Determining the group of transferring employees in a TUPE transfer can raise tricky issues. Laura Merrylees sets out four key tips for employers when assessing who is in the pool for transfer.
The fragmented outsourcing of services under the TUPE Regulations 2006, together with atypical working arrangements, can create a confusing picture. Get it wrong and a transferee may end up inheriting employees and liabilities that were never anticipated.
Who transfers under TUPE
1. Remember only employees “assigned” to the undertaking other than on temporary basis transfer.
“Assigned employees” will include those on fixed-term contracts but not agency workers.
The question of whether or not seconded employees transfer can raise difficult issues, either because they are seconded in or out of the business at the time of transfer.
There is no general rule when it comes to deciding whether or not seconded employees transfer as it will depend on the circumstances, including the length of the secondment.
Remember that employee liability information will need to be provided by the transferor to the transferee in advance of the transfer for all employees who are assigned to the undertaking.
2. Explore percentage of employees’ working time spent in part of business being transferred.
This is particularly important in outsourcing or insourcing arrangements under the TUPE Regulations 2006.
Spending at least 50% of working time in the transferring business will be a strong indicator that an employee is likely to be part of the transferring group.
Dependent on the job role, assessing percentage time may involve reviewing time sheets, rota arrangements and team structures.
3. Weigh up other factors when assessing who transfers.
In BT Managed Services Ltd v Edwards and another, the Employment Appeal Tribunal held that an employee not working because of health problems, but retained as an employee to receive permanent health insurance payments, did not transfer. The Court of Appeal will hear an appeal in this case later in 2016.
While the percentage test is a useful rule of thumb, other elements will still need to be explored.
This will include considering the amount of value given by the employee to different parts of the business, together with internal charging mechanisms.
The description of an employee’s duties in the contract of employment may influence the analysis, taking into account that an employee’s duties may differ in practice.
4. Think carefully about employees away from work at time of transfer.
Employees who are overlooked as part of the transferring group tend to be those away from the business at the time.
Those employees on short-term absences, including suspension, holiday and maternity leave, are likely to be included in the transferring group.
However, the picture is far from straightforward when dealing with those on sick leave and, in particular, those on permanent health insurance. Assessing whether there is any prospect of the employee returning to work will be critical.