Case law has established that temporary absence from work, for example on sick leave or family-related leave, does not prevent an individual being 'assigned' to a grouping of employees and therefore transferring with that grouping where there is a service provision change under TUPE. The EAT has now confirmed that the position is different where the absence is permanent, ie there is no expectation of a return to work; in that event an employee will no longer be 'assigned' to the grouping. Continue reading
Tag: service provision change (UK)
The EAT has ruled that there can theoretically be a change of service provider covered by TUPE even where the service is provided to more than one client under more than one contract, provided the clients are a group with a common intention as to the manner in which the activities are to be carried out and they remain the same post transfer. The reference in TUPE to "a client" could be interpreted as encompassing a group of clients in this context. In this case, the clients were management companies for a number of residential blocks on the same site, who grouped together to commission property management services from a single provider albeit under separate contracts. (Ottimo Property Services Ltd v Duncan)
The service provision change clauses in TUPE exclude from its scope changes of contractor where the client intends the activities to be carried out in connection with ‘a single specific event or task of short term duration’. The EAT in Swanbridge Hire v Butler has given its view that this exclusion should be read as if ‘short-term’ governed both ‘event’ and ‘task’. It also clarified that it is the intended duration at the point at which the putative transferee takes on the contract that is relevant.
One of the key issues on any outsourcing is what happens to the employees involved in the service. The answer will be determined largely by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). Government plans to reform TUPE were announced in early September 2013 and, although not as significant for outsourcing as originally envisaged, make material improvements for contractors. New regulations are expected to be laid before Parliament in December 2013 and in force from January 2014 subject to transitional provisions. Continue reading
The Government has just published its response to the consultation on proposed reforms to TUPE. The original plans were to bring the reforms into force in October 2013, but as anticipated the timetable has slipped and the Government now intends to lay new regulations before Parliament in December 2013 and bring them into force in January 2014. The response is available here.
Key changes to the original proposals include:
- the service provision change clauses will not be removed from TUPE;
- a transferor will not be allowed to rely on a transferee’s economic, technical or organisational (ETO) reason as a defence to a claim of unfair dismissal for a TUPE-connected reason;
- the requirement on a transferor to provide employee liability information prior to the transfer will not be repealed, though the timing will be changed so that the information must be given 28 days before the transfer (rather than the current 14 days).
Key proposals that are going ahead include: Continue reading
- The Employment Minister, Jo Swinson, has announced that simplified TUPE regulations will be unveiled in September, rather than the beginning of July as originally indicated. This may suggest a delay to the original planned implementation date of October 2013.
- The Inner House of the Scottish Court of Session has endorsed recent EAT cases (for example, Eddie Stobart v Moreman) ruling that, where a client transfers its work to a new contractor, there will not be a service provision change under TUPE simply because there are employees who happen to spend most or all of their time working for that client.The requirement for there to be an “organised grouping of employees”, the principal purpose of which is to carry out work for a client, means that there must be an element of conscious organisation by the employer of the employees into a team, which as a whole has as its principal purpose the carrying out of activities for that client. The fact that one employee works 100% for one client does not mean there is the necessary organisation of a team, nor that the team as a whole will be viewed as dedicated to that client (where others on the team work much lower percentages of their time for the client). (Ceva Freight (UK) v Seawell)
- An Employment Tribunal Judge has ruled (at a pre-hearing review) that TUPE does apply to transfer “workers” with a contract personally to perform work, as well as those with a contract of service or apprenticeship – only independent contractors in businesses on their own account are excluded. This is because TUPE defines “employee” as any individual who works for another person, whether under a contract of service or apprenticeship or otherwise. It appears to be the first time a tribunal has considered the point. The obligations to inform and consult and provide employee data should therefore extend to workers, although in our view this would not mean that workers without a contract of service or apprenticeship could claim unfair dismissal by reason of a transfer. (McCririck v Channel 4 and IMG Media)
The service provision chance (SPC) limb of TUPE does not apply where the activities are in connection with “a single specific event or task of short-term duration”. There have been conflicting EAT views as to whether this only applies when events are short-term as well as tasks. Most recently the EAT considered that the “short-term” requirement did not apply to events but that single events would by definition be short-term in any case. It considered that activities in connection with events would be excluded from the SPC provisions however long the activities themselves – note that this conflicts with government guidance on the issue and may be open to challenge. In this case, a 12-month contract to transport children while their usual school was rebuilt was in connection with a short-term task and therefore excluded from the SPC provisions. (Liddell’s Coaches v Cook, EAT)
The SPC limb also only applies if the activities to be performed by the new contractor are fundamentally or essentially the same as those performed by the original contractor. The EAT has ruled that, although a planned significant reduction in work can mean the activities are viewed as different, this will not be the case where the same service is being provided but to a lower standard. Here a local authority took a service fulfilling a statutory duty back in house when the expected new contractor pulled out. Although it only had the resource to provide a skeleton service such that some functions of the service were neglected, the activities remained the same, ie to fulfil the statutory duty. (London Borough of Islington v Bannon, EAT)
The Court of Appeal has upheld the EAT's decision that the service provision change provisions of TUPE cannot apply where the client to whom services are being provided changes at the same time as the change in service provider.
This ruling is good news in particular for purchasers of property portfolios: although new managing agents are commonly appointed, the owner of the property also changes so there is no service provision change under TUPE even though the services are being provided in respect of the same property.
Some employees may be left behind with a transferor contractor when a service is taken back in house by a client, even if the contractor only provided services to that one client.
The EAT has ruled that employees who were part of the transferor’s infrastructure and had strategic roles concerned with the running of the transferor, rather than being involved in the front line delivery of the service to the client, were not assigned to the service and so did not transfer when the service was taken back in house. In this case the relevant employees were the directors of the transferor, but the same might apply to others, eg a handyman at the transferor’s head office, employed to keep the building in a suitable condition for client work to be administered, or a cook providing lunch for the directors.
Of course in some cases the old business transfer test might be satisfied, in which case such employees might well transfer. (Edinburgh Home-Link Partnership v The City of Edinburgh Council, EAT)