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TUPE and identity of employer

Outsource iStock 000007727531XSmall 146x219The Employment Appeal Tribunal has recently considered TUPE transfers in the context of joint employment and multiple transferee/transferor cases. Peter Edwards, Ron Simms and Raj Basi report.

In the case of Hyde Housing Association v Layton, the Employment Appeal Tribunal (EAT) has ruled that TUPE will not apply where the original employer still retains liability for the claimant’s employment, even when that liability becomes shared with other employers. The decision may have significant implications for providers of health, social care and social housing services.

Facts

Mr Layton was employed as a multi-skilled decorator by Martlet Homes Limited, a registered provider of social housing, predominantly in the South East. In 2008, Martlet joined the Hyde Group. Following a restructure of the Group’s services, Mr Layton’s employment with Martlet was terminated and he was offered a new contract of employment by the Hyde Group, meaning that he would be jointly and severally employed by all the companies in the group, including Martlet.

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Mr Layton refused to sign the new contract and claimed unfair dismissal. As a preliminary issue, the employment tribunal considered whether his employment had transferred to the group under TUPE, meaning his terms and conditions with Martlet were preserved.

The Employment Tribunal held that there had been a TUPE transfer from Martlet to the Hyde Group. The Hyde Group appealed to the EAT.

The EAT decision

The EAT overturned the tribunal’s decision. It held that, in accordance with the wording of TUPE and the European Acquired Rights Directive from which it derives, in order for TUPE to apply, the transfer must be to “another person” and the original employer must have ceased to employ the employee. As Mr Layton’s original employer retained liability for his employment, the legal position remained unchanged. Accordingly TUPE did not apply.
 Mr Layton has been granted leave to appeal to the Court of Appeal.

What to take away

This case is of particular application to the social housing sector, where such group arrangements are common.

However, it may also impact on healthcare providers currently planning their workforce requirements for the “new models of care” proposed following the Five Year Forward View.  FYFV envisages a range of different ways of providing more integrated care, for example Multispeciality Community Providers (MCPs) and Primary and Acute Care Systems (PACS). Where provider partners enter into new delivery models, it is possible that they may do so on the understanding that they will be jointly liable for staff. In such a scenario, as a result of the Layton case it may now be more complicated to assess whether or not TUPE, or any other TUPE related obligations, such as information and consultation, applies.

Peter Edwards is senior partner, Ron Simms is a partner and Raj Basi is a senior lawyer at Capsticks. Peter can be contacted on 020 8780 4761 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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