TUPE: No Service Provision Change if Client Changes Too
The EAT has held that there will only be a service provision change under TUPE if the services are provided to the same client before and after the change of contractor.
C was employed by RSS as a security officer at student accommodation known as the Glasshouse. RSS had a contract to provide security services to the owner of the Glasshouse, Ely Properties. When the Glasshouse was subsequently acquired by Mansion Group, RSS lost the security services contract to Taurus. C was told that his employment transferred to Taurus under TUPE but Taurus disagreed and his employment was terminated.
The tribunal considered whether there had been a service provision change under TUPE – i.e whether activities ceased to be carried out by a contractor on a client’s behalf and were instead carried out by another person on the client’s behalf. It concluded that there had and it was not necessary for the activities to be provided to the same client before and after the change of contractor.
The EAT upheld the appeal and, following its earlier decision in Hunter v McCarrick, held that the client before and after the change had to be one and the same.
The need for the client to be the same before and after the change of contractor leaves a gap in TUPE protection. Where ownership or management of a commercial property changes hands and at the same time facilities services are changed, facilities staff will not transfer to the new provider. The outgoing provider will need to be aware that it will be responsible for any termination costs should it need to dismiss its staff - unless it negotiated appropriate exit provisions with the first client when it entered into the contract.
In the meantime, the EAT decision in Hunter v McCarrick has been appealed to the CA so watch this space!
It may also still be possible in certain circumstances for an outgoing service provider to argue that there has been an ordinary business transfer under TUPE, as opposed to a service provision change – if it can show that there has been a transfer of an economic entity which has retained its identity.
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