The decision of the employment appeal tribunal (EAT) in Horizon Security Services vs Ndeze demonstrates two ways in which employers can avoid a service provision change (SPC) under the Transfer of Undertakings (Protection of Employment) Regulations 2006, known as TUPE, taking place.
A SPC occurs where either a client outsources the provision of services, 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 were in connection with a short term event or task.
This case concerned a serviced office centre owned by the London Borough of Waltham Forest (the Borough). The centre was managed by Workspace on behalf of the Borough.
The claimant was employed by PCS. PCS had a contract with Workspace to provide security services for 120 hours per week at the centre. The claimant was one of two security guards dedicated to the centre.
In early January 2013 Workspace notified PCS that, as from 25 January 2013, Workspace would no longer be providing a management service for the Centre on behalf of the Borough as the centre was going to be closed, demolished and replaced by a supermarket. Workspace informed PCS that the service that PCS was providing would therefore no longer be required after that date.
Workspace told PCS that the Borough might be in contact with them regarding continuing the service, but PCS would need to contract directly with the Borough in order to do so.
PCS unsuccessfully tendered for a new contract directly with the Borough to provide security services at the centre. The contract was instead awarded to Horizon. On 26 January PCS told the claimant that he had TUPE transferred to Horizon, but Horizon told him that they would be using their own security guards.
The claimant brought a claim of unfair dismissal against both PCS and Horizon.
The claimant was successful at the tribunal. It found that there was a SPC as:
1. there had been a consistent client, the Borough, as the security services were always provided on its behalf; and
2. the exemption for short term tasks was not met as no definitive date had been set for the demolition.
On appeal the EAT 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 Borough. So when Workspace’s contract with the Borough 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 Borough, not Workspace, and 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 demolition.
This case shows how owners of commercial property can protect themselves from the effects of TUPE by using subcontractors. If the person on whose behalf the services were being provided change, 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.
First published in People Management 2 September 2014.