Continuous service and time of transfer

Mr White was a sessional teacher with Birmingham City Council, whose contract ran, along with other sessional teachers, for the academic year 1st September to 31st July. He was engaged in the Birmingham Music Service. He had been a sessional teacher since 1992.

The Council commenced consultation with the unions about a possible TUPE transfer to S4E Limited in October 2011 and was advised by the transferee that the sessional teachers would not transfer, albeit they would be invited to apply for sessional work post transfer.

The Council wrote to the sessional teachers advising them of the transfer and asking them to inform them if they were interested in being considered for sessional work with the new provider. The transfer was then punted back to September 2013 due to a number of administrative delays.

Mr White’s contract finished on 31st July 2013, as it had in all previous years due to him being a sessional teacher. He was offered, but did not sign, a zero hours contract to commence from 3rd September 2013 till 31st July 2014. The transfer duly took place on 1st September 2013. He issued proceedings against the council and S4E for unfair dismissal on the basis that he had been dismissed by S4E on either the 1st or 3rd September and re-engaged on different terms. The Council’s initial arguments that he was a casual worker were subsequently dropped and they accepted he had continuous employment until 31st July 2013. S4E accepted it has subsequently employed him.

The Employment Tribunal rejected Mr White’s arguments that the dismissal was contrary to TUPE, on the basis that he was not employed immediately before the transfer, and that the termination of his employment on 31st July 2013 was the same as in every previous year and therefore unconnected to the transfer.

In terms of continuity, the Council accepted that his absences in the summer holidays had been as a result of a temporary cessation of work in accordance with section 212(3)(b) of the Employment Rights Act. However it argued that the cessation of work on 31st July 2013 was when his employment ended because there was no further gap to bridged due to the transfer of the services to a different entity. S4E argued that he had not been employed by anyone between 1st August and 3rd September and sessional contracts could only be bridged between the same employer.

The Tribunal held that he has been employed by the Council until the expiry of his last fixed term contract; he was subsequently employed by S4E; and that his continuity of employment with the Council was preserved and then continued with S4E. It held that this was as a result of the legislation i.e. Employment Rights Act and was not dependent on a transfer from the council to S4E. The question then arose on appeal as to when exactly the transfer took place.

The EAT held that he could not rely on section 212(3)(b) ERA to bridge the gap because this only applied to employment with the same employer. If the effective dismissal took place before the start of the time of the transfer, this would have broken the continuity of employment; therefore he could not rely on section 218(2) ERA relating to the time of the transfer, that a gap in employment which would not otherwise count towards a period of continuous employment, could be bridged if it related to “the machinery of the transfer”.

The EAT, relying on previous authority regarding the period of time over which a transfer could take place, decided that the Tribunal had been entitled to find that 31st July 2013 was a date during “the time of the transfer”. It referred to the case of Clark and Tokeley Limited v Oakes, a 1999 case which held that the time a business is transferred is a question of fact and degree. It had held that the time of a transfer was not necessarily when a property was conveyed by one party to another but the process by which that result was achieved.

Applying that principle to this case, the EAT held that the Tribunal was correct to find that 31st July 2013, when Mr White’s employment ended, was a date “during the time of the transfer” and that therefore he was employed “immediately before the transfer.” He therefore had continuous employment (which had anyway been acknowledged by the Council), and the appeal by S4E was dismissed.

The EAT confirmed that there are two different concepts of timing for the purposes of transfers under TUPE, and the calculations of continuous service under the ERA. For an employee to be susceptible to transferring under TUPE they must be employed immediately before the transfer, in accordance with Celtec Limited v Astley and others. On the other hand for the purposes of continuous service under the ERA, the time of transfer is a far more moveable concept which may stretch back years before the transfer actually takes place. The result is that, “at the time of the transfer” under the ERA has a wider meaning that “immediately before” the transfer under TUPE. Since the ruling in Celtec post dates the Court of Appeal ruling in Oakes, it is to be hoped that the Court of Appeal may review this purposive approach to the question of “time of transfer” under the ERA.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.