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Similarity of activities
[ch 12: pages 452-453]A key first step in working out whether there has been a service provision change is to identify the service that was being provided to the client before the service contract changed hands (Rynda (UK) Limited v Rhijnsburger [2015] EWCA Civ 75) and the activities making up the service.
A tribunal will want to test whether the “substance” of the activities to be provided is the same before and after the transfer, 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 intended 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 it was identical to the contractual obligation owed by the outgoing contractor. The substance of the activity was the same. As a result, all the HGV drivers employed by the outgoing contractor transferred to Qlog under TUPE.
In practice, this meant that Qlog would have to cover the cost of making the drivers redundant, since under its business model, it had no directly employed drivers.
Qlog v O’Brien [2014] UKEAT/0301/13/2103
There will be no service provision change unless the activities to be provided under the service agreement are fundamentally the same before and after the change of service provider.
For example:
• 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).
“Activities” is given its ordinary, common sense meaning. Employees could lose out from too narrow and pedantic an interpretation, said the EAT in this recent case:
The claimants were support workers employed by Coventry Cyrenians, a charity providing accommodation-based support to vulnerable adults under a contract with the council. The council replaced its network of 22 different providers with a single provider, merging homelessness and ex-offender support services and improving procedures so that users moved more quickly to private accommodation.
The Salvation Army (SA) won the tender. It argued that TUPE did not apply because the services were not “fundamentally the same”. It pointed to these differences: SA provided services to people aged over 25 instead of over 18; SA users found private accommodation immediately where possible, instead of after a few weeks or months; SA’s supported accommodation was offered for a shorter period; and SA ran only two hostels instead of using many different locations.
Unsurprisingly, the EAT disagreed, ruling that there had been a service provision change in this case, transferring the hostel workers’ contracts to SA. The basic service provided before and after was the same, namely the supply of accommodation-based support for homeless men and women, with the provision of a support worker to help someone return to private accommodation as soon as possible.
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).