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We have recently insourced building maintenance work after unsuccessfully outsourcing this work some 18 months ago. We have an individual (the former Building Maintenance Manager) claiming that they ought to have transferred employment to us upon insourcing.
When we outsourced business maintenance, this person transferred to the new provider but then changed his role to Maintenance Manager for the new provider’s entire Northern Ireland region. When we insourced building maintenance work, we did not take back this individual because his role had changed significantly and we did not believe he was entitled to transfer back to our employment. He says that he ought to have transferred back to our employment and is threating to bring an Industrial Tribunal claim. How do I handle it?
Sharon McArdle of Tughans Solicitors writes:
The situation you describe is one which may constitute a service provision change, in that activities ceased to be carried out by a contractor on a client’s behalf and are carried out instead by the client on his own behalf (Regulation 3(1)(c) of the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006).
In order that an individual is entitled to transfer employment from the contractor to the client in these circumstances, he or she must be “assigned to an organised grouping of resources or employees that is subject to the service provision change”. “Assigned” means “assigned other than on a temporary basis”, however legislation tells us no more than that. The issue of assignment is a question of fact for the Industrial Tribunal. Initially employment tribunals applied a percentage test, but European case law has subsequently confirmed that this is not the correct approach.
The proper test is the “Botzen test”, set out in Botzen –v- Rotterdansche Droogdok Maatschappij BV, which said that an employment relationship is essentially characterised by the link existing between the employee and the part of the undertaking or business to which he is assigned to carry out his duties. The test requires the Tribunal to establish to which part of the undertaking or business the employee was assigned.
Authorities which apply this test may support a view that the Maintenance Manager is not assigned to the activities which transferred back to your organisation.
In Kingston v Darlows Estate Agency, unreported 1998, the UK Court of Appeal found that the Manager of a Regional Office was not entitled to transfer employment to a Transferee when a number of sub-offices were transferred to a buyer. It was found that the Regional Manager was not assigned to any of the Branches transferring; his managerial and administrative responsibilities covered the whole of the region without assignment to any particular part. As he was not assigned to the part of the business transferring but was responsible for the region as a whole, he had no transfer rights under TUPE.
In the case of Skillbase Services Limited –v- King, Falkirk Council had put out its local repair requirements under contract to Skillbase. The contracts were administered out of a depot at Grangemouth. Mr King was a Branch Manager at Grangemount who managed all of the contracts supervised out of that Branch. About 80% of the Branch turnover emanated from the Falkirk Council contract. Despite this volume of business, King remained responsible for all other contracts managed out of the Branch and was not responsible for the day to day supervision of the Falkirk contract. When the Council decided to bring the contract back inhouse, a dispute arose about who, of the Skillbase team, was on the “transfer list” for transfer back to the Council. The Employment Tribunal held that Mr King was not assigned to the contract given the above facts. The EAT declined to interfere with the decision of the Employment Tribunal, recognising the distinction between someone working exclusively on a particular contract and a person employed in the executive capacity managing a Branch such as the position of, in the present case, Mr King.
This case also confirms that the percentage test is not the correct test to establish whether an employee is assigned to activities transferring. Although this is commonly used, it is not the basis of the Botzen test, which is the test which should be applied.
You have advised that in the role of Maintenance Manager for the Northern Ireland region the individual was responsible for overall management of several contracts in respect of multiple organisations and not just the contract in respect of your organisation. Therefore, it is arguable that he would not have been specifically assigned your organisation and was instead employed in an executive function, managing the providers’ contracts in Northern Ireland.
In view of the complexity of this area of law, however, I recommend that legal advice be taken following detailed instructions in relation to the precise facts of this case. If the individual was to successfully claim transfer rights, then he would have an unfair dismissal claim against your organisation. In addition to that he would have a claim in relation to failure to inform and consult about the transfer.
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