Chapter 16Employing labourthe necessary period of continuous employment. This may
be with one employer, but, if it is with more than one
employer, it must be possible to regard the employments
with the various employers as continuous. Situations of
continuous employment, despite a change of employer,
taken from the Employment Rights Act 1996, are:
(a)A transfer between associated employers
For example, if A is employed by B Ltd and is transferred
to work for C Ltd, and B Ltd and C Ltd are subsidiaries
of X plc, then A’s employment with B Ltd and C Ltd is
regarded as continuous;
(b)A sale of the business in which the employee was
employed to another person. (See also below)
If a business is sold the general rule is that the employees
automatically become employed by the owner of the
business with full continuity of employment.
TUPE 2006
The Transfer of Undertakings (Protection of Employ-
ment) Regulations 2006 (SI 2006/246) came into force
on 6 April 2006. They replace the 1981 regulations of the
same name (SI 1981/1794) in relation to transfers which
take place on or after that date.
A relevant transfer
Regulation 3 applies and provides that a business trans-
fer which will be affected by the regulations 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. This is
the conventional provision. However, reg 3 goes on to
clarify that employees will be protected in a situation
of service provision changes as where, e.g. a cleaning
service is outsourced or passed from one contractor to
another or is brought back in-house.
This is subject to there being, prior to the transfer, an
organised grouping of employees, the grouping having
as its principal purpose the carrying out of the activities
that are contracted out on behalf of the client. There is
an exception where services are bought in for a specific
task or event of short duration and where the activity
that is outsourced consists of making goods for the
client’s use.
Comment
■TUPE 2006 does not apply where there is no iden-
tifiable group of employees. Thus, if an organisation
grants a contract for courier services but prior to this
the services were carried out by a number of different
couriers on an ad hocbasis as opposed to a perman-
ent dedicated team, then the regulations would not
apply.
Even where there is an identifiable group of work-
ers, the regulations will not apply if the purpose of
the identifiable group is to carry out activities for a
number of clients, as would be the case with a firm
of solicitors or a travel agent, as opposed to working
exclusively for a single client (but see below). Con-
tracts for single specific tasks are not included, as in
organising a conference or supplying sandwiches to a
works canteen to sell on as distinct from running the
canteen.
■In the view of the Department of Trade and Industry
(now BERR), TUPE 2006 could apply and lead to
the transfer of employees even though the transferee
intends to carry out the service in a different way, e.g.
by computerisation. If the transferred staff do not
have the necessary skills, the transferee may choose to
retrain them or make them redundant.
■It is also worth noting that TUPE 2006 does not speci-
fically exclude professional business services. Could
this have implications for the larger accountancy and
law firms where employees are largely dedicated to
providing services for one client organisation? If the
client moves his instructions to another firm are the
dedicated employees transferred to the new firm?
Effect of a relevant transfer on contracts of
employmentThe transfer of employees
Regulation 4 provides that employees, who are employed
by the former operator of the business and assigned to
the organised grouping of resources or employees that is
subject to the relevant transfer, will be transferred to the
new operator of the business.
Regulation 7 provides that employees who are dis-
missed before the transfer for a reason connected with
it will transfer to the new operator of the business.
Taken together, regs 4 and 7 reflect case law on the 1981
Regulations and close a loophole in TUPE 1981. There
were cases where the former operator of the business
retained employees at the actual time of the relevant
transfer and then dismissed them soon after the transfer.
TUPE 1981 did not protect employees against this tactic
because it protected only workers whose contracts
were terminated by the transferand in the example
given the contracts were not terminated by the transfer
but after it.457