TUPE Podcast Series: Service Provision Changes - Single specific events or tasks of short duration

In this fourth podcast in our TUPE Podcast Series, Amanda Glover will be looking at the second of the three conditions required for a service provision change transfer.

In our third podcast Service Provision Changes – Organised grouping and principal purpose, we discussed that the service provision change rules in the TUPE regulations are very wide and are meant to cover most situations where activities performed by a service provider on behalf of a client change hands. These will amount to service provision change TUPE transfers. However, the rules will not apply where the client intends that the activities will be carried out by the new service provider in connection with a single specific event or task of short-term duration.

If you have any questions in relation to TUPE, please contact our employment lawyers for advice.

Transcript

Hi, my name is Amanda Glover, and I'm an associate in the employment team at Clarkslegal. This is the fourth in our TUPE podcast series, and I’ll be looking at the second of the three conditions required for a service provision change transfer.

If you've listened to any of our earlier podcasts, you'll be aware that the service  provision change rules in the TUPE regulations are very wide and are meant to cover most situations where activities performed by a service provider on behalf of a client change hands. These will amount to service provision change TUPE transfers. However, the rules will not apply where the client intends that the activities will be carried out by the new service provider in connection with a single specific event or task of short term duration.

The wording of the exclusion can be found in regulation 3(3)(a)(ii), of TUPE and reads as follows: “The client intends that the activities will, following the services provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration”.

Limited archived guidance exists, which sites two examples of how the exemption could apply in practice. The guidance was provided by the Department of Business Innovations and Skills, or BIS as it was known back then. Two examples they used involved security contracts at large events, such as the Olympic Games. The first example, which we can call Contract A, is a contract for the provision of security advice to the event organisers and covers a period of several years running up to the event. And the second example, Contract B, is a contract for the provision of security staff to protect the athletes during the period of the event itself. BIS’s view was that TUPE would apply to Contract A but not to Contract B. Although the services in Contract A were for a specific event, i.e. the Olympics, they also needed to be a short term duration, which was not the case. Unfortunately, the wording of the exclusion itself is not without difficulties, and over the years, we’ve had to turn to case law to gain further insight into how it may work in practice. I will now go on to look at some of the main cases on this issue. 

The first case to look at is that of SNR Denton UK LLP against Kirwan and others. In this, a law firm argues that there was a single specific event or task of short term duration, as it was only instructed to provide legal advice for the period of administration, which is a maximum of 18 months. The claim failed on appeal, as the Employment Appeals Tribunal held that there had not been a service provision change, as the identity of the client had changed. Nonetheless, it gave a tentative view the exclusion only applied to events or tasks that are both single specific and of short-term duration, which was in line with the earlier BIS guidance. As for what would amount to short term, the EAT noted that it should be considered in the broader context of the employment relationship as a whole and the question would be one of fact and degree for the tribunal. 

However, the waters were muddied somewhat in the Liddell’s Coaches v Cook and Others case. Liddell’s Coaches were engaged to provide transport to primary school children who were distributed to other schools when their own school was being rebuilt. Initially, Liddell’s  had five contracts each lasting a year, and Mr Cook worked on one of these. The five contracts were offered out to tender for a further year, and Abbey Coaches took over the contract that Mr Cook worked on. Abbey did not accept that Mr Cook, or a liability for his dismissal,  transferred under TUPE, arguing that the exclusion applied. The EAT agreed; in its judgment, firstly it considered that “single specific event” spoke for itself and it was not necessary to qualify it with “short term duration” as events are likely to be short term. Secondly, it did not agree that the exclusion could not apply to Contract A in BIS’ guidance. It was of the view that the Olympic Games was a single specific event, and the fact that the security advice was provided over a number of years was irrelevant. Thirdly, it thought that the transporting of the children while their school was being rebuilt was a task of short-term duration and lastly it found that the one-year contract was short-term. This was because normal transport contracts were typically between three to five years in length. So consequently, TUPE was avoided. 

