Date of transfer
Labour & European Law Review Weekly Issue 390 08 October 2014
When a relevant transfer occurs under the Transfer of Undertakings (Protection of Em-ployment) Regulations 2006 (TUPE), the affected employees become employed by the transferee from that time. In Housing Maintenance Solutions Ltd v McAteer and ors the Employment Appeal Tribunal (EAT) held that the date of the relevant transfer is when re-sponsibility for carrying on the business moves from the transferor to the transferee, not when the transferee continues the transferred service.
LMH is a housing association, responsible for managing over 15,000 homes in Liverpool which includes repairing, maintaining and cleaning the properties. In 2009 it entered into a contract with Kinetic for the provision of repairs and maintenance services.
In 2010, LMH decided to set up a wholly owned subsidiary, HMS, to take over the services being provided by Kinetic from 1 July 2011. However, due to concerns about Kinetic’s financial situation, LMH terminated the contract on 9 June. The company’s administrators then wrote to the claimants on 14 June to dismiss them by reason of redundancy with effect from that same date.
To help ensure the service operated fully from 1 July, four managers from Kinetic carried on working for HMS from 15 June and cleaners previously employed by Kinetic began working for HMS from 20 June. By 1 July, 206 out of 208 Kinetic employees were em-ployed by HMS. A number of former Kinetic employees brought claims for unfair dismissal and unauthorised deductions from wages for the period from 9 June to 30 June 2011 when HMS failed to pay their wages.
The tribunal found that HMS had "assumed responsibility" for the claimants and engaged with them in "continued consultation and reassurance”, so it became their employer from 9 June. HMS believed that the relevant TUPE transfer could not take place until the service resumed on 1 July.
The EAT rejected the appeal by HMS that an undertaking does not transfer until the transferee starts carrying out the transferred activities. It also reiterated that the relevant date will be when all the necessary elements are established by operation of law (i.e. as interpreted under article 3 of the Acquired Rights Directive and regulation 3 of TUPE 2006) and cannot be postponed to another date at the will of the transferor or transferee.
However, the EAT went on to find the tribunal was wrong to treat the date that HMS apparently accepted responsibility for the claimants (9 June 2011) as determinative of the date of the relevant TUPE transfer.
The EAT remitted the case to a different employment judge to decide the date of the claimants’ TUPE transfer from Kinetic to HMS in light of its findings.
The date of a relevant TUPE transfer can become horribly complicated for affected employees who work in different ways under a transferring service. This case highlights that the date of the relevant TUPE transfer will not simply depend on when the transferee continues the service provided after a period of it being suspended, nor could the employer(s) decide and dictate when it was to happen for the affected employees involved.