“TUPE” Regulations apply to a service provision change and preserve the job rights of employees involved in a “relevant transfer.” But such rights do not arise if the new services are “wholly different”. Nicola Doran reports on a recent appeal verdict which sheds light on when this exclusion applies.
When: August 2009
Law stated as at: 30 October 2009
TUPE may apply where there is "service provision change" (namely, in-sourcing, outsourcing or re-tendering) or a business transfer.
In order for TUPE to apply on a "service provision change" the activities forming part of the service must be taken over by another person and there must have been:
- an organised grouping of employees situated in Great Britain (this can be just one employee);
- which had as its principal purpose the "carrying out of the activities concerned".
The effect of TUPE is that all employees assigned to the activites concerned will transfer to any new service provider and will be protected from dismissal (for a reason connected to the transfer).
The application of TUPE to re-tendering exercises has been a thorn in the side of many employers in the marketing and advertising sectors.
What has happened:
In the case of OCS Group UK v Jones and another, the EAT considered whether the "activities concerned" were identifiable as the same activities before and after a potential service provision change.
OCS Group Limited ("OCS") provided a number of services at the BMW Mini assembly plant in Oxford, including catering, cleaning, security and pest control. The Claimants were employed by OCS as chefs at the site.
In August 2007, OCS lost the contract with BMW and this was taken over by MIS. However, MIS were not contracted to provide the full range of services carried out by OCS and provided a much more limited service of kiosks selling sandwiches and salads. There was no requirement for hot food preparation.
On termination of the OCS contract, the Claimants brought various claims against OCS for wages, unfair dismissal and redundancy pay. OCS argued that the Claimants should have transferred to MIS as there had been a "service provision change".
The Employment Tribunal decided that there had been no service provision change as the operation had changed from the provision of a full canteen service to the provision of cold kiosk snacks. The activities carried out by MIS were substantially different to those carried out by OCS. OCS appealed this decision, stating that the Tribunal had focussed too closely on the change of "activities" as opposed to the actual service, which was simply the provision of catering services.
The Employment Appeal Tribunal upheld the Tribunal's decision that the sandwich and salad kiosk provided by MIS as the new service provider was "wholly different" to the full catering provided by OCS as the old service provider. Accordingly TUPE could not apply as the "activities" carried out before the transfer were not the same as those carried out after the transfer.
Why does this matter:
This case will be welcomed by agencies as it reinforces previous authorities which have held that for TUPE to apply, the "activities concerned" need not be identical, but "fundamentally or essentially the same" as those carried out by the old service provider.
This case also highlights the importance of having robust provisions contractual provisions which clearly set out the nature of the services to be provided by the agency as this will be helpful evidence if the applicability of TUPE is disputed.
For more information on the effect of TUPE on business in the marketing and advertising sector, please see our previous article on this topic at http://www.marketinglaw.co.uk/articles/2008/9875.asp.