Permanent sick leave: Does employment still transfer under TUPE?

25 September 2015

If an employee is permanently off work on sick leave, will his employment still transfer under TUPE? 

This issue arose in BT Managed Services Ltd v Edwards.  Mr Edwards had a heart condition and as a result was on long term sickness absence. The sickness absence was permanent and there was no expectation that he would ever return to work for his employer, BT, and indeed he was in receipt of Permanent Health Insurance benefits.

Mr Edwards’ division transferred under TUPE to Ericsson, however Ericsson refused to accept Mr Edwards on the grounds that his long term absence prevented him from being “assigned” to the transferring division at the time of the service provision change.

The Tribunal, and subsequently the Employment Appeal Tribunal, found that Ericsson was justified in refusing to accept Mr Edwards as he was not assigned to the transferring division. To be assigned in this way, there needs to be something more than a mere administrative or historical connection between the employee and the division. There must be some level of participation by the employee in the activities which are the main purpose of the grouping, or, if the employee is temporarily absent from work (for example on long term (but not permanent) sick leave, or maternity leave), there must be an expectation that he or she will carry out those activities in the future.

As Mr Edwards had only a limited administrative link to the division and there was no participation by him in the activities of the division, nor an expectation that there would be such participation in the future, he was not assigned to that division for the purposes of the TUPE regulations.

The Employment Appeal Tribunal took care to distinguish the situation in which an employee is permanently unable to return to work from an employee who is on long term sick leave but who may return to work in the future. If the former is the case, transferor employers should be aware that such employees may not transfer across in a TUPE situation, and transferee employers should be aware that they may be able to argue that they should not have to accept such employees.

For further information, please contact a member of our employment law team.

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