Where a company outsources, insources or changes its service provider it needs to consider if the affected employees will be protected under the TUPE Regulations. If TUPE does apply and an employee is assigned to the contract that is affected, their employment will automatically transfer to the incoming service provider. The issue of whether an employee is assigned to the organised grouping of employees who carry out the service is accordingly crucial as to whether they automatically transfer.
In a recent case the Employment Appeal Tribunal (EAT) was asked to decide whether an employee on long-term sick leave transferred under TUPE or remained with his original employer.
Mr Edwards was employed as an Engineer for BTMS. He was a member of a team dedicated to providing maintenance services for mobile phone networks. Due to various illnesses, Mr Edwards did not attend work after January 2008 but remained “on the books” of BTMS so that he could receive benefits under a permanent health insurance (PHI) scheme. When his PHI benefits expired, Mr Edwards continued to receive payments from BTMS.
In December 2012 the maintenance contract was transferred to Ericsson. BTMS argued that Mr Edwards was assigned to that contract and had transferred under TUPE; Ericsson argued that Mr Edwards was not assigned, as required by TUPE, due to his long-term sickness and he remained employed by BTMS.
The EAT noted that Mr Edwards was permanently incapacitated and there was no prospect of him ever returning to work. It held that for a person to be assigned to an organised grouping of employees for the purposes of automatic transfer under TUPE, a mere administrative link did not suffice. What was required was some level of participation in, or contribution to, the activities of that group. As Mr Edwards played no part in the group’s work he could not be assigned to it and did not transfer to Ericsson.
The EAT indicated that where an employee is on long-term sick leave at the time of a TUPE transfer but may be able to return to work in the foreseeable future, the employee would be assigned to the organised grouping that he could have been required to work for, had he been able to.
The case shows that, given similar circumstances, whether an employee on sick leave transfers under TUPE is likely to depend on whether a return to work is foreseeable. Employers with an employee on long-term sick leave should make sure they keep in regular contact and up-to-date on the medical prognosis. In addition to creating confusion in a TUPE scenario, allowing the situation to drift could lead to claims for disability discrimination or failure to make reasonable adjustments.