Sub-contractor wins appeal over TUPE transfer of laid-off workers

A sub-contractor has won its appeal that workers who were temporarily laid off while employed on a building project should still qualify to be transferred to a new firm under TUPE regulations.

The sub-contractor had been engaged by a construction company to work on a large contract. It assigned a number of workers to carry out the required tasks. There was then a period of two months when it received no new assignments on the site. However, work was due to resume in January 2013.

The workers were temporarily laid off under the terms of their employment contracts, which contained terms agreed nationally by the Construction Industry Joint Council.

When the development was due to resume, the construction company hired a new firm carry out the work.

The sub-contractor asserted that this amounted to a service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). It said the workers were an organised grouping of employees whose principal purpose was to carry out of the construction company’s activities.

The Employment Tribunal disagreed. It found that although there had been a service provision change, the workers could not be an “”organised grouping of employees”” because their activities had ceased prior to January.

That decision was overturned by the Employment Appeal Tribunal. It held that there was nothing in the regulations to suggest that a temporary cessation of activities at that time precluded the continued existence of the organised grouping.

Furthermore, to find that a temporary lay-off would cause an organised grouping to lose its identity would cut across TUPE protection and negate the effect of a national agreement such as the Construction Industry Joint Council terms.

Something more than a temporary lay-off caused by a temporary absence of work was required to dissolve the organised grouping. An organised grouping of employees could have a purpose of carrying out activities even during a period of temporary cessation. They did not have to be physically carrying out those activities at the relevant time.

Please contact Robert Bedford if you would like more information about the issues raised in this article or any aspect of employment law.