The Civil Division of the Court of Appeal handed down its judgment in the case of Marcroft v Heartland (Midlands) Ltd [2011] EWCA Civ 438 on 14 April 2011, concerning the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 SI 2006/246 (“the TUPE Regulations”) to an unusual set of circumstances. The first issue was whether the appellant had been “assigned” to the commercial insurance part of PMI’s undertaking at the date immediately before the relevant transfer, but “on a temporary basis” under Regulation 2(1). The second, whether, where an employee so objects, the relevant transfer operates to terminate his contract of employment with the transferor but not so that he should be treated as having been dismissed by the transferor.

The appellant had been employed by PMI in its commercial insurance department from July 2008. His contract of employment contained a restrictive covenant prohibiting him from approaching clients of PMI whose accounts he had managed or about whom he had acquired knowledge while with PMI. In August 2009, PMI entered into negotiations for the disposal of the commercial insurance undertaking to the respondent and on 15 September, the appellant submitted notice of his resignation. He was officially informed by the directors at a meeting attended by him on 25 September 2009 that it was proposed to sell the business to the respondent, who had agreed to buy it. It was agreed he was not to attend the office to work, but that he would be “on call” at home, if necessary. There was no consultation with him about any actual or prospective transfer, and nor did he receive any documentation about the transfer. Between 25 September and 2 October 2009 a formal written agreement was entered into for the transfer of the business as a going concern, but making no reference to the appellant by name or to the transfer of his contract of employment.

On 25 November 2009, PMI’s solicitors wrote to the appellant alleging that he had breached his restrictive covenants in his PMI contract by soliciting clients of PMI. The appellant originally argued that the TUPE Regulations applied and that his contract had been transferred to the respondent, which had the benefit of any effective covenants. On the respondent bringing suit for damages for breach of contract relying on the TUPE Regulations, the appellant argued that, inter alia: the TUPE Regulations did not apply; that there had been no relevant transfer; and that PMI had deliberately breached its duty to provide him with information about the transfer, thereby depriving him of the opportunity to object to it and rendering the transfer of his contract of employment ineffective.

His Honour Judge Platts, at first instance, found that there had been a relevant transfer by PMI to the claimant under Regulation 3; that the appellant had been employed by PMI; that the appellant was assigned to the business of the commercial insurance department at PMI which was transferred to the respondent; and that he had been given information and had had adequate opportunity to object to the transfer.

The appellant submitted that the judge had erred in law in several respects: he failed to interpret properly the protective nature of the TUPE Regulations; he failed to give proper consideration to the notion of a temporary assignment in TUPE Regulation 2(1); and he failed to give adequate consideration to the fact that the appellant had not been provided with information and documents or afforded a right to object to the transfer.

Lord Justice Mummery, delivering the lead judgment of the Court held first that while HHJ Platts had stated neither that for the purposes of the Regulations “assigned” did not include “assigned on a temporary basis”, nor had he discussed the nature of the appellant’s position in PMI during the relevant period in terms of whether or not he had been assigned on a temporary basis, his decision on that point had not been wrong. He had dealt with the substance of the appellant’s arguments that he had not been “assigned” within the meaning of the TUPE Regulations.

The failure to inform and alleged denial of the right to object could not render ineffective the appellant’s transfer. There had been no conspiracy by PMI and the claimant to evade the TUPE Regulations which would disentitle the appellant from claiming that there had been a TUPE transfer. There was no legal basis for saying that the transfer of his contract of employment was, on the facts, ineffective. There was a duty under Regulation 13 to provide the representatives of the affected workers with certain information, but not including the right to object, and not to provide the information to the appellant personally. Compliance with Regulation 13 was not a condition precedent to an effective transfer of a contract of employment, and finally there was no basis in fact or law for the suggested implied term in the contract of employment that would render the transfer of it ineffective unless the employee had been provided with information by the employer about the transfer.

The Court of Appeal thus dismissed the appeal, commending the judge at first instance for having carefully considered the evidence and submissions, making clear and firm findings of facts, and correctly applying and interpreting the TUPE Regulations to those facts.