(1) UNISON and others v Aintree Hospitals NHS Trust and RCO support Services Limited
(2) UNISON and others v Initial Hospital Services and RCO Support Services Limited
Liverpool Employment Tribunal decision 2 November 1998
After some adverse decisions, a welcome ruling of the Employment Tribunal at Liverpool confirms that the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) remain a key source of protection for employees and Trade Unions.
In earlier issues of this Review, reference has been made to the changing emphasis from UK and European Courts in TUPE claims, and this has been particularly seen in contractor/activity cases.
In June 1998 the EAT decision in ECM v Cox and others signalled a shift away from the restrictive approach seen in the Suzen case. In ECM the EAT considered a contract situation and re-asserted the economic entity test, confirming that the transferee should not be allowed to avoid the TUPE Regulations by refusing to take on staff.
In Liverpool the Aintree Hospitals Trust operated domestic and catering services from two hospital sites, A and B. Each site had a different provider for the services. Site A was set to close and the work was transferring to site B. This would fall under a different provider. The contractor at site B (RCO) refused to accept the application of the TUPE Regulations, meaning that the site A staff were dismissed. All of the domestic staff did not even get a redundancy payment because the transferor relied upon the Regulations and would not make payments on a voluntary basis. This left the staff without jobs or compensation.
This appalling situation was considered by the Employment Tribunal in a combined hearing with claims relating to a failure to consult with UNISON.
The Tribunal decided that the transfer of work from site A to site B was covered by the TUPE Regulations, with the Tribunal relying upon the ECM decision. The Tribunal asserted that the purpose of the Regulations and Directive, was to protect the rights of the employees. The Tribunal believed that the European Court never intended the Suzen decision to lead to avoidance measures being taken by transferees. On the facts, the Tribunal decided that the work was organised so as to represent an identifiable economic entity which continued after the transfer. Importantly, the Tribunal did not accept that the question of whether the employees should have been taken on is determined by asking whether they have been taken on.
The decision shows that the business decisions taken in transfer cases must recognise the purpose of the legislation. Identification of all aspects of an economic entity, including staff, is crucial, but employers must now know that the Regulations cannot be avoided simply by refusing to take on prospective employees. This must represent the intention behind the legislation, and it must be remembered by all Courts considering transfer claims.