July 27, 2015

TUPE and meaning of “client”

The circumstances surrounded the operation of an ice rink and car park. The local council contracted with a company, Saturn, to operate the ice rink and car park. In turn, Saturn sub-contracted the running of the car park to a company called Regal. When Saturn gave up the car park, the sub-contract with Regal ended and the council passed this on to a local NHS Trust. The Claimant asserted that his employment transferred from Regal to the council under TUPE.

Initially the Employment Tribunal struck out the claim as having no real prospect of success. It considered that there was no TUPE transfer because the client must be the same both before and after the transfer, and Regal’s client was Saturn and not the council. Therefore there was no contractual relationship between the council and Regal. The relevant provision of TUPE was regulation 3(1)(iii) which allows for a service provision change to include circumstances where activities cease being carried out by a contractor on a client’s behalf and are instead, going forward, carried out by the client on its own behalf.

On appeal, the EAT disagreed with the Tribunal analysis. It asked the question, on whose behalf was Regal running the car park? The question of who is the client is a question of fact and not law and it held that there could be more than one client in any given case. Following the decision in Horizon Security Services v Ndeze, a strict legal or contractual relationship was not essential. Furthermore, under regulation 2(1) of TUPE, the definition of "contractor" also includes a sub-contractor.

The EAT remitted the application back to an Employment Tribunal for reconsideration.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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