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Employees of non-transferring self contained business are not `affected employees`

10 May 2013 #Employment


Where there is a ‘relevant transfer’ within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”), there is an obligation on both the old and new employer to inform and consult with representatives of the employees who may be affected by the transfer (or measures taken in connection with it). 

In Unison v Somerset County Council [2010] ICR 498, the EAT explained that affected employees are those:

  • Who will or might be transferred.
  • Whose jobs are in jeopardy by reason of the proposed transfer.
  • Who have job applications within the organisation pending at the time of transfer.

In the recent case of I Lab Facilities Ltd v Metcalfe and others the EAT was asked to consider whether dismissed employees who worked in a distinct part of the undertaking which was not transferring under TUPE were ‘affected employees’ who should have been informed and consulted about the transfer. 

The Tribunal, at first instance, held that they were ‘affected employees’, however the EAT decided that they were not.  The employer had two distinct businesses and the transfer of one of these businesses under TUPE did not result in the information and consultation obligations being triggered for the other, which was insolvent.  This remained the case, despite the fact that employees in the insolvent business were initially told that their business would transfer.  As it turned out, these employees were made redundant when the business went into liquidation.

As the transferor’s business was insolvent, the employees had been looking to the transferee business (I Lab) for awards totalling £81,375.

Employer’s should be wary of applying this case too broadly, as an employee who does some work in or for the undertaking being transferred will still likely be an ‘affected employee’ even if most of their work is carried out for a distinct part of the business.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Louise Merrell

Louise Merrell
Associate

E: lmerrell@clarkslegal.com
T: 0118 960 4614
M: 0779 900 7325

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