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Similarity of activities
[ch 12: pages 419-420]To have a valid service provision change, the activities carried out before and after the change must be “fundamentally the same”. To test this, the first step is usually to identify the “services” being transferred and the “activities” making up those services. The “substance” of what is being transferred must be fundamentally the same, as shown in this example:
A cardboard manufacturer decided to end its haulage contract with its existing transport provider and to switch to a new service provider known as Qlog. Qlog signed a service agreement accepting responsibility for transporting all the manufacturer’s goods, without specifying how this would be achieved. The old haulage company had used its own drivers and vehicles, but Qlog owned no vehicles or employees. Instead, it planned to perform the contract using a computer system that matched the client’s delivery requirements to “self-employed” drivers, using their own vehicles to provide the services.
There was still a service provision change, ruled the tribunal. This was because Qlog’s contractual obligation under the service agreement was to transport the goods. This was the service it agreed to provide, and its contractual obligation was effectively the same as that owed by the outgoing contractor. As a result, all the HGV drivers employed by the outgoing contractor should have transferred automatically to Qlog under TUPE.
Qlog appealed unsuccessfully to the EAT. The tribunal was entitled to rely on Qlog’s own contract documents to identify the activities to be provided and to find that those activities were substantially the same. The drivers were allowed to pursue claims for automatically unfair dismissal, failure to consult before the service provision change and unlawful deduction of wages against Qlog.
Qlog v O’Brien [2014] UKEAT/0301/13/2103
As long as core activities stay fundamentally the same before and after the change in service provider, multiple minor differences introduced by the new provider should not prevent TUPE applying (regulation 3(2A), TUPE, as amended).
Here are some examples from decided cases:
• there was no service provision change when a contract to provide a full catering service was replaced by a contract to provide “dry goods kiosks” (OCS Group UK Limited v Jones [2009] EAT/0038/09); and
• there was no service provision change when an NHS residential care facility closed and was replaced with independent living in the community supported by staff at two charities (Nottingham Healthcare NHS Trust v Hamshaw [2011] UKEAT/0037/11).
In both cases, TUPE did not apply because the activities were not fundamentally the same before and after the transfer.
Tribunals must give the word “activities” its ordinary, common sense meaning. A too narrow and pedantic interpretation could allow a new employer to escape responsibility for the transferor’s workforce when a service contract changes hands, leading employees to lose out (The Salvation Army Trustee Company v Coventry Cyrenians Limited [2016] UKEAT/0120/16).
“Activities” are not limited to those contractually guaranteed under the service agreement. Any work that is anticipated and regularly provided can be included, even though it is not contractually guaranteed (Lorne Stewart v Hyde [2013] UKEAT 0408/12/0100).