EAT adopts 'pragmatic' approach to service provider TUPE transfers

Employees have the same rights when a company changes serviceprovider as when work is outsourced in the first place even if thenew service is not identical to the old, the Employment AppealsTribunal has ruled.

The Transfer of Undertakings (Protection of Employment)Regulations (TUPE) protect the rights of employees whose companiesare taken over by new owners. In 2006 they were expanded to governsituations where work is outsourced, brought back in-house or theservice provider is changed. The ruling is the first to look at themeaning of a service provision change in the law.

The Employment Appeals Tribunal (EAT) has ruled in a caseinvolving service providers in which it found that the employeesdid have TUPE rights when work was transferred from one location toanother and from one service provider to another.

The employees of one provider argued that their employment hadbeen transferred to the new provider, and the EAT agreed, sayingthat it was the first case to be heard at EAT level that involved aTUPE dispute relating to service providers.

In the ruling, the EAT said that workers were transferred fromone employer to the next if "the activities previously carried outby client or contractor have ceased to be so carried out and,instead, are carried out by a contractor or a new contractor or bythe client".

The case centred on accommodation provided for asylum seekers.The body responsible for providing the accommodation moved it fromits existing supplier in London to a location and new supplieroutside London.

The workers in London claimed that their employment had beentransferred, and the EAT agreed. It said that the important thingfor employers to consider when trying to understand if TUPE rightsexisted was whether the service provided after the change wasessentially the same as before it. If it was, the employees had theright to transfer to the new provider, it said.

, an employment lawspecialist at Pinsent Masons, the law firm behind OUT-LAW.COM, saidthat the ruling extends to 'type B' TUPE claims relating tooutsourced work the approach tribunals have taken to in-house workin 'type A' claims.

"This is helpful guidance from the EAT in deciding whether aservice provision change exists. The drafting in the Regulations isfairly detailed and the EAT reminds us not to take too legalistican approach," he said.

It had been argued that the services carried out by the newprovider were not exactly the same as those provided by the oldone, but the EAT said that claims can be made when servicesprovided are not identical.

"It cannot, in my judgment, have been the intention of theintroduction of the new concept of service provision change thatthat concept should not apply because of some minor difference ordifferences between the nature of the tasks carried on after whatis said to have been a service provision change as compared withbefore it," said the ruling. "A commonsense and pragmatic approachis required to enable a case in which problems of this nature ariseto be appropriately decided."

"The Tribunal needs to ask itself whether the activities carriedon by the alleged transferee are fundamentally or essentially thesame as those carried out by the alleged transferor. The answer tothat question will be one of fact and degree, to be assessed by theTribunal on the evidence in the individual case before it," itsaid.

It said that the Employment Tribunal hearing the original casenoted the differences between the services provided by the old andnew companies but was right to conclude that the services providedwere basically the same.

"This ruling shows that tribunals will take a broad, pragmaticapproach that is not concerned with getting overly legalistic,"said Doherty.