Last Updated: 13 November 2012
Article by Alison Wallace

Senior Employees

Edinburgh Home Link Partnership and others v The City of Edinburgh Council and others 2012 EATS/0061/11/BI

The EAT found in this case that TUPE did not apply to two directors of a company which provided services for the homeless on behalf of the Council when the Council decided to take homelessness services in house. The directors did not provide homelessness services themselves but their role was one of strategic management of the company employing the staff who provided the services. The directors appealed but were unsuccessful. Their direct services to the Council formed a minimal part of their day to day activities, thus their roles were not sufficiently connected with the services to the Council which were transferred.

Key point: Senior individuals' contracts will not necessarily transfer under a TUPE service provision change if their roles are not sufficiently dedicated to the provision of the services which are being transferred.

Harmonisation of Terms

Manchester College v Hazel and another UK EAT/0642/11

Mrs Hazel and Mrs Huggins were teachers who were transferred along with about 1,500 other employees to Manchester College under TUPE. Five months later the College proposed redundancies together with changes to employment terms for staff. After consultation Mrs Hazel and Mrs Huggins were not at risk of redundancy but were offered alternative employment terms and these included a substantial pay cut of up to 18.5%. The College explained that the new terms were necessary for harmonisation across the workforce to remove inequalities. When Mrs Hazel and Mrs Huggins refused to accept the new terms they were dismissed.

They were then offered employment on new contracts at a reduced salary which they accepted and they returned to work after their dismissals but then brought claims against the College arguing that their dismissals had been unfair connected with the TUPE transfer and not for an ETO reason. They sought reinstatement on their old terms and conditions. The Employment Tribunal agreed that they had been automatically unfairly dismissed and that they should be re engaged on their original salaries with a pay freeze until their colleagues' salaries caught up. The College appealed but was unsuccessful. The changes to their contracts were separated in time from the redundancy exercise and were a simple harmonisation which was not an ETO reason. The College could have avoided these problems if they had required Mrs Huggins and Mrs Hazel to enter into a Compromise Agreement on termination.

Key point: Successful post TUPE harmonisation remains uncertain where there is no change in the number or functions of employees.

Service Provision Change

SNR Denton UK LLP v Kirwan and Jarvis plc (in Adminstration) UK EAT/0158/ZT

Ms Kirwan brought a claim against the solicitors Denton UK after she was made redundant. She worked in house at JAS, a subsidiary of Jarvis, and when the Jarvis plc experienced financial difficulties she was responsible for the disposal of facilities management service contracts to outside purchasers. Deloittes were eventually appointed as joint administrators of Jarvis, who in turn engaged Denton UK to act as their solicitors in relation to the administration of JAS. When she was not kept on by Denton UK she argued successfully before a tribunal that there had been a service provision change. However, on appeal Denton UK were successful in overturning this decision. The EAT held that the activities carried on by Ms Kirwan and Denton UK were not on behalf of the same client. Denton UK were performing their activities on behalf of the administrators not JAS and so Regulation 3 of TUPE could not apply.

Key point: This is the first case on the application of the Service Provision Change in an Administration. There may be circumstances, however, where Administrators do act on behalf of a company and so professional advisers who are retained by them may also be acting on behalf of the company. It will be a question of fact in each case.

McCarrick v Hunter 2012 AER 315

The Court of Appeal in this case denied Mr McCarrick his claim for unfair dismissal, holding that there was no service provision change under TUPE when the property management services were transferred from one contractor to another and the new contractor provided the services on behalf of a new client, in this case the mortgagee. For there to be a service provision change the client must be the same before and after the change of contractor under Regulation 3 of TUPE. Accordingly, Mr McCarrick did not have sufficient continuous employment.

Key point: The arrangements in this case were unusual but Regulation 3 is only applied where there is the same client throughout, in second generation outsourcing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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