The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006 state that there has to be a change in the identity of the employer for the regulations to apply. In Hyde Housing Association Ltd and ors v Layton, the Employment Appeal Tribunal (EAT) held that if an employee transfers from one company to a group of companies which includes the original employer, then the identity of the employer has not changed and the regulations do not apply.
Mr Layton worked for Martlet Homes Ltd as a multi-skilled decorator. He was told in December 2007 that Martlet was joining the Hyde Group as a subsidiary of Hyde Housing Association Ltd (HHA), but that his employer would remain the same. In 2008, HHA started providing HR and payroll services to Martlet, andMr Layton’s payslip started showing HHA as his employer.
As part of a restructuring in August 2013 Mr Layton was given notice of termination and offered re-engagement on revised terms and conditions. The new contract stated that his employer was now the Hyde Group, meaning that he was jointly and severally employed by all members of that group. He accepted the offer but lodged a claim that his dismissal from his former contract of employment was unfair.
Regulation 3(1)(a) of TUPE states that a relevant transfer applies to a “transfer of an undertaking … to another person where there is a transfer of an economic entity which retains its identity”.
Regulation 3(2) states that “economic entity” means an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.
Although Mr Layton was entitled to pursue a claim of unfair dismissal whether or not TUPE applied, the tribunal first considered whether there had been a relevant transfer as this related to the test it would need to use.
It held that there had been a transfer on the basis that the kitchen and bathroom section of the planned maintenance team in which Mr Layton worked was an economic entity within the meaning of regulation 3(2) and that it had retained its identity after the restructuring in August 2013. Although the transfer had been to more than one entity (which included his original employer, Martlet), the tribunal held that the requirement for there to be a transfer to “another person” under regulation 3(1)(a) did not mean it had to be a single entity.
The EAT agreed that there was no “principled reason” why the reference to the singular in regulation 3(1)(a) could not also be read as including the plural. The transfer from Martlet to the umbrella employer, the Hyde Group, could therefore give rise to a relevant transfer under the regulations.
However, the EAT allowed the employer’s appeal because it found that the identity of Mr Layton’s employer remained the same before and after the transfer to the Hyde Group. The control of the business remained with Martlet, as did Mr Layton’s employment relationship. The earlier changes to pay arrangements had not changed that and there was nothing in the tribunal’s findings to suggest this reality was subsequently altered except in the sense that other companies were now jointly and severally liable for his employment.
As both TUPE and the Acquired Rights Directive require a change in the identity of the employer, there was no TUPE transfer.