The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply where there is a transfer of an economic entity that retains its identity (a business transfer). This involves three elements:
However, Regulation 3(5) of TUPE specifically excludes 'an administrative reorganisation of public administrative authorities or the transfer of administrative functions between public administrative authorities'. Such arrangements do not constitute a relevant transfer and therefore TUPE does not apply.
In this case, Croydon Primary Care Trust transferred its public health team, which largely undertook work relating to commissioning of public health services, to the London Borough of Croydon under a Staff Transfer Scheme. The provisions of the scheme mirrored the TUPE regulations in many respects, including setting out protections for the employees against dismissals related to the transfer. However, unlike TUPE, the scheme placed a time limit on the employees protection against dismissal such that, any dismissal related to the transfer which occurred after 31 March 2015 would not be automatically unfair.
After 31 March 2015, a group of employees were dismissed following changes to their contracts of employment. As a claim for unfair dismissal was time-barred under the scheme, they sought to rely on TUPE.
London Borough of Croydon argued that TUPE did not apply as there had been a the transfer of administrative functions between public administrative authorities. The Claimants sought to argue that there had been a transfer of an 'economic entity' thus transferring employment under TUPE.
The Employment Tribunal (ET) concluded that the employees had been exercising public authority and were therefore excluded from TUPE. However, it also found that all, or almost all, of the work done by the team was or could be offered by private companies and contractors. This would usually be a strong indicator of 'economic' activity.
The employees successfully appealed to the EAT which determined that the ET had not explained how it could conclude that the employees were exercising public authority whilst also finding that the private sector was heavily involved in the same or similar work. The case has been sent back to the ET for reconsideration.
While we await a further ET decision as to whether the transfer of functions in this particular case is covered by TUPE, the EAT judgment sets out a valuable discussion of the relevant case law.
Regardless of the eventual outcome, the guidance given in the judgment will be helpful for employers and practitioners alike when analysing proposed transfers, particularly in the context of public sector arrangements.