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Temporary cessation of work and lay off of employees did not preclude TUPE from applying

The Employment Appeal Tribunal has  found that an employment tribunal was wrong in finding that TUPE did not apply where there had been a lay-off of employees as a result of a commercial dispute with the main contractor leading to termination of the contract before the new contractor took on the services (Mustafa v Trek Highways Services Ltd and others UKEAT/0064/15).

In this case, Transport for London (Tfl) contracted with the main contractor to carry out road maintenance services who then subcontracted traffic management services to Trek Highways Services Ltd (Trek).  On re-tender, Tfl decided to award the work to a new provider who would take over the services on 1st April 2013.   The Claimants were due to transfer to the new provider under TUPE.  However, before this date, the main contractor and Trek had a dispute which led to Trek suspending operations on 8th March 2013 and asking staff to go home and wait to be contacted.  On 20thMarch 2013, the commercial contract came to an end by agreement and shortly afterwards Trek went into administration.

The main contractor continued to be obliged to provide traffic management services and continued to do so by alternative, ad hoc means pending the services being taken on.

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The employment tribunal found that there had been no business transfer or service provision change under TUPE given the commercial sub contract had been terminated before the new contract was due to commence. The EAT, however, disagreed stating that the suspension of work did not mean that the entity had ceased to exist.  There were still staff, vehicles, and equipment dedicated to the work and the sub-contract remained in existence.  Further, in relation to a service provision change under TUPE, it held that the wording of TUPE did not require the organised grouping of employees to be actively engaging in the activity immediately before the transfer and there was nothing in TUPE to suggest that a temporary cessation of activities would preclude there from being an organised grouping.

The case has been remitted to the employment tribunal to reconsider the application of TUPE. It confirms that simply because an outgoing contractor may not actually be performing the services in question at the time of the putative transfer, this does not, in itself, prevent there being a TUPE transfer. In particular, the EAT made clear that the reasons why the activities cease to be carried out (in this case, a commercial dispute) will usually be irrelevant to the application of TUPE.

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This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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