Wynwith Engineering v Bennett [2002] IRLR 170 (EAT)
RCO Support Services Limited v UNISON and others [2002] EWCA Civ 464 (Court of Appeal)
Temco Service Industries SA v Imzilyen (Case C-51/00) (European Court of Justice)

The Consultation period for the proposed revisions to the TUPE Regulations ended in December 2001. The draft Regulations are still awaited. In the meantime, courts here and in Europe continue to grapple with applying the Regulations and the Acquired Rights Directive to differing sets of circumstances where workers are affected by a change of employer.

The latest in a line of welcome decisions by the Court of Appeal is RCO v UNISON, in which Thompsons represented UNISON. The transfers concerned involved cleaning and catering contracts. No cleaners transferred and only one of the catering staff.

The Employment Tribunal decided that each of the catering and cleaning services amounted to an undertaking: a distinct economic entity, in that 'particular people did particular jobs in particular places for particular people; all the work in either group was homogeneous ...each was a group with its own identity; each staffed by people dedicated to particular tasks'. RCO did not appeal against this finding.

The appeal concerned the Tribunal's finding that there had been a transfer. Both the EAT and the Court of Appeal upheld this finding. The central arguments concerned the proper interpretation and application of the Suzen decision. Lord Justice Mummery rejected the argument that there can never be a transfer of undertaking in a contracting out case if neither assets nor workforce are transferred. Whether or not the majority of workers are taken on by the employer is only one of the facts to be considered as part of the overall assessment required by the Spijkers decision. The Court went on to conclude that the facts as a whole showed that the cleaning and catering services had retained their identity following the transfer. They 'had a discrete organisation for the exercise of special and important support skills, including established operating methods and training, and they were an integral part of the distinctive in-patients infrastructure' replicated after the transfer.

This is a positive approach which limits the scope for avoidance by employers. However, less helpfully, Lord Justice Mummery cast some doubt on the Appeal Court's (and his own) views in the ECM case that the court should take into account the employer's motive for failing or refusing to take on staff from the old employer. The Appeal Court had previously taken into account a refusal to take on staff in order to avoid TUPE and concluded that this did not prevent a transfer. Lord Justice Mummery now expresses some doubt about this, but does go on to say that the circumstances of any decision not to take on the workforce is to be taken into account.

The key part of the decision is that a refusal or failure to take on staff does not of itself mean there is no transfer.

A different set of circumstances was considered by the European Court of Justice in Temco Service Industries. Volkswagen in Brussels contracted out its cleaning to a company which in turn sub-contracted to a subsidiary. Volkswagen terminated the contract and signed a contract with a new contractor, Temco. The previous contractor dismissed all bar four of the staff. In accordance with Belgian law, Temco had to offer jobs to the majority of the dismissed staff as required by a mandatory collective agreement.

The Court reasserted (as in previous cases) that in the case of labour-intensive sectors, a group of workers engaged in a joint activity on a permanent basis may constitute an economic entity which may retain its identity (and thus be a transfer) if the majority of staff are transferred. The fact that they were transferred under a collective agreement did not prevent there being a transfer.

Consistent with its previous decisions, the Court also said that it did not matter that there was no contractual link between the old employer (the sub-contractor) and Volkswagen or Temco: a transfer may take place where an organisation enters into two successive contracts with different organisations.

This decision is not particularly surprising, but it does represent a welcome continuity with earlier decisions.

A case where the EAT decided against a transfer was Wynwith Engineering. Here staff were made redundant, but the need for further work arose so they were engaged to provide their services through an employment agency who employed them for this purpose. They covered a wide group of workers within the plant, with a wide range of skills and occupations. They did not work together as a group, but were integrated with other staff.

The EAT decided that this was not a distinct undertaking. The employees were defined only by their employment relationship with the company and did not form any organised grouping which could be regarded as an economic entity. There was therefore no transfer.

The decision in this unusual set of circumstance is unlikely to have a wider negative impact in other cases.