Service provision changes 




Service provision changes are the second category of transfer to which TUPE applies. They were added to the TUPE regime in 2006, with the aim of protecting workers when a service contract changes hands, either through outsourcing, insourcing (bringing services back in-house), or second generation outsourcing (that is, a change from one provider to another) (regulation 3(1)(b), TUPE (as amended)).



The TUPE protection provided on a service provision change exceeds the minimum requirements of the Acquired Rights Directive and plugs a gap in the protection offered by EU law.
Because these regulations are based on national rather than EU law, tribunals must apply normal (as opposed to “purposive”) principles of interpretation. In other words, they must adopt a “straightforward and common sense” meaning, instead of stretching the language of the regulations to achieve the Directive’s purpose (Metropolitan Resources Limited v Churchill [2009] IRLR 700). See Chapter 1: [EU law].



Here are the key features of a valid service provision change under regulation 3(1)(b), TUPE:



• there must be a change in the identity of a service provider (that is, the contractor must change);



• there must be no change in the identity of the client(s) who commission the services before and after the change of service provider (that is, the same client must contract for the services from the old and the new contractor);



• immediately before the transfer, there must be an “organised grouping of employees” whose “principal purpose” before the transfer was to provide the services; 




• the “activities” carried on before and after the change of service provider must be “fundamentally the same”;



• the client must intend that after the change of contractor, the services will be provided “other than in connection with a single specific event or task of short term duration”; and



• the service contract must be to supply services, not goods for the client’s own use.



Each of these tests are looked at below.