Same Client and Fundamentally the Same Activities
This is the second podcast in our TUPE Podcast Series; the first podcast introduced the two types of relevant transfers covered by TUPE, namely a business transfer and a service provision change . If you want a general introduction on what a service provision change is, make sure you listen to the first podcast in the TUPE Podcast Series.
In this podcast, Caroline Lendrum will be focussing on service provision changes and, in particular, the requirement to have the same client pre and post-transfer and the requirement for activities to remain fundamentally the same pre and post-transfer.
If you have any questions in relation to TUPE, please contact our employment lawyers for advice.
Same Client and Fundamentally the Same Activities
This is the second podcast in our TUPE Podcast Series; the first podcast introduced the two types of relevant transfers covered by TUPE, namely a business transfer and a service provision change . If you want a general introduction on what a service provision change is, make sure you listen to the first podcast in the TUPE Podcast Series.
In this podcast, Caroline Lendrum will be focussing on service provision changes and, in particular, the requirement to have the same client pre and post-transfer and the requirement for activities to remain fundamentally the same pre and post-transfer.
If you have any questions in relation to TUPE, please contact our employment lawyers for advice.
Hello, my name’s Caroline Lendrum and I’m an Associate in the employment team at Clarkslegal.
This is the second podcast in our TUPE Podcast series our first podcast provided an introduction to the two types of relevant transfers covered by TUPE, mainly a business transfer and service provision change. If you want a general introduction on what a service provision change is, make sure you listen to the first podcast in the TUPE Podcast series available on our Clarkslegal and Employmentbuddy websites.
In this podcast we will be focussing a bit more on service provision changes and, in particular, the requirement to have the same client pre and post-transfer and the requirement for activities to remain fundamentally the same pre and post-transfer.
So, looking first at the same client test
For there to be a service provision change, the client on whose behalf the activities are being provided must remain the same pre and post transfer – it’s only the provider of the activities who changes.
In many cases this will be relatively straightforward, however, the position becomes more complex when sub-contractors have been engaged. Here’s a couple of cases to highlight this point.
In Horizon security services v ndeze (2014)
The London Borough of Waltham Forest contracted out management of one of its business centres to a company called Workspace who let out the offices to their clients. Workspace sub-contracted out security services to PCS who employed a security guard, Mr Ndeze. Mr Ndeze engaged with PCS on a day to day basis, patrolled the building and surrounding area and assisted Workspace’s clients.
Waltham Forest then decided to end the current arrangement with Workspace and engaged a company called Horizon to provide security services directly to it.
The question, therefore arose, was there a change in client?
Initially the Tribunal, found that there was no change as the client at all times was Waltham Forest as it was the owner of the building and, ultimately benefitted from the service.
However, on appeal, the Employment Appeal Tribunal (which we’ll refer to as the EAT), overturned this Judgment. It held that the Tribunal had reached its conclusion based on an ‘inference’ that the building owner was the client, however, this was not a finding of fact. The EAT said that, on the facts, there was a change of client as pre-transfer PCS’ client was clearly Workspace and post-transfer the only client was Waltham Forest.
In reaching this conclusion the EAT highlighted that:
Then came the case of JINKS V LONDON BOROUGH OF HAVERING (2014)
The facts of this case are very similar to that of Horizon.
The Council owned a site which had an ice rink and a car park. It hired Saturn to manage the site and Saturn sub-contracted out part of this management to Regal. Mr Jinx worked for Regal. The Council decided to take the management back in house and Mr Jinx argued that he should transfer under TUPE.
In this case, the Tribunal, ruled that TUPE did not apply as it said that the Horizon case made it clear that the client is the person who the contract is with and here that person changed from Saturn to the Council.
On appeal to the EAT, the case was sent back to the Tribunal to be revisited. The EAT felt that the Tribunal had taken an ‘impermissible shortcut’ by treating the client of a sub-contractor as only being the party to whom the sub-contractor was contractually bound. It highlighted that a sub-contractor may actually have more than one client.
