In this case HHJ Clark crystallised the approach to be taken on the issue of whether the ‘activity’ that is carried out before a transfer is also carried out after a transfer for the purposes of a Service Provision Change.
The essential facts can be shortly stated. Enterprise provided IT support services to LCC schools. When the agreement came to an end LCC invited tenders for a new agreement. The new agreement was different in a number of respects but in one significant respect, the new proposed contract excluded any service cover providing for curriculum systems. This represented 15 per cent of the work of the Enterprise staff assigned to the Leeds service. The ET held that this difference was such that the activity did not remain the same. (Unhelpfully for Enterprise in an email explaining why they were not going to tender for the new contract a, senior manager gave the reason that the new contract had quite different requirements).
The EAT dismissed Enterprise’s appeal. in doing so some useful guidance was given by HHJ Clark which is reproduced below (case references omitted):
(1) The prospective SPC in this case arises under Reg 3(1)(b)(ii), that is where ‘activities’ cease to be carried on by a contractor on a client’s behalf and are carried on instead by a subsequent contractor.
(2) The expression ‘activities’ is not defined in the Regulations. Thus the first task for the ET is to identify the relevant activities carried out by the original contractor.
(3) The next (critical) question for present purposes is whether the activities carried on by the subsequent contractor after the relevant date are fundamentally or essentially the same as those carried on by the original contractor. Minor differences may properly be disregarded. This is essentially a question of fact and degree for the ET.
(4) Cases may arise where the division of services after the relevant date, known as fragmentation, amongst a number of different contractors means that the case falls outside the SPC regime.
(5) Even where the activities remain essentially the same before and after the putative transfer date as performed by the original and subsequent contractors an SPC will only take place if the following conditions are satisfied:
(i) there is an organised grouping of employees in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client;
(ii) the client intends that the transferee, post-SPC, will not carry out the activities in connection with a single event of short-term duration;
(iii) the activities are not wholly or mainly the supply of goods (rather than services) for the client’s use.
(6) Finally, by Reg 4(1) the ET must decide whether each Claimant was assigned to the organised grouping of employees.