TUPE

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Ottimo Property Services Ltd v Duncan EAT – 10 March 2015

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The issue in this case is whether the word ‘client’ in Reg 3(1)(b) is to be understood as referring to the singular or whether it could refer to more than one client.

The Facts

D was employed by Chainbow as a site maintenance manager on an estate comprising 12 residential blocks at Britannia Village (‘BV’).  Each residential block had a separate management company and each was a separate legal entity.   in 2007 Chainbow had maintenance contracts with 11 of the 12 residential blocks.  One block, BV 11, contracted with another maintenance company.  In 2009 to 2011 3 other blocks moved their maintenance contracts away from Chainbow to other providers.  In February 2012 Chainbow were acquired by Trinity who in turn subcontracted the work to Ottimo.  D’s employment transferred to Ottimo.   By 2012, other blocks had moved away from Chainbow/Ottimo such that Chainbow/Ottimo were contracted with 6 blocks, BV 1, 3, 5, 6, 7, 10 and the company, BVG which looked after the communal areas of the estate.    In May to August 2012 Warwick acquired the contracts for blocks 1,3, 5, 6 and 7.   Warwick refused to take on D as it considered TUPE did not apply.

The ET Judgment

The ET, having rejected a Reg 3(1)(a) old style transfer then considered whether this was a Reg 3(1)(b) SPC.   The ET considered that because each of the blocks was a separate client then there was no organised grouping that had as its principal purpose the carrying out of the activities for the particular client.  Rather D carried out activities for a range of clients (i.e. each of the blocks).  Further D was not assigned to any of the contracts.

 

The EAT Judgment

HHJ Eady QC held:

(1)  Although the identification of “the client” for the purposes of Reg 3(1)(b)  has been the subject of earlier consideration in the case-law, none of those cases had to expressly address, on the facts, the question whether – allowing no changes in the end users before and after the SPC – the client had to be understood solely in the singular or whether the regulation could allow for there to be – providing they remained identical – more than one client.

(ii)  That ‘client’ could include more than one person and that some contractual scenarios a group of different entities may be defined as the client’. Such clients would have to retain their identity before and after the SPC, but, the fact that the service is provided to more than one legal entity does not necessarily mean there cannot be a SPC transfer.

(iii)  Allowing that “the client” may comprise more than one legal entity – and so, might more properly be described as “the clients” – there must be some link, some commonality, between them, to permit the identification of intention for Reg 3(3)(a)(ii) purposes.  That will be all the harder to demonstrate where there is no umbrella contract defining “the client”.  That does not mean that there must be a single contract between the legal entities comprising the client, or clients, and the contractor.  There must, however, be an ability to ascertain a common intent.

 Link to judgment

 

 

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