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July 9, 2015

Tribunal Tale – Important TUPE Decision June 2015

It is not unusual, particularly in relation to a service provision change, for all or part of the services to be provided by one or more sub-contractors. This can lead to the question of whether, when the client changes the principal contractor or brings the services in-house, the transferring population includes the employees of sub-contractors.

In terms of the TUPE Regulations, one of the situations which will give rise to a service provision change is where activities cease to be carried out by a contractor on a client’s behalf and are carried out instead by the client on his own behalf.

In Jinks v London Borough of Havering, the council owned an ice rink and car park. Saturn Leisure Ltd operated the site and sub-contracted management of the car park to Regal Car Parks Ltd. When the ice rink facilities closed, the car park remained open for several weeks before eventually becoming a public car park which the council managed in-house. Mr Jinks was initially employed by Saturn but transferred to Regal when the rink closed. He claimed that his employment transferred to the council which they denied.

Mr Jinks raised an unfair dismissal claim in the employment tribunal which took the view that the contractual relationship was between Saturn Leisure and Regal and not the Council and Regal. Consequently, for TUPE purposes the council was Saturn’s client and not Regal’s and TUPE did not apply to Mr Jinks’s employment.

The EAT overturned this decision and expressed the view that looking strictly at the legal and contractual relationships does not necessarily answer the question of who is the client in these cases. That question is one of fact and not law and there can be more than one client in any given case.

Transferors should, therefore, be aware that they could become liable for the employees of a sub-contractor and consider including appropriate indemnities in service agreements.

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