Two important Service Provision change (SPC) concepts were considered in this case: (1) Whether services were provided to the same client before and after transfer, and; (2) Whether the client intended that the task be of a short term duration.
The employee (N) was employed by PCS as a security guard at a business centre. The site of the business centre was owned by Waltham Forest LBC (the Council) but it was managed by Workspace who had a contract with PCS for the provision of security. PCS were told that the business centre was to be demolished and a supermarket built on its site. PCS were also told by Workspace that, as from 25 January 2013, Workspace would no longer require security as the site would be closing but that the Council might require security to continue in which case PCS would have to contract separately with the Council.
PCS were asked by the Council to quote for the contract for ongoing security. They were not told that it would be of limited duration. The Council also asked another security company, Horizon, to quote for the contract. Unlike PCS, Horizon were told that the contract would be ‘for a period possibly until September/October 2013’ (i.e. 8 or 9 months). Horizon were awarded the contract by the Council. N was told by PCS that his employment had transferred to Horizon. Horizon denied that there was a transfer.
The ET Judgment
The ET held at a PHR that there was a Reg 3(1)(b) transfer from PCS to Horizon. The ET held that the activities were carried out for the same client before and after transfer, i.e. the Council who ultimately owned the site. Furthermore, that when asked to tender, PCS and Horizon had been asked to tender for a continuous service and not one which was of a short term duration.
Horizon appealed on a number of grounds including that: (i) The ‘client’ was not the same before and after transfer. (ii) The ET had failed to consider, if the client was the Council, whether it intended that the activities would, following the SPC, be carried out by the transferee other than in connection with a single specific event or task of short-term duration (Reg 3(3)).
The EAT Judgment
In a characteristically clear judgment HHJ Eady QC held:
Applying Hunter v McCarrick and Eddie Stobart a purposive construction of the SPC provisions was not permissible as they were not founded on any underlying EU provision but were purely domestic provisions.
On the grounds of appeal she held:
(i) Whether the client is the same before and after transfer is a question of fact and it is possible, for example, where there is an agency arrangement, that there may be more than one client. Here, however, Workspace were clearly the client of PCS. They contracted with PCS and moreover the customers of the business centre were Workspace’s customers. The fact that the Council owned the site was not enough of itself to make them the client of PCS. As Horizon’s client was the Council wheras PCS’s client was Workspace, the client before and after the transfer were not the same. The appeal succeeded on this ground. Hunter v McCarrick and SNR Denton UK LLP v Kirwan applied.
(ii) Applying Swanbridge Hire and Sales v Butler it was necessary when considering the issue of the duration to consider the client’s intention . The intention was clear that the contract was to be provided for 8 or 9 months until the business centre was demolished. The fact that the services were still being provided at the date of the ET hearing, a factor taken into account by the ET judge, was irrelevant. It is relevant to consider what has happened in the past in relation to the duration and the structure of prior contracts. The EAT could not, however, say the ET Judge was definitely wrong when considering that 8 or 9 months might not be a period which is ‘short term’. Had the first ground not succeeded the case would have been remitted on this ground .