period and would then be required to register as available for work at the employee’s local JobCentre.

Thomas Vale released the work to Inex in tranches, often with a temporary gap in between. In November and December 2012, Inex completed its latest work order for Thomas Vale. They thought Thomas Vale would send through their next work order in January 2013. In the meantime the Claimants were laid off in accordance with the CIJC agreement.

When Thomas Vale released the next tranche of work, it went to a competitor. The work to be performed was, for the most part, the same as the work completed by Inex for Thomas Vale on the previous work tranche.

At a preliminary hearing of the Employment Tribunal, it was held that there was a service provision change but no organised grouping of employees because the employees were not working on the contract immediately before the service provision change.

Decision

On appeal, the Employment Appeal Tribunal (“EAT”) overturned this decision and said that a temporary cessation of work did not necessarily preclude the possibility of there being an organised grouping of employees.  The EAT said that the cessation of work had not “dissolved” the organised grouping and accepted the argument that the fact that the employees were all laid off in anticipation of a new tranche of work suggested there continued to be “an organised grouping”.  As the Tribunal had not considered whether, apart from the temporary cessation of work, there was an organised grouping of employees and, if so, who was assigned to it, the EAT remitted the case back to the Tribunal to determine these facts.

Comment

This case illustrates the importance of a careful analysis of the TUPE regulations on the basis of the facts of a particular case and the difficulties that can arise if the analysis is incorrect.  One thing that is clear is that there is a distinction between employees who are, effectively, permanently absent due to illness, who will not generally transfer (as in the BT Managed Services case) and employees who are only temporarily absent because of a reduction in work, who may transfer.  

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