Where a commercial contract to provide services changes hands (known as a “service provision change”), the Transfer of Undertakings (Protection from Employment) Regulations 2006 (TUPE) provides protection to affected employees. TUPE has the effect of transferring those employees assigned to the entity or activity that is transferring to the new employer with all their rights and obligations intact. In order for this protection to apply in service provision change scenarios, there are a number of factors which need to be established, including:
- The client for whom the service is being carried out must remain the same; and
- For an employee to transfer, they must be assigned to the activity transferring immediately before the transfer takes place.
There have recently been a couple of notable Employment Appeal Tribunal (EAT) decisions on these points.
The first case considered who the client is if a service contract is subcontracted to a third party. In Jinks v London Borough of Havering, the Council owned some land which had upon it a car park and an ice rink. They contracted out the management of the site to a company called Saturn Leisure, who in turn sub-contracted the management of the car parking to another company, Regal Car Parks. Mr Jinks was employed by Regal. In April 2013, the ice rink closed and Saturn gave up occupation of the site, at which point the Council took control of the site and closed the car park. The Council then converted the land into a public car park and managed it themselves. Mr Jinks argued that he should have transferred to the Council when it took over the running of the car park.
At first instance, the Tribunal decided that there was no TUPE transfer between the Council and Regal. The client which had engaged the services of Regal was Saturn. There was no contractual relationship between the Council and Regal before or after the alleged transfer. When the Council took over the running of the car park, it was doing it for itself, so the client before and after the alleged transfer was different.
The Employment Appeal Tribunal concluded that this was wrong. The fact that there was no contractual relationship between Regal and the Council was not conclusive of the question of who the real client of the car parking management was. That is a question of fact for the Tribunal and the case was sent back to the Tribunal to re-consider. The lessons here are therefore, first, that who is the client is a question of fact not determined exclusively by contractual relationships; second, that where there is a client – contractor – sub-contractor relationship, it is possible for there to be a TUPE transfer between the sub-contractor and the client where the client takes the activity back in-house.
In the second case, the issue was whether an employee was assigned to the relevant contract immediately before the transfer, when previously a third party had requested they be removed from it. In Jakowlew v Saga Care and Westminster Home Care, Mrs Jakowlew was employed as a Care Manager for Saga working on a contract with the London Borough of Enfield (the Council). That contract came to an end on 30th June 2013. Thereafter, the contract was awarded to Westminster. Prior to this, in February 2013, there was an incident at work which led to the suspension of Mrs Jakowlew and 2 other colleagues, who remained suspended until late June 2013. As a result of this, on 19th June 2013, the Council exercised a contractual right to require the removal of Mrs Jakowlew from the contract. Saga objected to this instruction. Towards the end of July 2013 and in any event some time after the transfer of the contract to Westminster had taken place, Saga acknowledged to Mrs Jakowlew, Westminster and the Council that in light of the Council’s request to have her removed from the contract, Mrs Jakowlew would not transfer to Westminster. Saga continued to pay Mrs Jakowlew until her dismissal on the grounds of redundancy in September 2013. Mrs Jakowlew pursued a claim for unfair dismissal, stating that she should have transferred to Westminster.
The original Tribunal decided that given the Council’s request, Mrs Jakowlew was not assigned to the contract immediately before the transfer. However, the EAT overturned this decision on the basis that, factually, Saga had not actually removed her from the contract before the transfer date, evidenced by their objection to the request. It was only Saga, Mrs Jakowlew’s employer, and not a third party who could remove her from that contract, which on the evidence they had not. Therefore, Mrs Jakowlew was assigned to the contract immediately before the transfer and should have transferred, rendering her dismissal unfair.
Both of these cases illustrate the complexities of applying TUPE to particular situations but also, perhaps, the tendency of the courts to favour interpretations that will give the employee the protection of TUPE.