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Fragments of Employees’ Contracts Can Transfer

Fragments of Employees’ Contracts Can Transfer

The TUPE Regulations provide protection to employees whose rights are transferred to another where a business or part of it is transferred from one owner to another.


In 2020 the European Court of Justice concluded that the rights and obligations arising from a contract of employment will be transferred to each of the transferees in proportion to the tasks performed by the worker (ISS Facility Services v Govaerts).


Following the ECJ’s approach, the Employment Appeal Tribunal (EAT) has applied it in the context of a service provision change under TUPE. (McTear Contracts Limited v Bennett and others and Mitie Property Services UK Limited v Bennett).


Amey Services Limited carried out work for a local authority’s social housing, employing two teams of employees. The teams worked fairly independently of each other, but across all the local authority area.

The local authority invited retenders for the social housing work, divided into two parts based on a geographical north and south split. McTear Contracts Limited won one part, and Mitie Property Services UK Limited taking the other.


A dispute arose as to how the Amey employees should be transferred. Amey concluded that one team should transfer to the north, and the other the south. Two employees had not been allocated to a particular team but Amey allocated one of these employees to each group.


The two transferee employers argued that some of Amey’s employees may not have transferred anywhere as they were not part of an organised grouping.


The EAT concluded: “There is no reason in principle why an employee may not, following such a transfer, hold two or more contracts of employment with different employers at the same time, provided that the work attributable to each contract is clearly separate from the work on the other(s) and is identifiable as such. The division, on geographical lines, of work previously carried out under a single contract into two new contracts is, in principle, a situation where there could properly be found to be different employers on different jobs.”


This type of situation is not unusual in service provision changes and it leads to the potential outcome that employees who were employed by one business may find themselves with several part-time roles allocate across multiple employers. This will create many practical problems.


It seems likely that an employee will undergo substantial contractual changes where their contract is split between two or more employers. This could give rise to a claim under TUPE unless the relevant employer could show that there was an economic, technical or organisational reason for the change(s).


If you’re involved in service provision changes, consider the following.

  • The company inviting the tender should consider the structure some time in advance, clarifying which employees are organised to which group, to try to avoid a complicated situation where employment contracts need to be split.
  • Transferors should organise employees in such a way that they are more likely to transfer to a specific transferee in the event this scenario arises, so that any transfer is more straightforward.
  • It is likely to be helpful to have a discussion with the other businesses involved at an early stage about how practically the parties are going to deal with the situation and try to agree which employees should transfer to which transferee and/or remain with the transferor.
  • If there are employees who do not clearly transfer to one transferee, perhaps because they work for more than one part of the business, a decision should be made on what should happen to them.
  • The parties should also try to reach agreement on how matters will be handled and who will carry the risk and liability if things go wrong.

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DISCLAIMER

Although every effort has been made to ensure the accuracy of the information contained in this blog, nothing herein should be construed as giving advice and no responsibility will be taken for inaccuracies or errors.

Copyright © 2021 all rights reserved. You may copy or distribute this blog as long as this copyright notice and full information about contacting the author are attached. The author is Kate Russell of Russell HR Consulting Ltd.

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