Was there a relevant transfer – reg. 3(1)(a): business transfer, two limb-test:
- is there an economic entity?
- has the entity transferred?
- or Reg 3(1)(b) and reg 3(3) service provision changes
Effect of relevant transfer (reg 4) dismissal effective, liability may transfer (reg 4(3) and reg 7(1))
Check eligibility
- one or two years' continuous employment; has there been a dismissal?
- was the dismissal due to the transfer (if not, apply UD rules vs transferor)?
- was there an ETO reason for workforce change?
- was dismissal handled fairly under s98(4)?

WHEN DO THE REGULATIONS APPLY?

Regulations are to protect employees where there has been a transfer
They should transfer to the new owner of the undertaking
They should keep the original terms and conditions of their contracts

For this legislation to apply, the identity of the employer must change, such as;

There must be a transfer from one person to another; there must be a change in the employer, not merely in the ownership
A merger
A sale of assets of a going concern
Changes of franchise
Sale of a sole traders business
Sale of a partnership
Regulations can apply where the ownership of a company is transferred to a company operating outside the UK

NOT:

If a person buys the controlling shares of a company, this is not a transfer of the business since the company itself has a legal identity and IT is the entity that employs the staff.
Neither does it apply to a transfer of assets only-e.g. upon insolvency, the receiver breaks up the business and sells off its assets to various buyers.
No transfer of liability of any person to be prosecuted for, convicted of and sentenced for any criminal offence

BUSINESS TRANSFERS

Is this a business transfer?

‘We must consider whether there is a relevant transfer. Under Reg 3(1)(a) a business transfer is a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the UK to another person where there is a transfer of an economic entity which retains its identity. [TRANSFEROR] is transferring their business that is situated in the UK to [TRANSFEREE] therefore this a business transfer under reg 3(1)(a)’.

Whole or part of a business
Economic entity
Retains its identity

Part 1 test: Is there an economic entity comprising an organised group of resources?

Under Reg 3(2) an economic entity is an “organised grouping of resources which has the objective of pursuing an economic activity”. On the facts, [TRANSFEROR] has an organised grouping of resources including…

Dedicated workforce
Management structure
How autonomous the entity from the rest of the business
Equipment separate from the business
Premises separate from the business

(Cheesman V R Brewer Contracts [2001]) – lack of transfer of assets does not preclude a transfer

Cheesman V R Brewer Contracts factors:

Needs to be a stable and discrete entity whose activity is not limited to performing one specific work contract.
Entity needs to be sufficiently structured and autonomous
Can be essentially based on manpower
Identity emerges from factors such as workforce, management staff, and way the work is organised and operating methods

Transfer can apply to part of an undertaking (Fairhurst Ward Abbotts Limited v Bates Building Limited (2004))

integration of transferor’s business into transferee’s business and the employees being integrated into [department ] still constitute a relevant transfer (Klarenberg v Ferrotron Technologies GmbH)

PARTT 2 Test: Does that entity retain its identity after the transfer?

Consider Reg 3(1)(a) specifically ‘which retains its identity’

Apply Spijkers Gebroeder Benedik Abbatoir CV [1986]
Necessary to look at all circumstances of the transaction including:

All factors need to be taken into account:

Type of business in question
Whether there has been a transfer of tangible assets (Vans, remaining stock)
Whether there has been a transfer of intangible assets (e.g. goodwill, databases)
Whether staff taken over by new owner (how many – link to ECM v Cox)
Whether customers transferred over to new owner (transferred customer database)
Similarity between old and new operation (same merely incorporated into it)
Duration of interruption to activity over the period of the transfer (straightforward takeover)

If relevant consider motive (ECM v Cox) tribunal entitled to look at reason why employees were not transferred – could be majority of staff in terms of skill set (ie all the chefs)
1. Only need to consider if the majority of the employees have not transferred over (less than half)
  1. Motive – was it to avoid TUPE? On the facts… no, the reason the majority are not going over is because PFL have enough workers not because they want to avoid TUPE. You would need to good evidence to show that they were trying to avoid it.

Conclude – there is/is not a relevant TUPE transfeR

SERVICE PROVISION TRANSFERS

Reg. 3(1)(b)

“ a service provision change, that is a situation in which-

(i) activities cease to be carried out by a person (‘a client’) on his own behalf and are carried out instead by another person on the client’s behalf (‘a contractor’) (contracting out i.e. client to contractor); OR

(ii) activities cease to be carried out by a contractor on a client’s behalf…and are carried out by another person (‘a subsequent contractor’) (contractor to contractor); OR

(iii) activities cease to be carried out by a contractor or subsequent contractor on a client’s behalf…and are carried out by the client on his own behalf”.(Contracting in – contractor to client)

Providing the conditions in paragraph (3) are satisfied.

Reg.3(3)(a)…immediately before the service provision change-

(i) There is an organised grouping of employees situated in GB which has as its principal purpose the carrying out of activities concerned on behalf of the client;

(ii) The client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; AND

(b) The activities do not consist wholly or mainly of the supply of goods for the client’s use.”

Is there an economic entity comprising an organised group of resources?

Reg 3(2) – “economic entity is an organised grouping of resources which has the objective of pursuing an economic activity…”

‘An organised grouping of resources’
1. Dedicated workforce
2. Management structure
3. How autonomous the entity from the rest of the business
4. Equipment separate from the business
5. Premises separate from the business

Focus on whether the contracting out is for the same thing

Compare services provided by out-going contractor and transferee

Reg 2 - It will not be a service provision change if:

Contract is wholly or mainly for the supply of goods for the client’s use
Activities carried out in connection with a single specific event or a task of short term duration
Client is not the same client

TIME OF TRANSFER

Although in practice the time of the transfer may extend over a long period of time rather than being an event staged to take place at any one particular moment in time, the legal requirement for certainty means that an identifiable date is desirable.

The ECJ held in Celtec v Astley [2005] that the use of the word ‘date’ (singular) in the Acquired Rights Directive combined with the need for legal certainty meant that the parties had to be able to point to a specific date on which it could be said that the transfer was effected.
They reiterated that the Directive was intended to safeguard the rights and working conditions of employees at the time of transfer.
And concluded that what was significant was to identify, “the date on which responsibility as employer for carrying on the business…in question moves from the transferor to the transferee.”
The House of Lords’ judgment in the same case expanded this to;

If the transfer is a sale of a business and there is a gap between the exchange of contracts and completion, it will be the date of completion, which is the date of transfer for the purposes of reg.4.

REG 4

STATE: ‘The effect of the relevant transfer (Reg 4) is that all rights, powers, duties and liabilities under [NAME]’s contract transfer to new employer, [TRANSFEREE]. [NAME]’s dismissal remains effective but liability for claims may transfer (reg 4(3) and reg 7(1))’

TUPE preserves the employment and transfers the employees and their contract to the transferee

Reg 4(1) protects employees contracts and employment rights to the new owner (Jackson v Compushare Investment Services plc [2008])
Reg 4(3) protects employees ‘employed immediately before the transfer’
- For the avoidance of doubt, an employee who is unfairly dismissed before the transfer does not transfer to the new owner. However, the employee’s claim of unfair dismissal does transfer and will be brought against the new owner of the business.
Reg 4(2) all rights, powers, duties and liabilities under employees’ contracts transfer to new employer
Reg 4(6) criminal liability the only exclusion
Reg 4(3) employees also protected if unfairly dismissed under Reg 7 before the transfer

REG 4	STATE: ‘The effect of the...

#13959 - Tupe - Employment Law

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