Senior Employees Do Not Necessarily Transfer under TUPE

The EAT has held in Edinburgh Home-Link Partnership and others v The City of Edinburgh Council and others (UKEATS/0061/11) that the executive directors of a transferor organisation did not transfer under a TUPE service provision change because their roles were strategic and managerial in nature and not sufficiently connected with the services to the client.

The transferor organisation was a housing charity which provided services to its sole client, the local council.  The local council decided to take those services back in-house.  It was accepted that this constituted a service provision change under TUPE.  The contracts of employment of employees assigned to the organised grouping of employees subject to the transfer would therefore pass from the housing charity to the local council.  The directors, who were also employees, argued that they were part of that organised grouping of employees.  

The EAT disagreed with the directors on the basis that their roles were mainly strategic in nature and principally directed to the survival and maintenance of the company as an entity, rather than being assigned to the group which had "as its principal purpose" the carrying out of the services for the client.  The EAT found that direct services to the local authority formed a minimal part of their day-to-day activities.  Employers should take note that senior individuals who are running departments or organisations operating for the benefit of a single client will not necessarily transfer under a TUPE service provision change if their roles are not sufficiently dedicated to the provision of services.