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What happens if an employee is sick in the event of TUPE?

Employment Law & HR

Can an employee who is permanently off work sick be assigned to an organised grouping of employees in the event of a TUPE transfer?

According to the EAT in BT Managed Services Ltd v Edwards, the answer is no.


What is TUPE?

Before looking at this case, we’ll explain what TUPE is. TUPE refers to the “Transfer of Undertakings (Protection of Employment) regulations. They apply to organisations of all sizes and protect employees’ rights when the organisation or service they work for transfers to a new employer.


According to Acas, the TUPE regulations can apply when a company is sold, activities are outsourced, brought in-house, transferred or a contract for services is moved from one provider to another.


Employees from the newly-acquired business, service or contract will transfer automatically to the incoming employer. Their terms and conditions of employment (apart from occupational pensions) and continuity of service transfer with them and they also receive certain protections around dismissal and redundancy.


There are impacts for:


  • The employer who is making the transfer (also known as the outgoing employer, the ‘old employer’ or the transferor)

  • The employer who is taking on the transfer (also known as the incoming employer, the ‘new employer’ or the transferee)

  • The affected employees, including any employees remaining with the outgoing employer and existing employees of the incoming employer as well as those who are transferring.


Business transfers

The TUPE regulations apply if a business or part of a business moves to a new owner or merges with another business to make a brand new employer. A part of a business might, for example, be a distribution function of a larger organisation.


To test whether a business has transferred, a useful test is to see whether the core assets of the business have transferred to the incoming employer and are being used in essentially the same kind of business activity as previously.


The details of the case

Mr. Edwards worked for BT as a Field Operations Engineer. His record of sickness began in 2006 when he was forced to take long-term sick leave due to a number of ailments, one of the most severe being a cardiac condition which seriously limited the work he was able to do.


Despite alternative work being offered, Mr. Edwards remained on long-term sick and last worked in 2008, being considered permanently incapacitated. However, he remained ‘on the books’ in order to benefit from payments under a permanent health insurance scheme, and then discretionary sick pay later on.


In 2013, the group he had worked for (and was still ‘on the books’) were transferred via TUPE to another company, Ericsson. However, Mr. Edwards was not.


Why no transfer?

In this case, Mr. Edwards did not transfer because he was not assigned to the group of transferred employees.


The EAT held that in order to be assigned to an organised grouping, Mr. Edwards would, “generally require some level of participation or, in the case of temporary absence, an expectation of future participation in carrying-out the relevant activities on behalf of the client.”


Because Mr. Edwards was only associated with the group for administrative reasons (i.e. for his sickness payments) he did not meet criteria to be transferred. The EAT ruled that in order to qualify, Mr. Edwards would have needed “some participation in the grouping’s economic activity” at some point.


What does this mean for absent employees facing TUPE?

This ruling confirms that some economic contribution to a grouping is required to be considered eligible for TUPE.


In Mr. Edward’s case, the key was that he was considered permanently incapacitated and would never contribute to the economic activity of his group. This is in contrast to those temporarily absent, who are expected to return to work, who would at some point contribute to a grouping.


Have a question about TUPE?

TUPE is one of the most confusing areas of HR because there are so many individual cases! In fact, the EAT in the case above did state that these sorts of claims must be heard on a case-by-case basis as a blanket ruling is complicated by individual circumstances.


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