Following a decision by the European Court of Justice, the House of Lords has confirmed that transfers under TUPE (Transfer of Undertakings (Protection of Employment) Regulations 1981) must take place on a specific date and not over an extended period of time.
In addition, employers and employees cannot agree a date for the transfer that is not the legal transfer date. Effectively, this means that TUPE overrides any agreements put into place by employer and employees.
The case, Celtec v Astley, particularly relates to secondments. It dates back to September 1990 when the Department of Education (DofE) created Training and Enterprise Councils (TECs) and seconded civil servants to run them.
In 1993, the civil servants were offered the chance to either return to the DofE or to be transferred to the employment of the TECs and sign contracts with Celtec’s predecessor Newtec – the employer.
The claimants were made redundant in 1998 and claimed redundancy payments based on continuous service from the date they joined the civil service. The question for the courts was whether the transfer took place in 1990 when the employees were seconded or in 1993 when they signed the new contracts.
The five law lords all gave separate opinions but four agreed with the ECJ that the transfer actually took place in 1990 – even though everyone thought the claimants were still employees of the civil service at the time.
In his dissenting judgment, Lord Mance pointed out that this could lead to commercial problems as if the claimants had continuity of employment, then logically those civil servants who chose to return to the DofE in 1993 must have had a break in their continuity of employment.
This is a particularly complex judgment, partly because the court also had to look at the Acquired Rights Directive, which must be interpreted in a way beneficial to employees.
One way to consider it is to fictionalise secondments. In cases where the employee is seconded and then transfers to the new company then the transfer takes place on the date of secondment and there is no break in service for redundancy purposes – it as if the secondment never took place.