Inex Home Improvements Ltd v Hodgkins

A temporary cessation of work, including a temporary lay-off, does not automatically dissolve an organised grouping of employees for the purposes of a service provision change. The question is whether, on all the facts, the grouping retained its identity immediately before the change. Relevant considerations may include the purpose, nature and length of the cessation and whether the employees remained available to resume the activities.

The service provision change provisions in the Transfer of Undertakings (Protection of Employment) Regulations 2006 are domestic provisions. Nevertheless, jurisprudence concerning temporary cessation under the Acquired Rights Directive provides a helpful analogy. The protective purpose of TUPE is also relevant to construction.

The Claimants were employed by Inex in a team dedicated to refurbishment work under the Sandwell contract. When one tranche of work ended, they were temporarily laid off under the Construction Industry Joint Council Working Rule Agreement, while Inex represented that further work would shortly become available.

The client’s main contractor subsequently placed substantially the same work with Localrun. The Employment Tribunal found a service provision change but held that no organised grouping existed immediately before it because the Claimants were not working. Inex appealed. The central issue was whether temporary cessation of work and lay-off necessarily prevented the continued existence of an organised grouping under regulation 3(3)(a)(i).

1. Appeal allowed and case remitted. The Employment Tribunal had misconstrued regulation 3(3)(a)(i) by treating the temporary lay-off as terminating the organised grouping without considering whether it retained its identity.
2. A temporary cessation of work immediately before a service provision change does not necessarily prevent a TUPE transfer. The statutory language does not require the organised grouping to be physically engaged in the activities at that precise time. Indeed, cessation of activities is an integral feature of a service provision change under regulation 3(1)(b)(ii).
3. The question is factual. The Employment Tribunal must decide whether the grouping remained an organised grouping situated in Great Britain whose principal purpose was carrying out the relevant activities on behalf of the client. The purpose, nature and length of the cessation may be relevant, together with other circumstances bearing on whether the grouping retained its identity.
4. The Tribunal should consider the temporary character of the lay-off, the CIJC Joint Secretaries’ Guidance Notes, and Inex’s representations that the Claimants remained employees and would be re-employed when work became available. A lay-off may in an appropriate case dissolve a grouping, but something more than a temporary absence of work is required.
5. Although the service provision change provisions are domestic legislation, principles derived from CJEU jurisprudence on temporary cessation under the Acquired Rights Directive provide a helpful analogy. Regard must also be had to TUPE’s protective purpose, apparent from its title.
6. The case was remitted to Employment Judge Kearsley for a further Preliminary Hearing to determine whether the grouping retained its status and whether the individual Claimants were assigned to it.

• Employment Appeal Tribunal: allowed Inex’s appeal from the Employment Tribunal’s Preliminary Hearing decision and remitted the case for reconsideration.
• Employment Tribunal: found a service provision change but held that no organised grouping existed immediately before it because the Claimants had been temporarily laid off.