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Employees absent due to ill health may not TUPE transfer

Sometimes the most contentious issue with TUPE can be who transfers. The Employment Appeal Tribunal in BT Managed Services v Edwards has determined…

Sometimes the most contentious issue with TUPE can be who transfers. The Employment Appeal Tribunal in BT Managed Services v Edwards has determined that an employee who had been absent for five years on ill health grounds was not assigned to the business transferring. In doing so, this Judgment appears to create a new potential uncertainty for those of you who deal with TUPE transfers.

The facts

In this case there was no dispute that there was a service provision change, and that TUPE applied to transfer a significant number of employees from BTMS to Ericsson. BTMS had organised their workforce so that the contract team was clearly identified. A dispute however arose about one person who was assigned to the contract team.

Mr Edwards had been absent for over five years on ill health grounds (for much of which he had received payments from the insurer under a permanent health insurance scheme). Whilst it was accepted that Mr Edwards was permanently unfit for his role and unable to work, BTMS argued that he was still assigned to the contract transferring and therefore should transfer under TUPE. He had continued to be counted against the headcount for the contract and, under the systems applied; his post could not be back-filled. Any costs associated with his employment were accounted for under the contract. All contact with him, including contact relating to his sick absence, his PHI payments and the more general keeping in touch, was carried out by managers in the contract team. Notionally if he was ever fit enough to return to work, BTMS would look for work for him on that contract.

The EAT has however held that the Tribunal was able to find that Mr Edwards did not transfer. It held that a limited administrative connection that was not based on the present or future participation in economic activity was insufficient for the employee to be assigned (so he transferred). It describes as "useful" looking at where an employee is able to return to work if he is be able to do so in the foreseeable future. However where the employee in question is permanently unable to return to work and has and can have no further involvement in the economic activity performed by the grouping and the performance of which is its purpose, that absence of any participation in that activity will, by definition, exclude persons in that position from transferring.

What does this mean for me?

The EAT Judgment describes the case as quite unlike any other, albeit our experience is that absent employees can often result in TUPE uncertainty. This Judgment certainly does not mean that all absent employees will not transfer. When considering a TUPE transfer it remains important to be alive to the possibility that the transferring staff will include those away from work due to maternity leave, shared parental leave, ill health and other reasons. In most cases where such employees are part of the staff who would (but for their absence) normally work on the contract or entity transferring, those absent employees will transfer as well.

However what this Judgment does is create a new uncertainty around those whose absence is longer term and potentially permanent. If the employee is permanently unable to return this case decides that the employee will not transfer. Precisely when such absence becomes permanent may be hard to define on a case by case basis. That creates an area for potential dispute and disagreement when transfers are occurring, particularly because the incoming provider/contractor is unlikely to want to take an employee with long term health issues (and potentially expensive PHI payment entitlements).

Comment

Sometimes the unforeseen costs of a TUPE transfer are related to those outside the core contract staff, such as those who are absent or in support roles. Do take advice if in doubt. As this Judgment proves, sometimes relatively novel or uncertain arguments can be correct and result in expensive staff not transferring.

If you have any questions about this Judgment or any TUPE-related issues, please get in touch with your usual contact in the Weightmans employment, pensions and immigration team, or get in touch with Phil Allen phil.allen@weightmans.com