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Issue 5 (November 1996)

New ruling on public admin staff and TUPE
Same rights for temporary staff
EAT deducts half invalidity benefit
Injunction hits the buffers
Court condemns abuse of appeal
Cases head for the ECJ
EAT adds another twist
Protection when only part transfers
Protective awards "made worthless"

EAT adds another twist

Meade and Baxendale v British Fuels Limited [1996] IRLR 541

In Wilson and Others v St Helens Borough Council [1996] IRLR 320 the Employment Appeal Tribunal decided that if contractual terms were changed because of a transfer of an undertaking, the original contract of employment remained in force. This meant that any variations were ineffective and gave full effect to the protective aim of the TUPE Regulations confirmed in Regulation 5(1).

Only four months after Wilson comes the Meade case which, while not being a retreat from the Wilson judgment, has certainly knocked some of the shine off it.

In Wilson the EAT was not influenced by delay on the part of the employees in raising a complaint. The test of whether TUPE applied was simple: was there a direct link between the transfer of the undertaking and the variation in the employees' contracts?

In Meade, the EAT appears to have gone off on a different tack. The EAT was required to consider again the effect of new contractual terms imposed after a transfer.

The employees in Meade were dismissed and paid redundancy pay and money in lieu of notice. The employees were re-employed by a new undertaking on inferior terms and some months later signed a new statement of terms and conditions confirming the inferior terms. More than one year after the transfer of employment, proceedings were commenced in the Industrial Tribunal.

In a surprising decision the EAT concluded that the original dismissals were effective and the prevailing contractual terms were those currently existing and agreed between the parties. Effectively the EAT directed that the employees should have claimed unfair dismissal, relying upon Regulation 8 of the regulations. But where does that leave Regulation 5 which says that a relevant transfer shall not operate so as to terminate the contract of employment of an employee employed immediately before the transfer?

In Meade the EAT would not accept that the dismissals were ineffective because of Regulation 5. The EAT sought to raise a false distinction between the type of dismissal in Meade and that in Wilson.

In Wilson the employees were dismissed by reason of redundancy prior to the transfer and, although redundancy payments were not received, this was because of special rules applying to redeployment between local authorities. The absence of a payment does not undermine the fact that there were dismissals.

The Acquired Rights Directive and the TUPE Regulations are there to protect employees. A key principle is that a relevant transfer automatically transfers the contract of employment.

This key principle - the very heart of the purpose of the Directive and the Regulations - would be defeated if employees could be dismissed and then re-employed on inferior terms. A dismissal and re-engagement connected to the transfer should not override the protection of TUPE Regulation 5.

This leads one also to consider the impact of Regulation 12 which says that any provision of any agreement is void in so far as it attempts to exclude or limit the operation of Regulation 5 (and other provisions).

The decision in Meade to accept the validity of a dismissal based upon a mistaken view of the law, followed by an inferior contract, surely runs contrary to Regulation 12 and the purpose of the Regulations.

In Meade the EAT went on to consider the position if the contract did transfer to the new employer. The EAT accepted that the new contract would be invalid because of Regulation 12 and the Wilson decision.

On the facts of the case there could be no break in the link between the transfer and the new contract.

However, the EAT went on to say that this situation could not go on forever, and that the longer the time since the transfer the easier it would be to establish a lawful variation by conduct or agreement. In Wilson the EAT did not accept the time factor as confirming agreement by conduct, and it must be right that a variation which is of no legal effect does not simply become lawful over time.

The real point about time must relate to variations and agreements in relation to the new terms following the transfer. The longer the time after the transfer the more difficult it will be to establish the direct link between the transfer and any changes to the contract. Such matters are for Industrial Tribunals hearing the facts. But in doing so there must always be proper regard to the purpose of the Regulations.

Some aspects of the decision in Meade in relation to the dismissal are unsatisfactory, but if no dismissal occurs the Meade judgment is in agreement with Wilson.

Both Wilson and Meade started with employers claiming the TUPE Regulations did not apply. In most transfer situations the parties now accept the application of the Regulations so the dismissal point may be less important in the future.

Certainly it will be a very foolish transferee who arranged for employees to be dismissed before employing them on inferior contracts. If the dismissals were related to the transfer they would be automatically unfair.

The employer cannot rely on the "economic, technical or organisational reason" defence - known as ETO - where there is no change in the workforce.

Protection when only part transfers

Rubinstein v McGloughlin [1996] IRLR 557
Buchanan-Smith v Schleicher [1996] IRLR 547 (EAT)
Securicor Guarding Limited v Fraser Security Services [1996] IRLR 552 (EAT)

An employee can be protected by TUPE when only part of an undertaking is transferred. In Botzen [1986] 2 CMLR 50 the European Court of Justice said that the test was whether the employee was 'assigned' to the part transferred.

But it is not always easy to establish whether a particular employee is protected, although two recent cases give some clue. In Buchanan-Smith the employee worked for two parts of a business.

The Employment Appeal Tribunal held that where an employer has more than one undertaking, but only one is transferred, an employee may be assigned to the part transferred even if they also carry out activities in the part which is not transferred. The EAT said it is not necessary for an employee to work exclusively in the part transferred to fall within the protection of TUPE.

The EAT was influenced by the fact that Mrs Buchanan-Smith was taken on by the new employer to continue functions in the part transferred, which suggested that she was assigned to that part pre-transfer.

In the GMB's Securicor case guards who worked at a particular site were assigned to that site, where they carried out their main duties. The EAT found in their favour despite the guards also having additional duties they sometimes performed elsewhere and despite a mobility clause which the employer could have relied on to transfer them to other sites.

An interesting point arises. There is no requirement for an employee to work exclusively in the part transferred to be treated as employed in that part. The test does not appear to be purely based on the amount of time spent on duties in that part. It may be a qualitative test: the nature of the employee's link with the part transferred.

This leaves open the possibility that an employee may be assigned to more than one part of a business. An employee who works exclusively on two parts of a business and splits their time equally between them should properly be regarded as assigned to both and should be protected by TUPE if one or other part transfers.