New TUPE decision

NEW TUPE DECISION

An important - and perhaps controversial - EAT decision considering when a TUPE transfer occurs. The case is reported on the EAT website.

CELTEC LTD -v- ASTLEY + others
(EAT, Hooper J. presiding, 5th October 2001))

Facts
Prior to 1990, vocational training and enterprise activities were managed by the Department of Education. In 1989, the government announced the creation of Training and Enterprise Councils (known as TECs). Approximately 80 TECs were set up, using (in the main) the same premises, databases and staff as had been doing the job under the Department of Education. They took over the Department of Education's existing contracts with suppliers and other third parties.

This case was concerned with the North Wales TEC, which began operations in about September 1990. In common with the other TECs, it was a company limited by guarantee and was initially staffed by civil servants, previously working for the Department of Education, who were seconded out for a 3-year period to the TEC. The terms of secondment provided that they continued to be civil servants and that, at the end of the period, they could extend the period of secondment or return to normal civil service duties.

In September 1991 the government decided to end the secondments and arrange for staff to be directly employed by the TECs. Following a period of consultation, all staff were offered the opportunity to return to the civil service at the end of their secondment, or resign from the civil service and enter into contracts of employment with the TEC. Many employees, including the Respondents to this appeal, adopted the latter option. The three in question, who brought their claims as test cases, resigned and entered into new contracts in about October 1993 (although the process extended until 1996 for other employees).


Issue
It was common ground at the appeal that a TUPE transfer took place. The question was, when did it occur?

If the TUPE transfer took place in September 1990, then "at the time of the transfer" (being the wording in ERA 1996, s218, dealing with continuity of employment) the employees were, and remained, employees of the Department of Employment. Thus s218 would not grant them continuity of employment.

If, however, the TUPE transfer was a gradual process occurring between September 1990 and October 1996 (as the staff transferred), then the employees would have retained continuity of employment for their years spent with the civil service.


Decision
The majority of the EAT (including Hooper J.) held that the correct test for the timing of the transfer is "when the new employer takes over the actual occupation and control of the old business". This occurred in September 1990, and thus the employees remained employed by the Department of Employment after the transfer. Thus continuity of employment was not preserved.

The minority member agreed with the decision of the original tribunal, holding that the transfer took place over a period of six years and was effected by a series of transactions, ie the transfers of the individual employees.

The EAT granted permission to appeal to the Court of Appeal without recalling the parties for argument - thus acknowledging the importance/complexity of the point.

[Thanks to John Bowers QC of Littleton Chambers, Counsel for the successful TEC, for sending me this transcript.]