UK: The Timing Of A TUPE Transfer

Last Updated: 16 May 2007

Article by Robert Hill and Nick Dent

There have been a number of cases dealing with TUPE (now the Transfer of Undertakings (Protection of Employment) Regulations 2006) issues in recent months. The House of Lords’ decision in Celtec (North Wales Training and Enterprise Council Limited (t/a Celtec) v Astley and others (2006)) is one which is of particular interest to employers.

In the Celtec case, the House of Lords has provided clarification on the issue of when employees will transfer to the transferee under TUPE. It held that the "transfer date" is a particular point in time - transfers cannot occur over a period of time.

In the light of this decision, it is important to identify the "transfer date". Although the date will often be clear, this will not be so in all cases. Celtec sets out the test for identifying the "transfer date" - as the date on which responsibility as employer for the business in question transfers to the transferee. The parties to the transfer cannot agree to postpone the "transfer date". The "transfer date" can only be changed where the employees legitimately "opt-out" of the transfer.

The facts and the decision in Celtec

In the early 1990s, the Department of Education (DofE) decided that the management of certain training, which it had previously dealt with, would be transferred to local training and enterprise councils (TECs).

One such TEC was Celtec, which took over the work from the DofE in North Wales in September 1990. The DofE employees who had previously carried out the work were offered the option of either being redeployed in the civil service once Celtec took over, or of being seconded to Celtec. The transfer of employment to Celtec, either under TUPE or otherwise, was not considered at this time.

The Celtec case arose as a result of three DofE employees who accepted the offer of a secondment to Celtec. In mid-1993, the three were given the option of new employment with Celtec or of returning to the DofE for re-deployment. They resigned their employment with the DofE and took up offers of new employment with Celtec.

One of the three was made redundant in 1998 and was told that her period of continuous employment did not include her time with the DofE. All three individuals then sought a declaration from the Employment Tribunal that there had been a "relevant transfer" to Celtec over a period of time between September 1990 and mid- 1993 and, therefore, that their employment had transferred to Celtec along with their full periods of continuous employment.

The case went all the way to the House of Lords (via the European Court of Justice) and it was decided that there had indeed been a "relevant transfer" from the DofE to Celtec. However, this had not happened over a period of time, but at a particular point in time in September 1990. As a result, the individuals’ employment had transferred to Celtec in September 1990, despite the fact that all parties had believed that the individuals had remained employees of the DofE until 1993.

The following key points of law were decided in this case:

1 The transfer of employees under TUPE takes place at a particular point in time - and not over a period of time.

2 The "date of transfer" of employees is the date on which responsibility as employer for carrying on the business transfers between the parties.

3 The parties cannot agree to delay the employees’ transfer except where the employees "opt-out" of the transfer.

4 For an employee legitimately to opt-out, the employee must be in a position to choose whether to enter the employment of the transferee and must exercise that choice of his own free will.

Conclusion and points to bear in mind

The four points of law set out above should be borne in mind in relation to any future "relevant transfer" under TUPE.

In terms of identifying the "transfer date", this will be when "responsibility as employer for the business transfers". It is worth noting that, in our view, the inclusion of the words in bold is unhelpful and unnecessary. This is because, on a strict interpretation of this test, it would mean that a transferee could refuse to take on any employees and, therefore, avoid a transfer of any employees to it. In view of this, Employment Tribunals will undoubtedly look simply at when the transferee takes on responsibility for the business itself in order to identify the transfer date.

In relation to employees "opting-out", transferors should ensure that information is still provided to individuals who state an interest in opting out and, if relevant, that consultation is carried out in full with them. This is to ensure that any opt out is legally valid and to avoid the risk of protective awards for failure to inform and consult.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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