The House of Lords decision in a recent case (Celtec v Astley) has important implications on the use of secondment arrangements in a potential TUPE transfer situation. In 1990 the Government outsourced their vocational training to a new organisation (C) and seconded a number of civil service employees to C. Three years later the seconded employees were given the option of resigning from the civil service and undertaking employment with C, or being reallocated to a different civil service department. The employees chose to take up employment with C. Five years later C made one of these employees redundant and based the redundancy payment on her continuity of employment dating back to 1993. A claim was raised arguing that in calculating continuity of employment, the seconded employees’ employment with the civil service should be included.
The House of Lords held the seconded employees’ employment had transferred to C at the time of their initial secondment in 1990, as the responsibility for carrying on their training transferred to C at that time. The seconded employees were not given the choice of remaining in the employment of the civil service and their employment therefore automatically transferred to C in 1990, despite the fact that all parties concerned believed the employees were employed by the civil service at that time.
This decision clarifies that the TUPE Regulations will override any agreement between the parties. The House of Lords, following the ECJ's ruling, held a TUPE transfer must take place on a specific date, being the date on which responsibility for carrying on the business transfers. This decision has significant implications, in particular when businesses are transferred in stages, as a specific date for the transfer will need to be identified for TUPE purposes. It appears that a transfer of an undertaking in stages over an extended period of time will require to be viewed as a series of separate transfers of parts of the undertaking. Technically each transfer should therefore have a separate information and consultation process and separate employee liability information obligations.
The argument raised by C, that by agreeing to the secondment the employees thereby objected to the TUPE transfer, was rejected by the House of Lords. Where secondment arrangements are used in a TUPE transfer situation, it is vital the old employer follows the correct procedural steps and ensures any seconded employee wishing to remain employed by the old employer has the opportunity to object freely to the transfer.