The Employment Appeal Tribunal has held that employees who are permanently incapacitated should be distinguished from employees who may return to work and that TUPE does not apply to those permanently incapacitated.


The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) have the effect, under certain scenarios, of automatically transferring employees who are in scope to new employers, on their existing terms and conditions.

One such scenario is the transfer of work undertaken by one contractor to another contractor. In this case, BT Managed Services Limited (BTMS) carried out work for Orange. This contract was taken over from BTMS by Ericsson.

The Claimant in the case, Mr Edwards, was permanently absent from work, and received permanent health insurance (PHI) payments. It appears that at some point there had been a deliberate decision by BTMS to maintain a permanent absence from work, so that he could receive the insurance payments.

When the transfer of the contract occurred, and Ericsson took it over, BTMS naturally wanted Mr Edwards to transfer along with the other employees. Ericsson argued that, under TUPE, only employees “assigned” to the group of employees transferring should transfer. They argued that Mr Edwards was not assigned, because his presence on the workforce was merely administrative, and he did not do anything in terms of work activities

The EAT agreed with Ericsson, and distinguished people in the position of Mr Edwards, and permanently absent from work, from those who might be absent on long-term sickness and who may, at some point in the future, carry out their activities for the business.


The unusual factor in this case is the decision to keep Mr Edwards permanently absent from work so that he could claim the PHI insurance payments. PHI cases should normally be actively managed by the employer, however, and the possibility of a future return to work taken into account. These cases, the normal cases, will usually therefore be in scope and TUPE will apply.

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Updates: For employers: TUPE |
Tagged with: TUPE |

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