Temporary cessation

The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006 provide protection for employees when their employment transfers to another employer in certain circumstances. In Mustafa and anor v Trek Highways Services Ltd and ors, the Employment Appeal Tribunal (EAT) held that the regulations apply even if the transferor had ceased operations before the transfer occurred.

Unite the Union instructed Thompsons to act on its members’ behalf.

Basic facts

Amey carried out highway maintenance services for Transport for London (TfL) in north-east and north-west London. When the company entered into a sub-contract with Trek to provide traffic management services on its behalf in November 2011, Mr Mustafa and Mr Steen transferred from Amey to Trek.

After a re-tendering exercise in late 2012, TfL awarded the contract for the north-east to Ringway Jacobs and the north-west to FM Conway with effect from 1 April 2013. Both companies initially accepted that TUPE applied and that employees principally engaged on traffic management services in those regions would transfer over to them.

However, on 8 March Trek suspended operations following a dispute with Amey and told its staff to go home. After the two companies agreed to terminate the sub-contract on 20 March, Trek informed its employees in the north-east region that their employment would transfer to Amey with effect from 21 March 2013. Ringway Jacobs, however, argued that the Trek employees who delivered services for Amey did not have the right to transfer over to it under TUPE.

Relevant law

Regulation 3 of TUPE states that a relevant transfer applies 1) to the transfer of an economic entity which retains its identity after the transfer; and 2) to a “service provision change” (SPC) when activities cease to be carried out by one contractor and are instead carried out by another as long as there is an “organised grouping” of employees whose principal purpose is to carry out of the activities concerned on behalf of the client “immediately before the SPC”.

Tribunal decisions

The employment judge held that there was no relevant TUPE transfer from Trek to Amey; and no relevant transfers directly from Trek to the incoming sub-contractors. In the alternative, the judge held that the claimants were not employed “immediately before” the transfer, as they had been dismissed on 20 March 2013.

EAT decision

The EAT allowed the appeal, holding that the tribunal judge had made the mistake of equating the entity with the activity performed by it when he decided that Trek had not retained its identity after the transfer because it had ceased activities on 8 March. In any event, the issue of suspending operations was just one factor among many to consider whereas the judge had treated it as determinative.

It also held that the regulations did not require the “organised grouping of employees” to actually be working immediately before the SPC. There might be cases where on the particular facts a temporary lay-off caused by the absence of any work might be sufficient to dissolve the organised grouping, but a temporary cessation of work does not by itself mean that a grouping of employees can no longer be said to be organised.

The case was remitted to the same tribunal to reconsider the issues raised by the EAT.