No TUPE Transfer For Employee on Long Term Sick Leave

An employee on long term sick leave who was not expected to return to work did not transfer to a new service provider under TUPE. 

Speedread

An employee on long term sick leave who was not expected to return to work did not transfer to a new service provider under TUPE. The employee was not ‘assigned’ to the organised grouping of employees that transferred. As a grouping is defined by reference to performance of a particular economic activity, persons who are permanently unable to contribute to that activity are almost by definition excluded. 

Facts 

In BT Managed Services v Edwards, Mr Edwards was employed by Orange as a Field Operations Engineer working on the domestic network outsource (DNO) contract. He commenced long term sick leave in May 2006. Following unsuccessful attempts to find him less strenuous work, he came to be regarded as permanently incapacitated and was not expected to return to work. He remained an employee so that he could receive benefits under the permanent health insurance scheme.    In 2009, his employment transferred to BT when the contract on which he had previously worked transferred to BT.  Once the PHI benefits ceased, BT continued to make payments to him and he remained “on the books” of the DNO grouping.

In 2012, the DNO contract once again came up  for tender and this time transferred to Ericsson. The parties accepted that there had been a service provision change and that the team employed on the DNO contract transferred to Ericsson. However, Ericsson argued that Mr Edwards did not transfer as he was not ‘assigned’ to the organised grouping of employees that transferred. 

The employment tribunal ruled that as Mr Edwards did not contribute to the economic activity of the grouping, he was not assigned to that grouping and so his employment did not transfer. BT appealed, having had no service whatsoever from Mr Edwards.   It was no doubt keen to pass on liability for Mr Edwards' sick pay to Ericsson.

Decision

The Employment Appeal Tribunal upheld the employment tribunal’s decision. 

This was an unusual case, where the employee’s connection with the organised grouping that transferred was a very limited administrative one. Where an employee is not at work at the time of a service provision change, the question of whether they are assigned to an organised grouping is not always determined by looking at whether the employee could have been required to work in the grouping, if able to do so. That test is useful in cases where the employee is likely to be able to return to work in the foreseeable future. However, it has no relevance where an employee is permanently unable to return to work and can have no involvement in the economic activity performed by the grouping. As a grouping is defined by reference to performance of a particular economic activity, persons who are permanently unable to contribute to that activity are almost by definition excluded. 

Implications 

Employees on long term sick leave will not transfer under TUPE to a new service provider if at the time of the service provision change there is no prospect of them ever being able to return to work.  However, it is important to bear in mind that the decision only applies where an employee is permanently unable to return to work. It does not apply in other cases of long term sick leave or long term absence, such as maternity leave, where the employee is expected to return. The test in those cases for determining whether an employee is assigned to the grouping that transfers will still be whether they could be required to work in the grouping if able to do so.