Service provision change under TUPE: what is a client?

19 Jul 2012

The essence of the service provision change provisions under TUPE 2006 are that outsourcing, insourcing and new contractors taking over services provided to a client are a relevant transfer for TUPE and therefore, employees are protected.

In Taurus Group v Crofts, the Employment Appeal Tribunal (EAT) had to decide whether a client could include more than one legal entity.  In its Judgment, given on 22 May 2012, the EAT decided that it could not.

Although not exactly the facts of Taurus, the following is perhaps the clearest way of explaining the Judgment:

– X owns a building

– X engages a security company (A) to provide 3 Security Guards to look after the building

– X sells the building to Y

– Y engages a second security company (B) to provide security at the building in place of A.

– A says to its 3 Security Guards "we have lost the contract to guard the building.  B have the contract. Your employment now transfers to B".

– B says "No.  We want to engage 3 new Security Guards."

The service provisions of TUPE do not apply to transfer the employment of the Security Guards to B because the Client X is no longer the client and a client, for the purposes of Regulation 3 of TUPE, cannot include two legal entities. 

Our view:

While A's Security Guards may feel that they have been hard done by, the Judgment is totally consistent with the Regulations as drafted.