Employees will not transfer if a contract is short-term or for a different organisation.
The decision of the Employment Appeal Tribunal in Horizon Security Services v Ndeze demonstrates two ways in which a service provision change, as defined by the Transfer of Undertakings (Protection of Employment) Regulations 2006, will not take place.
Under Tupe, a service provision change (SPC) occurs where a client outsources the provision of services to a contractor, or appoints a new contractor, or takes the services back in house. Where an SPC occurs, the new provider of the services must take on the employees of the previous provider. The SPC provisions of Tupe do not apply where the activities to be carried out by the new provider are in connection with a short term event or task.
Facts
This case concerned a serviced office centre owned by the London Borough of Waltham Forest. The centre was managed by Workspace on behalf of the local authority. Another company, PCS, had a contract with Workspace to provide security services for 120 hours per week at the centre.
Workspace notified PCS that, as from 25 January 2013, it would no longer be providing a management service for the centre on behalf of the local authority as the building was going to be closed, demolished and replaced by a supermarket. Workspace informed PCS that the security service it was providing would, therefore, no longer be required after that date. It also told the security company that the local authority might be in contact regarding continuing the service, but PCS would need to contract directly with the local authority if it wished to continue.
PCS tendered for a new contract directly with the local authority to provide security services at the centre but was unsuccessful. The contract was, instead, awarded to another company, Horizon.
The claimant was one of two security guards employed by PCS and dedicated to the centre. On 26 January PCS told the claimant that he had transferred under Tupe to Horizon, but Horizon told Ndeze that it would be using its own security guards. Ndeze brought a claim for unfair dismissal against both PCS and Horizon.
Tribunal
Ndeze was successful at the employment tribunal. It found that there was a Tupe SPC as:
- there had been a consistent client (the local authority) and the security services were always provided on its behalf
- the exemption for short-term tasks in Tupe was not met, as no definitive date had been set for the demolition of the centre.
Horizon appealed.
EAT
On appeal the Employment Appeal Tribunal ruled against the claimant on both grounds. It held that the services must be provided on behalf of the same client before and after the change for there to be a SPC.
In this case PCS contracted with Workspace to provide services on its behalf. PCS did not contract with the local authority. So when Workspace’s contract with the local authority was terminated, there was no SPC as security services were no longer being provided on Workspace’s behalf by any entity. Security services at the centre were now being provided by Horizon, but on behalf of the local authority, not Workspace – this was, therefore, a different client.
The EAT also found that the contract awarded to Horizon was for a short- term task or event, so that a SPC did not occur. The tribunal had placed too much emphasis on the fact that, at the time of the hearing, the contract had been extended and no date had been set for the centre’s demolition.
Comment
This case shows how owners of commercial property can protect themselves from the effects of Tupe by using subcontractors. If the organisation on whose behalf the services were being provided changes, then there will not be a SPC.
The decision on the meaning of a ‘short-term task or event’ shows that in determining whether a task is short term, it will be necessary to consider what has happened in the past against what is proposed for the future.
Ben Stepney is an Associate in the Employment Team at Thomson Snell & Passmore
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