Transfer of Undertakings - Service Provision Change

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

When solicitors for administrators took over activities previously carried out in-house by a company in administration, was there a service provision change under TUPE?

No, said the EAT in SNR Denton UK LLP v Kirwan.

The Claimant was a solicitor who worked in-house for a facilities management company that ran into financial difficulties. As a result she was engaged for most of her time disposing of service contracts to third parties. Administrators were then appointed, who appointed SNR Denton to act for them in the administration. Their work involved continuing the disposal of the company's contracts. The Claimant argued that there was a service provision change and, therefore, a relevant transfer under TUPE.

This raises not one, but three, interesting TUPE points. First, the employment tribunal had been correct, said the EAT, in finding that the activity of disposal of the company's contracts, which was continued after the handover, was essentially the same as that previously performed by the company in-house.

But the tribunal had been wrong to ignore the fact that the services, previously carried on by the client on its own behalf, had been continued by SNR Denton thereafter on behalf of that same client. Denton was hired by the administrators, not the company. Therefore the client had not remained the same and Regulation 3(1)(b) could not apply (see Taurus Group Ltd v Crofts).

  Finally, the question arose whether the activities had been intended to be carried out on behalf of the client for a single specific event or task of short term duration (in which case the service provision rules are excluded). Although this was not necessary to decide the case, Langstaff J made some helpful observations. He pointed out that textbooks and commentaries focus on the temporal nature of the exclusion. But the real issue for the tribunal should be an examination of the intention of the client as to what should be the period of time of the contract concerned. In failing to look at this, the tribunal fell into error.