Key Communications v Rose & others (EAT, Maurice Kay J., 5th July 2002)
An interesting TUPE decision on the meaning of "a transfer of an undertaking...may be effected by a series of two or more transactions".
An insolvent business was purchased by Key Communications from the receivers on 24th December 1998. During the negotiations, Key Communications agreed that it would sell the business on to another company, Impact, which had been unable to raise the funds sufficiently swiftly to meet the receivers' needs.
The employees of the business were not taken by Key Communications on 24th December 1998 (the date of the first sale).
The business was sold on by Key Communications to Impact on 19th April 1999.
The Employment Tribunal Decision
The employment tribunal found there had been a TUPE transfer from Key Communications to Impact on 19th April 1999. However, because the employees had not been taken on by Key Communications on 24th December 1998, they were not employed by Key Communications at the date of the transfer on 19th April 1999 - and thus did not transfer across to Impact. Accordingly Key remained liable for redundancy (and possibly unfair dismissal) payments.
The Employment Appeal Tribunal Decision
The EAT held that the ET had not properly considered the impact of TUPE reg3(4), namely that "a transfer of an undertaking...may be effected by a series of two or more transactions".
The ET had been wrong to rely on the four month gap between the transfers as meaning there was no 'series' of transactions. It had always been contemplated by Key Communications and Impact that the transaction would take effect as part of a series. There was no statutory necessity for the further transaction to take place immediately.
Accordingly the appeal was allowed.
The decision can be seen at http://www.employmentappeals.gov.uk/uploads/EAT1292001852002/index.htm