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Seconded workers are TUPE-transferred

23 June 2006

Employees going on secondment to other organisations may unwittingly be transferring their employment status for legal purposes, following a House of Lords judgment this week.

The Lords interpreted a European Court of Justice (ECJ) decision that a transfer of undertakings occurs on the date when “responsibility as employer for carrying on a business of the unit transferred moves from the transferor to the transferee” as meaning that an employee – the ‘unit’ in the ECJ’s judgment – changes employer if they are seconded out.

“The wider implication of this ruling is that the date of transfer of undertakings cannot be changed by the will of either party with or without consent,”said the appellant’s solicitor Richard Corran, a litigation specialist at Mace and Jones. “The fact that neither the employee or employer thought or wanted a transfer to take place in this case, does not mean it didn’t occur.”

Celtec v Astley [2006] UKHL 29 revolved around the exact date an employer transfers business undertakings and the effect on an employee’s rights under the Acquired Rights Directive 77/187/EEC and the Transfer of Undertakings (Protection of Employment) Regulations 1981, which transpose the Directive into national law.

The dispute arose between Newtec, a North Wales training and enterprise council, now known as Celtec, and a group of employees who were seconded to it for three years from the Department of Employment in 1990. After the secondment finished in 1993, the employees chose to stay on as Newtec employees, rather than return to the civil service and Newtec subsequently argued that this is the date their employment started. However, the employees argued that as the ‘Tecs’ were a government initiative, the transfer had taken place over a period of time between 1990 and 1993. This entitled them to longer continuous service with Celtec, improving redundancy entitlements.

After a 1999 employment tribunal decision in favour of the employees, a 2001 Employment Appeal Tribunal decision backing Celtec, and a subsequent reversal in the Court of Appeal, the House of Lords referred the case to

the Luxembourg court, which decided that the date of employee transfer is “a particular point in time which cannot be postponed to another date at the will of the transferor or transferee”. The ECJ decided that this date was dependent on the date the “responsibility for the unit” is transferred and both parties accepted this was when the secondment began in 1990.

In the Lords, the employees argued that if this was the case, they were employed by Newtec/Celtec from 1990 and any decision to permanently join from 1993 should be viewed as “continuous service” as they were remaining with the same employer. Celtec argued that this was a new line of argument that should not be allowed at this late stage of proceedings and requested the case go back before the employment tribunal.

Dismissing Celtec’s appeal, Lord Hope said it was “the duty of the national court to give them [the employees] that opportunity [to present the new line of argument] in view of the ECJ’s ruling.” In light of this, Hope LJ, backed by three other Law Lords held “that the respondents had continuous employment with Celtec from the start of their employment with the civil service by virtue of the Acquired Rights Directive”.

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