Benjamin Gray writes for our monthly column “View from Littleton
Chambers” in Tolley’s Employment Law Newsletter. This article first
appeared in the November 2015 edition.
The Employment Appeal Tribunal (EAT) has handed down useful guidance on
when to treat employees as assigned to a relevant grouping of employees under
the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)
in BT Managed Services Ltd v Edwards & anor.
BT Managed Services employed the claimant. He had been on long-term sick
leave since May 2006, and last worked in January 2008. The employment tribunal
found, and the evidence was, that there was no prospect of his ever returning to
work in his job, and he received permanent health insurance (PHI) benefits on
The claimant had worked on a specific contract, with its own separate
and dedicated structure. All his contact with managers, including that relating
to his sickness absence, was under this specific contract’s team. He was
counted against its headcount, and his role could not be back-filled, but had
to be covered by existing employees. His role was not changed, and he did not
move to another part of the business.
In 2013, this contract transferred to Ericsson, under what was accepted
to be a TUPE transfer. The question arose whether the claimant was assigned to
the relevant grouping of employees, and therefore whether he transferred over
to Ericsson. The tribunal held that he was not, and therefore did not.
The EAT reviewed the authorities in this area and upheld the tribunal’s
original decision. An “organised grouping” under reg 4(1) of TUPE is defined by
reference to the performance of a particular economic activity. To be assigned
generally requires some level of participation, or an expectation of future
participation, in that economic activity. That requires something more than a
mere administrative or historical connection.
In this case, the claimant had a very limited administrative connection
to the organised grouping, which was not based on any present or future
participation in the economic activity. Unlike employees on other forms of sick
leave, or on other forms of temporary absence, there was no reason to believe
that the claimant would return in due course. As the absence was permanent, and
could have no such further involvement in the economic activity, he could not
be said to be assigned to the grouping.
The organised grouping is defined by the work it carries out, meaning
that a person who plays no part in the performance of that work cannot be a
member of the group, and is therefore not assigned to it.
This case reinforces the importance of a careful exercise in identifying
which employees transfer over under TUPE. Simply looking at where employees are
assigned administratively is insufficient. There has to be something more than
the mere fact that the employee is on the books for a particular grouping. He
or she has to be participating in the economic activity that is the principal
purpose of that organised grouping. If they are not, then an assessment may
need to be made about whether there is reason to believe they will do so in the
Where employees are on long term sick leave a particular focus will have
to be made on not only their prospects for return generally, but also the
prospects of any such return being to that particular organised grouping.