Service provision changes 



Service provision changes are the second category of transfer to which TUPE applies. These 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 are expected to apply normal (as opposed to “purposive”) principles of interpretation. In summary, when interpreting the service provision change regulations tribunals are meant to adopt a “straightforward and common sense” meaning instead of stretching the language of the regulations to achieve the purpose of the Acquired Rights Directive (Metropolitan Resources Limited v Churchill [2009] IRLR 700). For more information on the interpretation of EU Directives by the courts, see Chapter 1, page 18.


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;


• there can be no change in the identity of the client(s) who commission the services before and after the change of service provider;


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



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


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


• the relevant agreement must be to do with the transfer of services, not goods for the client’s own use.


There can be no service provision change (and therefore no protection of contract terms under TUPE) if an existing service provider successfully bids to retain an existing contract. This is because although the service contract is renewed, the employer stays the same, so TUPE does not apply.