TUPE: Service provision changes


23 March 2021

The Scottish Employment Appeal Tribunal (EATS) has held that following a service provision change (due to a re-tendering), the contract of a transferring worker can in principle be split between multiple transferees.

McTear Contracts Ltd v Bennett and others UKEATS/0023/19 and Mitie Property Services UK Ltd v Bennett and others UKEATS/0030/19

Facts

This case involved a group of kitchen fitters, working for Amey Services Ltd under a contract between Amey and North Lanarkshire Council to fit kitchens into the Council’s social housing stock. The group were divided into two teams, but these teams were not allocated to different geographic areas.

In 2017, the kitchen contract was re-tendered and the Council decided to split the contract into ‘north’ and ‘south’ regions. The contract was awarded to two different contractors: McTear and Mitie. Amey initially issued notice of redundancy to the employees, but later withdrew notice having decided that the service provision change provisions of TUPE applied.

Amey analysed the geographic locations of where the employees had worked over the past 12 months, compared to the areas covered by the new contracts. On this basis, individual fitters were allocated either to the McTear or Mitie contracts. However, both McTear and Mitie refused to take on any of the employees.

An employment tribunal held that there had been a service provision change under TUPE and that the claimants’ employment had been transferred to McTear and Mitie in accordance with the geographic analysis conducted by Amey. McTear and Mitie appealed this decision on the basis that the tribunal was wrong in concluding that liability for the employees could transfer to only one of the transferees, without considering whether some or all of the claimants may have transferred to both, or neither, entity.

EAT decision

The EAT has upheld the appeal, remitting the case to be reheard by the tribunal.

In reaching its decision, the EAT decided that it should take into account a previous decision of the European Court of Justice (ECJ). The ECJ held that in a transfer to multiple transferees, the contract of a transferring worker could be split between them in proportion to the tasks carried out by the worker, provided that this was possible and did not adversely affect the worker’s rights and working conditions (ISS Facility Services v Govaerts, C-344/18).

The EAT considered that it would not be desirable to take a different approach to the transfer of employment contracts under TUPE according to whether it was a service provision change (i.e. outsourcing) or a business transfer. The same considerations should apply to both types of transfer.
In principle, there was no reason why an employee could not hold two (or more) contracts of employment with different employers at the same time, if the work was clearly separate. On the facts of this case, the EAT considered that it was not impossible for individual employees to be employed by two different employers, according to the location of each job.

The question of whether the claimants had transferred to McTear or Mitie would need to be reconsidered by the tribunal, taking into account the location of the work carried out by individual claimants.

Consequences

On a service provision change under TUPE, for example as a result of a re-tendering exercise, it is not always clear what should happen in relation to individual employees when a contract is split between multiple contractors.

As a consequence of this decision (and subject to any appeal), the question of whether (and which) employees transfer following a service provision change will need to be considered differently in cases where there are two or more incoming service providers. Potentially, an employee’s contract could be split between multiple transferees. It means that the parties will need to assess the duties carried out by each individual employee, rather than taking a broad approach on a group-wide basis.

What is less clear from the decision is in what circumstances the division of an individual’s contract between multiple transferees might be regarded as impossible, or result in an adverse impact on the individual’s rights and working conditions, in accordance with the ECJ ruling. This is no doubt a question that will arise in future litigation.

These articles are from the March 2021 issue of Employment and Immigration Law Update, our monthly newsletter for HR professionals. To download the latest issue, please visit  the newsletter section of our website. For further information please contact Liz Stevens or another member of Birketts' Employment Law Team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2021.

Author

Liz Stevens

Professional Support Lawyer

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