Employment Update: TUPE



Employee objection to transfer – the right to resign and claim unfair dismissal may not be preserved if employee transfers to transferee on temporary secondment.

In its recent judgment in Capita Health Solutions v BBC and McLean the EAT has given a reminder that, where the TUPE regulations apply, they apply automatically and sometimes regardless of what those involved have agreed between themselves. The case is also a reminder as to the limited nature of the extent to which an employee can prevent the automatic transfer of their employment by either (a) objecting to the transfer – in which case their employment terminates automatically on transfer ('old' TUPE Reg 5(4A); TUPE 2006 Reg 4(8)); or (b) resigning and claiming constructive dismissal in response to a repudiatory breach of contract by the employer (old TUPE Reg 5(5); TUPE 2006 new Reg 4(11)).

The employee worked in occupational health for the BBC. That part of the BBC HR department was to be outsourced to Capita on 1 April 2006.

She said that she objected to transferring, but accepted a suggestion by the BBC that she work out 6 weeks of her notice period and remain paid by the BBC but seconded to Capita until 12 May 2006 as this would help provide continuity of service in the department. 'You will remain a BBC employee until 12 May’ she was told. She agreed to be seconded for the six week period and resign with effect from 12 May.

She then wished to make a claim in the Tribunal against the BBC as her employer.

The Tribunal held that, despite what all the parties had thought and agreed at the time, her employment had in fact been transferred automatically under TUPE to Capita on 1 April and so any claim should be made against Capita.

The EAT agrees, referring to the House of Lords decision in Celtec v Astley. Contracts may transfer automatically even if there is a secondment agreement to the contrary.

As for her right to object, this would have terminated her contract automatically on 1 April except that she did in fact continue working in the same job. Her only objection was to being a long-term employee of Capita and that did not count as an 'objection' under TUPE which had to be acted on immediately, as did any right to claim constructive dismissal.

Points to note:

  • It could be argued that the McLean case was not a true secondment, as although her assignment was temporary, it was never intended that she should revert to working for the BBC. There was no post for her to return to, as the department she had worked in had been shut down.

  • However if, at the time of a TUPE transfer, a true temporary secondment of staff is under consideration, specialist legal advice will be needed as to the wording (and timing) of any documentation to prevent the automatic effect of TUPE from frustrating the intentions of all parties involved.

Employee dismissed pre-transfer at request of transferee was unfairly dismissed. She could also claim automatic unfair dismissal for asserting statutory rights relying on a claim made in her previous employment with the transferee.

In the rather unusual case of Perry's Motor Sales Ltd and Perry's Burnley Ltd v Lindley the EAT has agreed with an Employment Tribunal that there may be some cases where the TUPE regulations should be ‘fudged’ to protect employee rights.

Until March 2006, the claimant employee had been employed by, and on termination of employment, made an unfair dismissal claim against, Perry's Motor Sales.

She then, in October 2006, found work at Vantage Garages.

In March 2007 Perry's Motor Sales bought all the shares in the holding company of Vantage Garages (VG) and changed its name from VG to Perry's Burnley.

Perry's Motor Sales then instructed Perry's Burnley to dismiss the claimant because of her previous history with them. This was done. A month later Perry's Motor Sales acquired all the assets of Perry's Burnley. It was agreed that this transaction was a TUPE transfer.

The claimant brought an unfair dismissal claim. Although she did not have one year's service, she argued that her dismissal was automatically unfair under Section 104 of the Employment Rights Act because she had been dismissed for asserting a statutory right i.e.making the previous unfair dismissal claim against Perry's Motor Sales.

So, for her claim to succeed, she had to argue that Perry's Motor Sales was in fact to be treated as being her employer at the time of her dismissal.

She said that, because all claims against the transferor (Perry's Burnley) transferred under TUPE to the transferee of the business (Perry's Motor Sales), she could bring this claim against the transferee.

Perry's Motor Sales argued that the dismissal by Perry's Burnley could not be automatically unfair under Section 104 as Perry's Burnley had not been the subject of her previous complaint so there was no liability that could transfer under TUPE. TUPE was not meant to create new rights.

The Tribunal, and the EAT, disagree - TUPE did allow her to bring this claim against Perry's Motor Sales. This was not a case of an employee trying to invent a new right so as to be able to bring a claim. It was a case of an employer trying to use TUPE to ensure that the employee was left with no right to bring a claim and that was not the purpose of the TUPE regulations.

Point to note:

  • Although the facts of this case are unlikely to reoccur, it again demonstrates the far-ranging effects that the TUPE regulations can have in preserving individual employee rights where there is a change of employer on a TUPE transfer. Employee issues should always be addressed early and thoroughly.