Celtic Ltd -v- Astley
In a long-running saga, the House of Lords has decided in the case of Celtic Ltd -v- Astley (2006, IRLR 635), that the contracts of seconded civil servants had automatically transferred over at the start of their secondment.
What were the basic facts?
The three claimants were civil servants employed by the Department of Employment (DOE) in Wales.
In September 1990 they were seconded for three years to newly formed Training and Enterprise Councils (TECs) which had taken over some of their work. They all resigned from the civil service at the end of their secondments and became employees of the TECs.
In 1998, Ms Hawkes was made redundant by Celtec. It refused to accept that she had continuity of service from the date on which she joined the civil service in 1986.
The other two claimants – Mr Astley and Ms Hawkes – asked the tribunal to decide their length of service as well in case they were made redundant.
What did the national courts decide?
The tribunal said that there had been a transfer of an undertaking, but to preserve their continuity of service the three claimants had to show they had been employed by the DOE immediately prior to their transfer to the TEC.
But when exactly did it happen?
The tribunal decided that it took place over several years, and that it only became effective when the seconded civil servants became employees of the TEC, giving them continuity of employment from the date they joined the civil service.
The employers appealed and the case eventually made its way to the House of Lords (LELR 102), which asked the European Court of Justice (ECJ) to decide whether a transfer could take place over several years.
It ruled that the “date of a transfer” has to be a particular point in time, in this case the date on which the employees were originally seconded.
What did the parties argue?
Celtec argued that the ECJ decision meant that the period of continuous service began after the claimants resigned from the civil service and started working for the TEC.
The claimants, on the other hand, argued that even if the date of the transfer was September 1990 (and not over a period of time), their continuity of employment was not broken when they resigned from the civil service, even though this took place after the date of the transfer. This was because they were deemed to have been handed over to the TEC at the date of the transfer.
What did the House of Lords decide?
Their Lordships decided that the continuity of employment of the civil servants was preserved by the EC Acquired Rights Directive, although they did not actually resign from the civil service until three years after the transfer.
They said that, despite the secondment arrangements, the claimants’ contracts were handed over to the TECs on the date of the actual transfer. This was the case even though the employees thought they were still employed by the civil service for the ensuing three years.
This approach accorded with the principle of automatic transfer, which lies at the heart of TUPE and the EC Directive. The only exception to this principle is when an employee chooses not to take up employment with the transferee, which had not happened in this case.
Comment
This surprising decision means that the parties to a TUPE transfer cannot postpone the legal consequences of the transfer. By definition, it calls into question the whole basis of temporary secondments.
Employees who are seconded to a transferred undertaking may now turn out to have been legally employed by the transferee, regardless of what they agreed with the transferor. That will affect not just the issue of continuous service, but all other contractual rights and obligations.
The lesson of Astley is that secondments can in fact turn out to have been transfers of employment. Workers therefore need to be as clear as possible as to the identity of their employer.