What if the business is outsourced to more than one provider?

TUPE can apply even if work under a service contract is split up and outsourced to more than one service provider. For example, supposing a cleaning contractor is also responsible for recycling and has a team of employees assigned to carry out that particular task. Then the contract is terminated and a new contractor (B) is appointed to do the office cleaning but a separate contractor (C) is awarded the contract for recycling. Both will be covered by TUPE, because each activity had a dedicated team of workers. The cleaners transfer to contractor B and the recycling staff to contractor C.

In practice, this situation has led to some of the most difficult TUPE decisions, especially where the relevant services are to be carried out by multiple service providers. The question for the tribunal to decide is which employees are assigned to which new employer. This often has more to do with working out who should bear the financial cost of dismissals than about continuing the employment.

In Kimberley Group Housing v Hambley [2008] UKEAT 0488/07/2504, the claimants had been employed by a provider of accommodation to asylum seekers under a Home Office contract. Their employer lost the contract, which was awarded instead to two different companies — Kimberley Group Housing and Angel Services. Neither accepted that TUPE applied.

The EAT confirmed that there can be a service provision change where services are contracted out to more than one transferee, and that the correct approach is to examine the link between the employees and the particular activities to be performed by the new employers, matching the employees to the new employers on the basis of the percentage split of those activities.