Employment Update July 2009: TUPE

23 July 2009

Employment Group

Change of service provider – when will TUPE apply?

In Metropolitan Resources v (1) Churchill Dulwich and (2) Cambridge and others, the employment tribunal had decided that there had been a TUPE transfer in the form of a service provision change when one organisation ceased providing the Home Office with hostel accommodation for asylum seekers and another started providing such services instead.

The EAT has upheld the decision and said that it will always be an issue of fact for the tribunal to decide whether TUPE applied. The tribunal had correctly said that all it could do was look at the wording of TUPE reg 3(1)(b) and the facts of the case, which is the only definition of 'service provision change' in TUPE. There was no other definition in the relevant European Directive either.

There was no need for the tribunal to consider the factors set out in the important TUPE case of Cheesman v Brewer. This case dealt with the necessity of identifying an 'undertaking' as a stable economic entity which transferred and retained its identity. In the case of a service provision change, there was no need to look for an undertaking at all. The fact that the services were to be provided from a different location, that an extra service was to be provided, and that the new service provider had started work with its own team months before the old provider’s contract expired, did not affect the fact that TUPE applied in this case.

The EAT also said that the House of Lords decision in Celtec was relevant in a case such as this - where the transfer took place over a period of months.  In order to provide continuity of service, the Home Office had entered into a contract with the new provider, which in consequence had to provide its own staff to man its hostel, months before the contract with the older provider expired. It was for the tribunal to determine a date on which the TUPE transfer occurred. There could only be one date. The tribunal had decided that it was the date on which the contract with the old service provider expired.

Points to note -

  • This decision confirms that it may be easier to prove that TUPE applies to a service provision change than to a transfer of an undertaking and also that the test is very fact-specific and will (as this case also shows) be hard to appeal. It will be important to get early specialist advice on TUPE when considering a change of service provider.

  • It is very important to establish the date of a TUPE transfer because it is from that point that the transferee assumes all the responsibilities of an employer towards the group of employees which carries out the activities in question. The fact that there has to be only one date may mean, as here, that the transferee assumes responsibility for the transferor’s employees some time before being aware of their identity. It is essential on a change of service provision change for client, old provider and new provider to share employee liability information in order to minimise the risk of employee claims.