Legal Opinion: TUPE, service provision change and the question of assignment

With TUPE transfers, it used to be said that “the employees go with the work”. It is not as simple as that, however. The courts are tightening up on the test of what is needed to show that the employee is actually part of the human capital of the function being transferred. Employment lawyer John McMullen looks at the implications of recent case law on this.

The question of assignment

For a reg.3(1)(a) TUPE transfer (such as a business sale or a merger) the employee has to be assigned to the undertaking or part transferred. In the case of service provision change under reg.3(1)(b), the employee has to be assigned to the organised grouping of employees which exists before the handover and which has, as its principal purpose, the carrying out of the activities concerned on behalf of the client.

A recent case illustrates that a person can be involved with activities going out to tender but may not be assigned to the organised grouping of employees dedicated to the delivery of the service.

Edinburgh Home-Link Partnership v The City of Edinburgh Council

In Edinburgh Home-Link Partnership v The City of Edinburgh Council (EATS/0061/11), two charities – Homeless Outreach Project and Home-Link – provided services to homeless persons in the Edinburgh area. Certain activities, namely the provision of visiting support for people in need, were carried out on behalf of the City of Edinburgh Council under a service agreement. In April 2009, the council decided it would take those activities back in-house. This was a service provision change under TUPE. The case concerned whether or not two executives working for the charities, Mr McAleavy and Ms Morrison, were assigned to the organised grouping of employees carrying out those activities on behalf of the council. An employment tribunal found that there was an organised grouping of employees dedicated to service delivery under the Edinburgh contract but it considered that the two executives were not assigned to it.

Their roles involved significant management matters and, in Mr McAleavy’s case, working closely with Home-Link’s board of trustees and its chair; apart from overall service delivery there were many other matters for which the two were responsible. On the whole, their roles were largely strategic, involved the maintenance of the organisation itself and did not include front-line service delivery. Accordingly, the two were not assigned to the organised grouping of employees in order to transfer under TUPE. The EAT agreed, with Lady Smith confirming that it simply cannot be taken as read that employees will transfer if they are in some way associated with the work changing hands.

Wider strategic roles may not be assigned

One reason an employee may not be assigned is because he or she is involved with the wider management of an organisation’s activities, not just with the service delivery of a particular contract. So, an employee whose role is strategic and (as in the present case) concerned with the survival and maintenance of the transferor as a whole, may not be assigned to the service concerned. Another reason may be that the employee is only temporarily located within the service changing hands and normally works elsewhere.

The question of assignment has to be asked in respect of each individual employee and cannot be assumed.

Dr John McMullen is director of employment law at Wrigleys Solicitors LLP

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