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23/06/2009

Metropolitan Resources Ltd v. Cambridge & others

Uncategorized

Employment Appeal Tribunal

The EAT clarifies, for the first time, the test to be applied when considering whether there has been a service provision change for the purposes of TUPE 2006, reg. 3(1)(b). The Tribunal should not adopt a multi-factoral approach and should not focus on differences in the particular manner of service provision, but should consider as a question of fact whether the service provided after the change was fundamentally or essentially the same as that provided before the change.
 
 
Facts
 
The case involved a change in the provision of accommodation to asylum seekers. The transferor, Churchill Dulwich Ltd, had a contract for the provision of asylum accommodation and related support services with Migrant Helpline (which was responsible for arranging such accommodation on behalf of the Home Office). In January 2007, Migrant Helpline made a decision to cease using the services of the transferor and to engage the transferee, Metropolitan Resources Ltd, to provide alternative accommodation arrangements.

Migrant Helpline therefore entered into a contract with Metropolitan Resources Ltd whereby the latter would begin providing asylum accommodation and related support services from 26 January 2007. From that date, all asylum seekers who would previously have been allocated to the transferor, were allocated to Metropolitan Resources Ltd, which provided accommodation for them at a different location, considered to be more secure and at which some additional services were provided.

Further, rather than assign or terminate its contract with the transferor, Migrant Helpline decided simply to allow that contract to run its course until 31 March 2007 and then to lapse. Some longer-term asylum seekers remained with the transferor for a number of weeks until alternative accommodation could be found for them and they were gradually dispersed. The claimants also continued to work for the transferor until 31 March 2007.

The Employment Judge (sitting alone) found that there had been a service provision change pursuant to TUPE 2006, reg. 3(1)(b)(ii), which took place on 26 January 2007, at which date the essential service or activity transferred from Churchill Dulwich Ltd to Metropolitan Resource Ltd.

On behalf of the transferee (Metropolitan Resource Ltd) it was argued on appeal that the Employment Judge had applied the wrong test in looking simply at the essential service or activity and that she ought to have adopted a ‘multi-factoral’ approach similar to that which applies in relation to traditional TUPE transfers ( Cheesmen v Brewer Contracts Ltd [2001] IRLR 144). It was further argued that, applying that approach, the Employment Judge ought to have found that there was no transfer because of key changes in the way the activities were carried out before and after the transfer – in particular, the change in location and the additional services provided by the transferee. Finally, it was argued that the Employment Judge ought to have found that there was no transfer because there was no single date on which the transfer occurred, which is required by Celtec Ltd v Astley [2006] IRLR 635.
 
 
Held by the EAT (HHJ Burke QC, sitting alone)

(1) A ‘service provision change’ under TUPE 2006, reg. 3(1)(b) is a wholly new statutory concept which does not derive from the Acquired Rights Directive (2001/23/EC), but from section 38 of the Employment Relations Act 1999. Its purpose is to remove (or at least alleviate) the uncertainties and difficulties which arise in relation to the question of whether there has been a traditional TUPE transfer in the circumstances of a service provision change, particularly where the operation is labour–intensive (paragraphs 11, 26-27).

(2) The statutory provisions themselves contain sufficient definition of the requirements for a service provision change to be established and should be applied, unadorned by any judicial gloss. In particular, there is no need for a judicially prescribed ‘multi-factoral’ approach of the kind applied in Cheesman (paragraphs 27-28, 34).

(3) The tribunal should, therefore, concentrate upon the activities and ask itself whether the activities carried on by the alleged transferee are fundamentally or essentially the same as those carried out by the alleged transferor. Minor differences or differences between the nature of the tasks carried on before and after the alleged service provision change should not negate a finding that there has been a service provision change. In this case, the differences were not sufficient to negate that finding (paragraphs 30, 37).

(4) There is no need for a service provision change to be effected on a single date; it may be effected by a series of transactions over a period of time. It will, however, be necessary in such circumstances for the tribunal to make a finding as to the date on which the transfer is to be treated as having occurred as a matter of law. The Tribunal was entitled to find that the transfer took place on 26 January 2007, which was when the essential activities transferred (paragraphs 38-40).
 
 
Comment
The main importance of this case is in establishing clearly that the purpose of the new service provision change provisions is to do away with the sort of detailed analysis of the particular means of provision before and after the transfer, which has historically led to so much uncertainty about whether there was a relevant transfer. The EAT’s insistence on a commonsense application of the statutory provisions, unadorned by any judicially prescribed ‘multi-factoral’ approach, and with the focus on the essential characteristics of the activities in question, is to be welcomed. It is likely to assist both employees and employers in their search for clarity and certainty in these situations: in the vast majority of service provision change cases, the effect is likely to be a clear presumption in favour of there being a TUPE transfer, which will need clear evidence of some fundamental change to the nature of the activities (as opposed to the manner of carrying them out) in order to rebut it.
 
Ben Cooper appeared for the first respondent.

UKEAT/0286/RN
EMPLOYMENT, SERVICE PROVISION, TRANSFER OF UNDERTAKINGS.

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