TUPE

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Qlog Ltd v O’Brien EAT – 21 March 2014

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This case is concerned with Reg 3(1)(b)(ii) and whether the activities carried on before and after transfer are fundamentally or essentially the same.  The interesting feature of the case is that the manner of providing the services after the transfer was radically different from the way in which they were carried out before the transfer.

The Facts

Ribble manufacture cardboard. In 2008 Ribble entered a contract with McCarthy, a haulage company, to deliver the cardboard to its customers. McCarthy allocated 15 vehicles to the contract and allocated HGV drivers who would operate from the Ribble premises. McCarthy also engaged a transport manager and 4 shunters who moved trailers about the Ribble site and assisted with loading and unloading. McCarthy lost the contract in September 2011 and the Appellant (‘Qlog’) took it over. Qlog were not, however, a transport company. They owned no haulage vehicles and employed no drivers, they simply act as middlemen between customers and hauliers. In this case they contended they were not providing haulage services but subcontracting the service to haulage companies who would bid for each specific delivery. Qlog accepted that the shunters and transport manager would transfer but it argued that the services it provided were fundamentally and essentially different from those provided by McCarthy and so the drivers would not transfer. The contract, executed after the transfer but dated before it stated that Ribble was transferring the provision of part of its transportation, delivery and distribution services from McCarthy to Qlog. Other contractual provisions made it clear that Qlog was engaging hauliers either on its own account or as sub contractors and that it had contractual responsibility for performing the services. Further property in Ribble’s goods passed to Qlog when it took on a particular delivery.

The ET Judgment

The ET recognised the business of Qlog was very different from McCarthy, however, the intention of Ribble was materially the same before and after the transfer. It wanted the other contracting party to be responsible for the transportation, delivery and distribution services of its products.

The EAT Judgment

Qlog sought to argue that the ET had failed to properly identify the ‘activities’ undertaking by it after the transfer and to recognise that these were fundamentally different from those performed by McCarthy. The appeal was dismissed. The ET had identified the key issue as the identification of the activates carried out before the transfer and those that were carried out by Qlog after the transfer. The ET had recognised there was a different mode of carrying out those activities but was entitled to have regard to what was set out in the contractual documentation when reaching the conclusion that the activities for which Qlog was responsible for were fundamentally the same. The issue of whether activities were the same before and after the transfer was a matter of fact for the ET to determine.

Comment

SPC cases can be won or lost on the defining of the activities before and after transfer. In this case by Qlog would probably have avoided liability if it had entered into a different contractual arrangement with Ribble which identified it as an agent or broker rather than the party responsible for delivering the service after the transfer.

Link to Judgment

 

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