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The Employment Appeal Tribunal has clarified that, for TUPE transfers where services are outsourced or re-tendered, a full-time employment contract for one employer can be split into multiple part-time contracts with different employers.
Where services are being outsourced for the first time or going through a re-tendering process, it can be tricky to determine how TUPE applies when the services are being split between two or more providers. In such cases, it is not always clear which employees will transfer to which employer (if at all), together with all their employment rights and liabilities.
In what has been a changeable area of TUPE law in recent years, the EAT in McTear Contracts Ltd v Bennett and others have gone some way towards clarifying how TUPE will operate when a service splits between multiple providers.
Previous UK case law set out that where more than one contractor carries out activities following a service provision change, the liability for the employees will pass to the service provider that takes on the greater part of the activities carried out pre-transfer.
The ECJ, in the Belgian case of Govaertz, called into question the existing position on multiple transferees in the UK. It ruled that in a transfer to multiple employers, the employment contract of a transferring worker could be split between each of the employers in proportion to the tasks performed by the worker, provided that:
In the Govaertz case, a single full-time employment contract was split into several part-time contracts with different transferees. However, if the division of the contract was impossible or would deteriorate working rights and conditions, the contract may be terminated, and that termination would be the responsibility of the transferee(s), even if it was initiated by the worker.
Considering the impact of the decision in Govaertz, the EAT confirmed that in a TUPE scenario, there was no reason in principle why an employee may not hold two or more contracts of employment with different employers at the same time, provided that the work attributable to each contract was clearly separate from the work on the other(s) and was identifiable as such.
The EAT remitted this case to the tribunal to reconsider the application of TUPE.
The EAT's judgement, in this case, is binding on Employment Tribunals in England and Wales and Scotland. The decision is helpful in that it clarifies that the approach in the UK (on either service provision changes or business transfers) can, in principle, follow the method used in Govaertz. This may be seized on by employers in TUPE situations to attempt to reduce their liability, either in commercial negotiations or when faced by claims from transferring employees.
The EAT's decision still leaves unanswered questions in TUPE situations involving multiple transferees, such as:
The EAT gave no consideration to the practical application of this, so employers will need to keep an eye out for further decisions in this area. Only time will tell whether the decision will remain applicable law or whether it will be challenged and departed from in the future.
Suffice to say that employers in TUPE situations that may include multiple transferees will need to act with caution, consider the possibility that employment contracts could be divided between multiple employers and take legal advice where there is uncertainty.