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TUPE applies to single employee

TUPE applies even if there is one employee. A single employee is “an organised grouping of employees”.

The Court Appeal has provided some valuable assistance in Rynda (UK) Ltd v Rhijnsburger [2015] EWCA Civ 75 (‘Rynda’) on when employees or a single employee can transfer under the Transfer of Undertakings Regulations 2006 (‘TUPE’) under a service provision change. Given the risk of employment litigation and compensation pay outs if TUPE has not been complied with the decision does carry serious ramifications especially for smaller businesses who may not immediately appreciate that TUPE applies.

TUPE transfer: background

TUPE applies to a ‘relevant transfer’. This can be either:
• a transfer of a business; or
• a service provision change.

The case of Rynda concerns a service provision change and this incurs when a client, which engages a contractor to do work on its behalf, reassigns such a contract or brings the work back in-house.

There are certain requirements that must be incurred for a service provision to take place and one of these requirements is that there must be ‘an organised grouping of employees’ of which the principal purpose is the carrying out of the activities concerned for the client on their behalf.

A relevant example for IT is the decision to outsource software development to a new provider, but then subsequently reassigning the contract in question or bringing the work back in house.

Fail to comply with TUPE, and an employment tribunal can award each affected employee 90 days gross pay. The claim must be brought by the appropriate representative within 3 months of the dismissal. Note this award is punitive rather than compensatory. The amount depends on the seriousness of the employers breach, not the employees’ loss.

The Facts of Rynda

Drivers Jonas initially employed Ms Rhjinsburger (‘Ms R’) as a Commercial Property Manager. She had single responsibility for managing and looking after a Dutch property group for Rynda Group, the client. Previously, she had looked after a collection of German properties , but now focused exclusively on managing the group of Dutch properties. Ms R worked individually and not part of a team.

Deloitte LLP acquired Drivers Jonas on April 2010. The company became Drivers Jones Deloitte LLP (‘DJD’). Ms R transferred to the new company DJD. Noot long afterwards, DJD decided to withdraw from managing the group of Dutch properties. In December 2010, Ms R’s employment ended. Before Ms R’s employment with DJD ended, Rynda organized their UK Subsidiary to take over its property management. Ms R joined the UK Subsidiary in January 2011, carrying out identical responsibilities and obligations as before.

Issues subsequently arose between Mr R and the UK Subsidiary and she was discharged. Ms R wanted to sue Rynda’s Uk subsidiary for unfair dismissal, but in order to do so she has to illustrate she had the sufficient length of continuous employment and to show this she had to prove that she transferred from DJD to Rynda’s UK subsidiary under TUPE.

Rynda’s UK subsidiary put forward the argument that Ms R did not establish ‘an organised grouping of employees’ for the purposes of TUPE.

The Decision in Rynda

The Court of Appeal disagreed and stated that there had been a service provision change under TUPE and accordingly Ms R had indeed transferred from DJD to Rynda’s UK subsidiary. In reaching its decision, the Court of Appeal directed tribunals to apply a four stage test in cases of this type to act as useful guidance for employers in potential TUPE transfers.

Four stage test to establish if TUPE applies:
• Identify the service which was provided by the client.
• Look and identify the activities that employees perform when providing that service.
• Identify the employee or employees who carry out the service.
• Asses whether the principal purpose of those employees or employee is carrying out those listed activities.

Tips for dealing with TUPE

The decision highlights that one employee can amount to an ‘organised grouping’ for the purpose of TUPE and tempting as it may be, TUPE should not be overlooked.

Companies which outsource or insource their business functions should look to examine whether if they will be providing an identical service that is essentially the same as those undertaken by the previous company or contractor and whether under TUPE any of the employees will transfer.

To review our advice for employers HR support and employment law guidance click here.

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