Marcroft v Heartland (Midlands) Ltd

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006, an employee remains assigned to an undertaking where the employment relationship and substantive connection with that undertaking continue, even if the employee has resigned, has a reduced workload, or is permitted to remain at home on call. Resignation does not automatically make the assignment temporary. The information and consultation duties do not make compliance a condition precedent to the transfer of an employment contract. Breach of those duties gives rise to the statutory Employment Tribunal remedies, rather than avoidance of the transfer. An employee’s failure to receive personal information, and any absence of an express objection, therefore does not invalidate a transfer otherwise effective under TUPE.

Heartland (Midlands) Ltd claimed damages from Neil Marcroft for alleged breach of restrictive covenants in an employment contract originally made with PMI Health Group Ltd. The claim depended on the contract having transferred to Heartland when PMI’s commercial insurance undertaking was transferred as a going concern on 2 October 2009.

HHJ Platts, on a preliminary issue in the Manchester County Court, held that TUPE applied, that Mr Marcroft was assigned to the transferred undertaking, and that his contract transferred to Heartland. The appeal challenged those conclusions on two grounds: whether his position after resignation was only a temporary assignment, and whether PMI’s failure to provide him with written information made the transfer ineffective.

1. Appeal dismissed. The findings of HHJ Platts supported the conclusion that Mr Marcroft remained assigned to PMI’s commercial insurance department until the transfer date.
2. Assignment is a question of substance. Before resigning, Mr Marcroft spent 80% to 85% of his time in the commercial insurance business. After giving notice, he continued some commercial work and retained the same assigned position, although his work input was reduced. After 25 September 2009 he remained on call and PMI could still rely on him if problems or questions arose.
3. An employee is not automatically assigned on a temporary basis merely because the employee has resigned and the employment has a fixed termination date. Nor does a reduced workload or remaining at home on call necessarily sever the employee’s assignment. The conclusion depends on the facts and the continuing connection with the transferred organised grouping.
4. The alleged failure to inform did not invalidate the transfer. Regulation 13 required information to be provided to representatives of affected workers, not personally to Mr Marcroft. Any breach was enforceable through the Employment Tribunal remedies in Regulations 15 and 16. Compliance with Regulation 13 was not a condition precedent to an effective transfer.
5. Making compliance a condition precedent would enable a transferor to prevent a transfer simply by withholding information, undermining the protective purpose of TUPE and the Directive implemented by it. There was also no basis for the proposed implied contractual term making the transfer ineffective unless personal information had been provided.

Lord Justice Patten and Lord Justice Elias agreed with Lord Justice Mummery. The order of HHJ Platts was upheld.

• Court of Appeal (Civil Division): [2011] EWCA Civ 438 — appeal from the Manchester County Court dismissed.
• Manchester County Court: HHJ Platts, order dated 12 October 2010 — on a preliminary issue, held that there was a relevant transfer under TUPE, that Mr Marcroft was assigned to the transferred commercial insurance undertaking, and that his employment contract transferred to Heartland.