Jenny Wotherspoon reports on the first reported Employment Tribunal case in which an employee working for an outgoing marketing services agency claimed entitlement under TUPE rules to a job offer from the incoming service provider. But did TUPE apply in this case?
Who: Hunt v (1) Storm Communications Limited (2) Wild Card Public Relations Limited, and (3) Brown Brothers Wines (Europe) Limited
Where: Employment Tribunal
When: July 2007
Law stated as at: 31 July 2007
In the first reported case on the issue an Employment Tribunal has dealt with a situation in which a PR account changed hands, and an employee of the outgoing agency applied to the Employment Tribunal for a determination that her job was protected by TUPE, the law on employment and transfers of undertakings.
New TUPE Regulations were introduced in 2006 ("TUPE 2006"). When a TUPE transfer takes place (which can include the transfer of a business or a service) the employment contracts of any relevant employees transfer to the buyer/new service provider, on their existing terms and conditions. This can obviously have far reaching and expensive consequences for the buyer/new service provider.
TUPE 2006 widened the scope of TUPE to cover 'service provision changes'.
Advertising and marketing services clearly caught
During the consultation period in relation to TUPE 2006, it was widely anticipated that TUPE would not apply to professional services. However, no such exemption was included in the final regulations and as a result it is has been accepted that those employed to provide services such as marketing and advertising related services will be caught by the regulations.
There will be a 'service provision change' (and TUPE will apply) where a service is outsourced, insourced or re-tendered, provided that before the change:
- There was an organised grouping of employees situated in GB;
- Which had as its 'principal purpose' the carrying out of the activities which transferred.
The Claimant, Ms Hunt, commenced employment with Storm Communications ("Storm") on 2 April 2007. On the first day of her employment she started working as an Account Manager for Brown Brothers Wines ("Brown"). Although she had a detailed job description, it made no specific reference to Brown.
In June 2006 Storm was informed that their PR account with Brown was to be re-tendered. Storm pitched for the account but they were not successful and the account transferred to Wild Card Communications ("Wild"). The Claimant argued that her employment transferred to Wild in accordance with TUPE 2006 as there had been a service provision change.
The Claimant stated that she spent approximately 70% of her time carrying out services for Brown.
Was Brown account the "principal purpose" of the employment?
Wild and Brown argued that working on the Brown account was not the Claimant's principal purpose because:
- She worked on other accounts;
- She was not obliged under her contract to work for Brown; and
- She only spent (in their opinion) 52% of her time on the Brown account.
The Tribunal found that there was a service provision change:
- Specialist PR services (a service provision) were provided to Brown by Storm and those services were taken over by Wild.
- An "organised grouping of employees" existed to carry out the service before the transfer (although, this comprised the Claimant only).
- The Claimant's principal purpose was carrying out PR services on behalf of Brown.
The Tribunal were persuaded by the fact the Claimant had worked on the Brown account for the full duration of her employment.
It followed from the Tribunal's decision in these points that Ms Hunt's employment was covered by TUPE and that she was prima facie entitled to be employed by the incoming agency.
One effect of this was that if the incoming agency did not employ her, she would be able to bring a claim against it for unfair dismissal.
Why this matters:
TUPE's applicability to PR and other advertising/marketing services contracts could be said to undermine the rationale which often is at the heart of a retendering exercise, namely, dissatisfaction with the current provider and the desire to engage new faces on the account.
Be that as it may, this case underlines that TUPE will apply in the commercial communications sector and provides an illustration of similar situations may be dealt with in the future.
Media Companies should be alive to the possibility that TUPE may apply when services are re-tendered and should seek legal advice before entering into new service contracts, so that the risks and can be identified and managed.
Companies should also structure their account teams to allow employees to work on a variety of different accounts. If this is not possible in practice, service providers should retain a contractual flexibility to move employees between accounts. This should be reflected in contracts of employment and job descriptions.