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Identifying the "affected employees" under TUPE

Posted on 30th May 2013
Case law

In this case the Employment Appeal Tribunal had to decide if employees working in a part of the business that did not transfer were affected employees.

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Adrian Green Adrian
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Senior Employment Law Solicitor Telephone: 01473 694403

the claimants were not “affected employees” simply because they worked in part of a business which was not sold and was less viable after the transfer

I Lab Facilities Ltd v Metcalfe & Others [April 2013] EAT

The facts

I Lab UK Limited (‘I Lab’) had, as a result of a previous merger, two distinct parts to its business. One part dealt with the production of “rushes”. Rushes are the first version of a piece of filming. They are produced on a rough and ready basis, typically overnight. The other part of the business specialised in post-production work. This was more sophisticated work and was typically done during normal working hours.

Not long after the merger I Lab got into financial difficulties. There was some uncertainty about what would happen. For a time it was proposed that a relevant transfer would take place in relation to the post-production part of the business as well as the rushes part of the business. However, what eventually happened was that the rushes part of the business was sold and the post-production part of the business was shut down.

Former employees of the post-production part of the business brought proceedings in the employment tribunal for breach of the obligation to inform and consult under TUPE.

The former employees were successful in the employment tribunal and received a protective award. The employer appealed to the EAT.

The decision

The EAT held that the employees in the post-production part of the business were not affected employees.

It concluded that the claimants were not “affected employees” simply because they worked in part of a business which was not sold and was less viable after the transfer. However, the EAT was quick to point out that it was not saying there could never be an obligation to inform or consult in relation to any employee who is not transferred in such circumstances. A proposed transfer may well affect such employees, for example if they did some work in or for the part of the business that transfers.

In practice

In practice it can be problematic to identify the affected employees prior to a transfer taking place under TUPE.

The above decision helps clarify the situation. It makes it clear that employees are not automatically ‘affected employees’ just because they work for an employer who transfers part of its business. This is the case even when the part of the business that is left has been made less viable by the fact of the transfer.

There will still be situations where it is hard for an employer to know whether an employee is an ‘affected employee’ or not. In such situations taking advice from us can help remove any doubt. The general rule is that it will be advisable to err on the side of caution and treat the employee as an affected employee. That way employees are properly informed and you minimise the risk of a protective award of up to a maximum 13 weeks’ pay, calculated at the employee’s actual gross weekly pay rate with no cap.

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