September 21, 2015

Long term sickness and TUPE employee rights

Most HR professionals will know that when a business changes owner, its employees’ rights, duties and liabilities are directly transferred under the TUPE legislation.

But it turns out this is not necessarily true if they are on long term sick leave, according to a recent case.

TUPE, or Transfer of Undertakings (Protection of Employment), was designed to introduce three basic concepts into UK employment law when a business is sold.

  • Employees employment rights remain intact
  • Employees have protection from dismissal if they are dismissed due to the transfer
  • Employees should be informed and consulted about the transfer via their representatives

When employees are on short term or temporary absence from work due to illness or family related leave, their rights will remain intact when their employment is transferred to a new owner.

However, the recent case of BT Managed Services Ltd vs Edwards & Anor confirmed that an employee on long term sick leave who was not expected to return to work did not transfer to the new business.

The employee was not ‘assigned’ to the organised grouping of employees that transferred as a grouping is defined by reference to performance of a particular economic activity, persons who are permanently unable to contribute to that activity are almost by definition excluded.

What happened in the case?

  • Mr Edwards was absent from work for around 5 years
  • In about 2010 he was deemed incapable of returning to work
  • He remained on the employer’s books, albeit without pay, for contractual reasons
  • The Employment Appeal Tribunal (EAT) ruled that by the time of the transfer he was no longer a part of the business
  • The EAT concluded he was permanently absent and not assigned to the business

What does this mean for employers?

If you have an employee who is on long term sick leave, they will not transfer under TUPE to a new service provider if, at the time of the service provision change, there is no prospect of them ever being able to return to work.

However, it is important to bear in mind that the decision only applies where an employee is permanently unable to return to work. It does not apply in other cases of long term sick leave or long term absence, such as maternity leave, where the employee is expected to return.

When considering who makes up the organised grouping to decide who may or may not transfer under TUPE, employers are advised to obtain up-to-date and definitive medical evidence to determine whether an employee is likely to return to work following that period of sickness absence.

If need support understanding this complex subject, you can contact us. To stay up-to-date with the latest Employment Law changes, read our Employment Law Guide.

By Jonathan Melia

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