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TUPE Service Provision Changes

In Lorne Stewart plc v Hyde and Others, the Employment Appeal Tribunal (EAT) has clarified the application of the ‘service provision change’ rules in the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which, following a consultation on their possible repeal, the Government has decided to retain.

The questions, as set out in TUPE Regulations 3(1) and 3(3), that the Employment Tribunal (ET) must ask in order to determine whether or not there has been a service provision change are straightforward and the answers to those questions are factual answers which cannot be overturned on appeal except on the grounds of perversity.

The ET’s job is to focus on the activities actually being carried out before and after the claimed service provision change. Whether the client was contractually obliged to give the contractor the work or the contractor was bound to do the work if it was offered is not a relevant consideration. Also, provided the activities carried out prior to the transfer were to continue after it had taken place, it was not necessary for anybody actually to be carrying out the type of work said to be the subject of the service provision change on the day or during the days immediately after the transfer.

In this case, the EAT dismissed an appeal against the ET’s decision that the contracts of employment of two workers previously employed by Carillion Planned Maintenance had transferred to Lorne Stewart plc following a re-tendering process for services in connection with Cornwall Council’s heating and boiler installations. The ET had found, as a matter of fact, that the claimants were engaged in activities which were carried on by Carillion prior to the transfer and were intended to be carried out by Lorne Stewart after it had taken place, and it was accepted that the men were assigned to the organised grouping of employees that was the subject of the transfer.

Anyone proposing to sell or acquire a business, or a part of a business, where the TUPE regulations apply should take professional advice early in the negotiations to ensure compliance with the law. Failure to do so could be costly.