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TUPE – Service Provision Changes – which employees transfer?

Posted by Lotty Reeves on 2nd February 2015

When a business changes its service provider (for example cleaning services) it will invariably constitute a Transfer of an Undertaking under which all employees of the service provider assigned to providing that particular service transfer automatically to the new service provider with their terms and conditions protected and with enhanced protection against unfair dismissal. Questions often arise, however, as to whether an individual employee is sufficiently “assigned” to that part of the business to transfer to the new provider, or whether they remain in the employment of the original provider.

In a recent case, London Borough of Hillingdon v Gormanley , the EAT held that the question is to be determined having regard to the way an organisation is structured and the employee’s contractual duties within it.

Robert Gormanley Limited (RG) was a firm employing three members of the same family. It carried out painting and decorating work for the housing stock operated by the London Borough of Hillingdon. Hillingdon then told RG that it was not going to be given any more work and took the service back in house.

A central question was whether the three employees were assigned to an organised grouping of employees, the principal purpose of which was to carry out the activities concerned on behalf of Hillingdon, the client. The initial tribunal held that the employees were assigned to an organised grouping of employees working within RG Limited on behalf of Hillingdon.

However the decision was overturned by the EAT who said that a proper analysis required consideration of a) the contractual duties of employees, and b) their role in the organisational framework of the transferor.

It concluded that the Tribunal had failed to consider the organisational framework within which the employment relationships of the employees took effect. The EAT considered that, as the claimants could be called upon to perform duties other than for Hillingdon under their contracts of employment (for example one of the employees was company secretary), the ruling that the employees were assigned to the Hillingdon contract had to be set aside to be considered again at another Tribunal.

It is worth noting from this that the mere fact that only one contract is being served by a group of employees at a particular time does not necessarily mean that a TUPE transfer occurs. The contracts of employment of the employees also fall to be considered.

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