However, in the case of Swanbridge Hire & Sales Limited v Butler & Others, a different division of the EAT preferred the view of the EAT in the SNR Denton case. This view was also supported by the EAT in the case of Horizon Security Services Limited v Ndeze & another. PCS a security contractor, had been engaged to provide security services for work space PLC, which was looking after a business center on a site owned by the London Borough of Waltham Forest. The site was then taken back by the borough, who engaged a new security company Horizon specifically to look after the site for a limited period of eight to nine months, pending demolition of the building. Employees working for PCS claimed that there was a service provision change that they should be engaged by Horizon. The claim failed for two reasons. Firstly, it was held that there had been a change in client and secondly, and of more relevance here, it was held that the contract that had been given to Horizon was of a limited duration. i.e., simply to look after the site pending its demolition. This was therefore a task of short-term duration and for this reason, there was no service provision change.

As I mentioned at the start, the exclusion will apply if, immediately before the transfer, the client intends that the activities will be carried out by the transferee in connection with a single specific event or task of short-term duration. Therefore, the client's intention forms part of the test. The wording of the exclusion was designed to avoid the client and the contractor entering into a succession of short-term one-off contracts, for what was in truth always intended to be an ongoing service provision arrangement. In an earlier government consultation document on the 2006 regulations, it explained that if a dispute arises over this issue, the court or employment tribunal hearing the case will have to decide what the clients intention was, based on the evidence before it. When trying to establish whether a client intends a service provision contract to be of a short-term duration, the EAT in the case of ICTS UK Limited v Mahdi and others, had held that a tribunal can take into consideration events that followed the transfer. ICTS was providing security for a former campus for Middlesex University. The site was sold and ICTS carried on providing security for the new owner. In October 2013, however, the owner decided to award the security contract to a new contractor, First Call. ICTS believed that the transfer of the security contract would be caught by TUPE, but First Call disagreed, arguing that the task of providing security for a vacant site would only be temporary and that when the site was redeveloped, the security required would be entirely different. The tribunal accepted that this was just a short-term task and that TUPE did not therefore apply. However, in reaching this decision, the tribunal refused to take into account the fact that as of August 2014, which was the hearing date, no planning permission had been applied for and there's no sign of a site being redeveloped. This undermined the owner’s argument that guarding the vacant site was a short-term contract. The EAT held that refusing to take this into account was an error. Whilst it was the client's intention at the time of the contract that mattered, rather than whether the task had turned out to be short-term in practice, the tribunal should not have ignored the subsequent events. What happens in practice can often shed useful light on what the intentions of the parties are and the tribunal should have considered whether the fact  that there was no sign of any redevelopment taking place, indicated that the real intention at the time of the transfer was that the site would remain vacant for a considerable amount of time. The case was returned to the Tribunal for reconsideration and is a reminder that the intention of the parties in these types of cases is not only relevant but key. However, a distinction should be drawn between evaluating the client's intention by reference to the ultimate outcome as at the hearing date, which is likely to give rise to an error in law, and also using post transfer events to cast light on the intention of the relevant party at the relevant time.

Finally, and in keeping with the issue of intention, the case of Robert Sage Limited against O'Connell has held that a hope or a wish that a contract be for a single specific event or task of short-term duration, is not the same as an intention that it be so. Here, a local authority contracted with a health and social care provider to look after a vulnerable adult, hoping that the arrangement would be short-term, pending the approval of the Court of Protection. But things became drawn-out, unfortunately, due to delays. The local authority of course had no control of how quickly the case would go through the court. It hoped that the contract would be short-term because of the uncertainty involved. However, in its judgement the EAT held that a hoped for outcome was insufficient to be the required genuine intention which would stop TUPE from applying. Therefore, TUPE should have applied to the transfer of the employee’s employment to Robert Sage. 

Well, that brings us to the end of this podcast. I hope that you found it helpful. The next one in the series will be focusing on who transfers under TUPE, so make sure you look out for that one. Many thanks.