Tupe can apply even when an incoming service provider does the job in a different way
In the case Qlog v O’Brien, the EAT had to decide whether an incoming service provider could trigger Tupe where it agreed to take on ‘fundamentally or essentially the same activities’ but decided to carry out those activities in a very different way.
Law
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (Tupe) apply where there is what the regulations refer to as a “relevant transfer”. This includes a “service provision change”, when business activities are reassigned from one contractor to another. Previous case law has suggested that, for Tupe to apply, pre-transfer and post-transfer activities need not be identical, provided they are “fundamentally or essentially the same”.
Facts
In September 2008, a cardboard manufacturer (Ribble Packaging) entered into an agreement with a haulage company (McCarthy Haulage Ltd) to transport and deliver cardboard packaging. The haulage company employed drivers, a transport manager and four ‘shunters’ who loaded goods on to the back of trucks.
In September 2011, the cardboard manufacturer chose a new provider, Qlog Ltd, a logistics company that did not provide transport services itself, but instead sub-contracted the transportation of goods to haulage providers. Under the agreement, Qlog agreed to carry out “transport and logistics services” which included arranging the physical carriage and distribution of goods to and from the manufacturer’s sites. The logistics company also agreed to take responsibility for the goods until they arrived at the point of delivery.
As part of the services change, the logistics company agreed the transport manager and shunters would transfer under Tupe. However Qlog claimed that the drivers did not transfer, as it did not provide the transport services itself. The drivers were dismissed by the haulage company and bought unfair dismissal claims against Qlog, claiming that Tupe effectively transferred their claims.
Tribunal
An employment tribunal looked at whether there was a service provision change and at the detail of the activities carried out by the haulage company, and those intended to be carried out by the logistics company. The employment judge found that the actual activities that the logistics company agreed to carry out on behalf of the manufacturer were the same as those previously carried out by the haulage company, even though the new contractor had a very different mode of operation from the previous one. This was the case even though Qlog did not own vehicles or employ drivers.
The logistics company appealed, claiming the tribunal had only looked at the contractual terms, not the actual activities that it carried out.
EAT
The Employment Appeal Tribunal upheld the tribunal’s decision, stating that Qlog carried out fundamentally or essentially the same activities as the haulage company, even though it did the job in a different way. The EAT went on to state that the tribunal was correct in focusing on the substance of the activity being undertaken, as opposed to the mode of operation.
Comment
This decision serves as a reminder to incoming service providers to consider carefully the nature of the activities they will be carrying out. Sub-contracting out services, or providing them in a different way, will not necessarily be enough to exempt companies from Tupe.
Having said that, the result may have been very different if the commercial contract terms been different, and if Qlog had not taken over direct responsibility for the goods until they reached their destination. As has been pointed out before, the earlier HR can get involved in discussions about Tupe the better.
Hannah McIlwraith is a trainee and Paul Mander is head of employment at Penningtons Manches
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