Mustafa & Anor v Trek Highways Services Ltd & Anor (Transfer of Undertakings: Transfer)

A temporary suspension of an undertaking’s activities does not, without more, prevent a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006. The tribunal must distinguish the economic entity from the activities it performs and assess whether the entity retained its identity by considering all relevant factors.

Likewise, an organised grouping of employees may remain organised during a temporary cessation of work. For a service provision change, the statutory short-term exception concerns the duration of the task, not the period for which a particular transferee is expected to perform it. Employees and the reasons why an incoming contractor did not take them on are material to the identity assessment.

Trek provided traffic-management services to Amey under a subcontract. Following a financial dispute, Trek suspended operations on 8 March 2013. Its subcontract with Amey ended by agreement on 20 March. Amey made ad hoc arrangements until new highway-maintenance contracts began on 1 April 2013, when Ringway Jacobs assumed responsibility for the North-East region.

The Employment Tribunal held that no transfer of an undertaking or service provision change occurred from Trek to Amey or Ringway Jacobs. It also held, alternatively, that the claimants had been dismissed and were not employed immediately before any transfer. The claimants appealed. The central issues were whether the temporary halt in Trek’s work prevented a relevant transfer and whether the employees remained protected by TUPE.

1. Appeal allowed. The Employment Tribunal’s findings that there were no relevant transfers or service provision changes, and that the claimants had been dismissed by 20 March 2013, were set aside. The case was remitted to the same Employment Judge.

2. The Tribunal wrongly treated Trek’s cessation of activities on 8 March as determinative and equated the economic entity with the activities it performed. A temporary suspension of activity is a factor in the multi-factorial assessment of whether an economic entity has retained its identity. It does not itself destroy the entity. On the existing findings, Trek’s dedicated staff, vehicles, equipment and subcontract remained in existence during the dispute, and there was no finding that the service could not immediately have resumed.

3. For a service provision change, there is no requirement that an organised grouping of employees be working immediately before the change. Whether a grouping has retained its identity during a lay-off is a factual question. A temporary cessation of work alone does not dissolve it. The Tribunal therefore erred by treating the absence of work as conclusive.

4. The short-term exception in Regulation 3(3)(a)(ii) concerns whether the task is intended to be of short-term duration. It does not concern whether the client expected Amey’s involvement to be brief. The relevant task was the continuing provision of traffic-management services.

5. In assessing a possible transfer to Ringway Jacobs, the Tribunal could not put the employees to one side. It should have considered why Ringway Jacobs did not take the assigned employees, including whether that reflected an attempt to avoid TUPE or an erroneous view that it did not apply. It also wrongly treated Ringway Jacobs’ intended integration of the service into its own operations as material: preservation of a functional link, rather than organisational autonomy, was the relevant question.

6. The evidence and findings did not justify substituting a finding that the claimants had been dismissed before any transfer. Trek’s letters asserted that employment had transferred, rather than evincing an intention to dismiss. The enclosed P45s could not, of themselves, terminate the contracts. Regulation 4(3) also required consideration on remission.

• Employment Appeal Tribunal: appeal allowed and the Employment Tribunal’s dispositive findings set aside; remitted to the same Employment Judge.
• Employment Tribunal, Watford: Reasons sent on 26 September 2014. It held that there were no relevant transfers or service provision changes and, alternatively, that the claimants were not employed immediately before any transfer.