Posted on 15th February 2016

In Mustafa and another v Trek Highways Services Ltd and others UKEAT/0063/15/BA 29, President Simler has given Judgment, on a TUPE case concerning those workers who ceased working for a contractor before the new contractor took over. Approving the decision of HH Judge Serota QC in Inex Homes Improvements Ltd v Hodgkins and others [2016] ICR 71, President Simler accepted that  a gap between the cessation of operations by one employer and the start of operations by another did not negate the existence of a transfer.

The Claimants were employed by Amey, the main contractor for a TFL contract. Amey transferred certain employees to Trek, a subcontractor for the TFL contract.  Contractors were required to re tender for a divided contract worth over £300 million. Amey lost the tender to other contractors Ringway Jacobs and Conway FM, who were allocated the contracts for two separate areas. The employees of Trek were assigned to regions based on how they had worked. Prior to the transfer of the contract, Trek refused to engage its employees on any further work whilst a dispute ensued with Amey over unpaid invoices. Amey carried out emergency road repairs for three weeks, as it did not have the resources to carry out the obligations under the original TFL contract. The employees, of Trek, who believed that they were to work for Conway FM or Ringway were left without work. Mustafa and others were not offered employment by either Conway FM or Ringway.

At the ET, the Claimant had relied upon a few cases such as Ny Molle Kro C-287/86 [1989] IRLR 37, the issue was whether there could be a transfer (within the meaning of the relevant Directive) when there was a change in the employer responsible for running a seasonal inn which was only open in the summer and was closed at the time the new employer took over. The ECJ held that the temporary closure of the undertaking and the absence of staff at the time of the transfer were not in themselves sufficient, particularly in the case of a seasonal business, to preclude the applicability of the Directive. (see also P Bork International A/S, (in liquidation) v Foreningen af Arbejdsledere I Danmark [1989] IRLR 41).

In Wood v Caledon Social Club Ltd (Debarred) and London Colney Parish Council [2010] UKEAT/0528/09 12 March 2010, the Claimant was employed by R1 as a bar steward at the Caledon Community Centre. On 11 August 2008 R1 surrendered its lease of the Centre to R2, which owned the freehold. The claimant was dismissed the following day, on 12 August 2008. On 16 September 2008, R1 surrendered its licence of the club area to R2. In due course, R2 resumed the operation of the bar, with effect from 6 October 2008. The ET found by a majority that there was no relevant transfer, because the bar had ceased to operate for a period. On appeal, the EAT overturned the decision of the majority. It held that there was merely a temporary cessation of the operation of the bar and that the economic entity did not cease but was “temporarily suspended”. The transfer took place on 16 September 2008 because it was plain by that date that R1 intended to re-open the bar.

Whilst the ET found that there had not been a transfer in Mustafa and anor v Trek, the President of the EAT held that an ‘organised grouping of workers’ did not have to be working immediately before the TFL contract was taken by another contractor. In this case, there was cessation of work on the road repair contracts for a period of three weeks because of the sub contractor raised a dispute with the main contractor.  Although emergency repairs was carried out by the main contractor on an ad hoc basis, they did not engage the organised grouping of workers, choosing to use their own resources as they could. However the President held that the emergency repairs carried out on an ad hoc were not relevant to the issues of the organised grouping. In turn that temporary cessation of work for the organised grouping did not preclude a transfer of their employment to the next contractors nor destroy the organised grouping.

The President agreed with submissions made at the ET that the work of road repairs was like any construction work, dependent largely on resources of workers.  In such circumstances, it was critical to consider why the workers were not taken on by the incumbent contractor and if the work remained of the same kind. If the answer to both questions was in the affirmative because the new contractors did not wish to employ the organised group of employees or because of a mistaken belief that they did not have, then the ET would have concluded that there was a transfer. How the work is organised, because for instance a split in the tender between two contractors instead of one, makes no difference.

Therefore the appeal of Mustafa and others was allowed, so that they can proceed with their claim for unfair dismissal for not having been permitted to transfer to the new contractors of the TFL road repair contract.

This article was written by No5 Chambers Employment Barrister, Nabila Mallick.

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