What these cases demonstrate is that whether the client is the same will be a question of fact for the Tribunal and that, on the facts, it is possible for a sub-contractor to have more than one client. Who the contractual relationship is with and what the contract says are important factors but they are not the only ones to consider.
Now turning to the second of the requirements we’re looking at today, whether the activities being carried out remain fundamentally the same before and after the transfer.
This issue comes up a lot. It is essentially going to be a question of fact for the Tribunal in each case so the most helpful way to examine the legal test is to explore some of the cases that have ruled on it…
Let’s begin with the OCS Group UK Ltd v JOnes and another (2009).
In this case OCS provided catering services to BMW. It operated a centrally located restaurant and deli bar facility and supplied both hot and cold meals. OCS's catering staff spent a "great deal" of time in the preparation of the hot meals.
MIS took over the catering contract but this was for a substantially reduced meals service, selling pre-prepared sandwiches and salads. There was no requirement for hot food. OCS argued that the activities were the provision of food and so remained the same pre and post transfer.
The Tribunal, and later the EAT, held that the activities were actually "materially different". The catering operation had changed from the provision of a full canteen service where the catering staff were chefs to staff becoming sales assistants in a kiosk.
Another case on this point is - Johnson Controls Ltd v Campbell and others (2012)
In this case Johnson Controls Limited provided a taxi administration service. This was performed by one employee Mr Campbell.
Mr Campbell spent 80% of his time on this work which included Taking instructions on taxi bookings from the client and booking taxis, advising on timings for journeys, combining jobs and pick-ups to ensure efficiency, dealing with booking enquiries and carrying out checks on suppliers and arranging security passes.
Subsequently the client decided its own staff could book taxi’s direct and terminated the contract with Johnson Controls. Mr Campbell argued that he should transfer.
The EAT decided that the activities were not fundamentally the same here. It said that assessing activities involves a holistic assessment. It is not simply a matter of breaking down tasks and identifying whether the majority of those tasks transfer. The service provided by Mr Campbell was a central and co-ordinated service which included, for example, combining jobs for efficiency and this did not transfer.
The EAT recognised that, if an activity performed by a single employee is, after the transfer, performed by several employees, it may be that the same activity is being carried on, but this will always be a question of fact and degree. Here, the crucial features of centralisation and coordination in the service provided by the administrator were no longer present.
The final case I wanted to run through is Qlog Ltd v O’Brien and ors (2013)
In this case, McCarthy had a contract with Ribble to deliver Ribble’s products to destinations in the UK.
McCarthy employed drivers, a transport manager and four "shunters" to carry out the services.
The contract was terminated and Ribble entered a new contract with QLog. The agreement with QLog said that Ribble was wanting to transfer the service to QLog.
QLog, however, did not employ drivers and so did not undertake the transport work itself – instead it sub-contracted the driving out to another company.
QLog conceded that the shunters and the transport manager transferred to it but refused to accept any drivers on the basis it was not carrying out the transport services itself.
The question that arose here was whether a change in the way services are carried out could mean that activities are not fundamentally the same?
The Tribunal and EAT agreed that the activities remained fundamentally the same even though the activities were being carried out in a very different way.
The wording of the agreement was important here as it demonstrated that the intention was for the activities to transfer. Further, under its agreement, Qlog accepted the risk for delivery of the goods, despite not providing the service itself.
It’s difficult to draw out general principles from the cases when they are so fact specific, but they do suggest that activities will be defined in a pragmatic and common sense way and will involve a holistic assessment focussed on the substance of the activities rather than the mode of operation. Minor differences will be ignored but activities must not be defined so broadly that they lose their meaning.
At the end of the day businesses should always remember that the Tribunals will be minded to act in a way compliant with the underlying purpose of TUPE - which is to safeguard employees’ contracts and rights.
That brings us to the end of this podcast but please do watch out for our future podcasts in this series and remember that you can get in touch with the employment team at Clarkslegal any time for any TUPE advice you may need.