Employees on long-term sick leave – Do they transfer under TUPE?

Potentially not, according to the Employment Appeal Tribunal (“EAT”) in the recent decision of BT Managed Services Limited v Edwards and anor

Mr Edwards was employed by BT Managed Services Limited (“BTMS”) and worked within a team of engineers providing maintenance services to Orange for its mobile networks (“the DNO contract”).

In 2006 Mr Edwards commenced long-term sick leave due to a heart condition. He was unable to work and was regarded from this time as permanently incapacitated. He remained, however, an employee of BTMS so that he could continue to enjoy payments under a payment health insurance scheme.

In 2012 the DNO contract was transferred to Ericsson. The service provision change took place in mid-2013 and under the TUPE Regulations the team employed by BTMS on the DNO contract transferred to Ericsson.

The issue before the Employment Tribunal (“ET”) was whether Mr Edwards was assigned to the grouping affected by the service provision change and consequently whether he should transfer under TUPE. At the time of the service provision change, Mr Edwards had not worked for BTMS since 2008 and there was no prospect him ever returning to work.

The ET decided that, because Mr Edwards did not contribute to the economic activity of the DNO grouping, he was not assigned to that grouping within the meaning under TUPE.

BTMS appealed but the Employment Appeal Tribunal (“EAT”) upheld the ET’s decision and reiterated that an employee who had no connection with the economic activity of the grouping and would never do so in the future could not be regarded as assigned to that grouping. The EAT further accepted that Mr Edwards’ mere administrative connection to the DNO team was insufficient to constitute him being assigned to the grouping in the absence of his participation in DNO grouping’s economic activity.

The following guidance was provided by the EAT on 2 September 2015:

  1. The question of whether an employee absent from work at the time of a service provision change was assigned to the organised grouping of employees is a matter of fact to be determined by the circumstances of each case;
  1. Although absence from work (to include lengthy absence) at the time of a service provision change would not necessarily mean that an employee was no longer assigned to the relevant grouping, an employee with no connection to the economic activity of the grouping and would never do so in the future could not be regarded as assigned to that grouping;
  1. There is a clear link between the identification of the relevant organised grouping of employees and the question of who is assigned to that grouping; and
  1. As the organised grouping subject to the service provision change is defined by reference to the economic activities its purpose is to pursue, an employee who plays no part in those activities and will never do so is not assigned to that grouping. Mere administrative connection to that grouping is insufficient to constitute an employee as being assigned to the grouping in the absence of some participation in the grouping’s economic activity.

What does this mean for employers?

This decision makes it clear that an employee who is permanently off work sick cannot be assigned to an organised grouping of employees in the event of a TUPE transfer. Essentially, the question of whether an employee on long-term sick leave at the time of a TUPE transfer is assigned to the relevant grouping of employees is a matter of fact to be determined according to the circumstances of each case.

This emphasises the need for employers to have stringent absence management procedures in place which continue to monitor and assess an employee’s ability to return to work. This will no doubt be assisted by the government’s recent introduction of the new Fit for Work service which aims to facilitate employees to return to work earlier following periods of absence due to sickness.

For more information or for any employment law enquiries the employment team can be contacted at anna.crayton@dwfmbeckman.com or 020 7408 8888.

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