The Transfer of (Protection of Employment) Regulations 2006 (TUPE 2006) apply where there is a "relevant transfer". A relevant transfer can be a "business transfer" and/or a "service provision change”. A service provision change will occur where:
- A client ceases to carry out activities on its own behalf and assigns them to a contractor to carry out on the client's behalf. E.g. a hospital outsourcing its cleaning services
- The activities cease to be carried out by a contractor on a client's behalf and are reassigned to another person. E.g. a client terminates a contract it has with one supplier for the provision of security guards and enters into a similar agreement with another company for the same service.
- The activities cease to be carried out by a contractor or a subsequent contractor on a client's behalf and are instead carried out by the client on its own behalf. E.g. a business decides to terminate the maintenance contract it has with an external contractor and decides to bring the provision back ‘in house’.
In addition, for there to be a service provision change:
- There must be an organised grouping of employees situated in Great Britain that has as its principal purpose the carrying out of the relevant activities on behalf of the client.
- The client intends that the activities will be carried out by the contractor other than in connection with a single specific event or task of short-term duration.
- The activities must not wholly or mainly consist of the supply of goods for the client's use
C was originally employed by Amey to carry out highway maintenance work for Transport of London. In 2011 Amey subcontracted Trek to carry out the work on its behalf and C TUPE transferred to Trek.
The contract was meant to be taken over by Ringway Jacobs from 1 April 2013. Normally C would have TUPE transferred to Ringway Jacobs but, 12 days before the anticipated transfer, Amey terminated the subcontract with Trek due to a legal dispute. Amey and Ringway refused to take on C via TUPE arguing that there was no valid transfer due to the contract being terminated early.
The EAT ruled that the cessation of work prior to the transfer did not mean that Amey was not an economic entity as it still had all the equipment and personnel needed to operate - they just were not on site. It also found that C was not dismissed upon termination of the subcontract between Trek and Amey and that therefore that he may be entitled to TUPE over to Ringway. The matter was sent back to the employment tribunal to determine if there had been a TUPE transfer from Trek to Amey – and then from Amey to Ringwood Jacobs – and to decide where liability for the dismissals ultimately lay.
Conclusion: Just because an employer stops operating that does not mean the employees who are no longer reporting to work cannot TUPE transfer across to a new contractor. A temporary cessation of work is just one factor to consider. The case illustrates just how difficult TUPE can be and how there may be multiple transfers within a short period of time.