Service provision changes

The second category of transfer to which TUPE applies is known as the “service provision change”. Service provision changes were introduced into TUPE in 2006. The rules on service provision change aim to protect workers when a service contract changes hands — either through outsourcing, insourcing (bringing services back in-house) or second generation outsourcing (i.e. a change from one provider to another).

There is no service provision change (and therefore no protection of contract terms under TUPE) where an existing service provider successfully bids to retain their contract. This is because although the service contract is renewed, the employer stays the same.

Regulation 3(1)(b) TUPE (amended, 2014) says that a valid service provision change requires:

• a change in the identity of a service provider;

• an organised grouping of employees whose principal purpose before the transfer was to provide that service; and

• for the activities carried on before and after the change of service provider to be “fundamentally the same”.

The Court of Appeal used a recent case, Rynda (UK) Limited v Rhijnsburger [2015] EWCA Civ 75, to summarise the correct stage-by-stage approach tribunals must take to work out whether there has been a service provision change:

• Step one: identify the service that the service provider was providing to the client before the change;

• Step two: list the activities being performed in order to provide that service;

• Step three: identify the grouping of employees who performed those activities;

• Step four: work out whether the grouping of employees was organised by the service provider for the principal purpose of carrying out the activities identified (and not for some other purpose, such as its own convenience).