It is well established that under TUPE employees of an outgoing contractor in a second generation outsourcing or contracting in scenario will transfer to the new contractor or the client if the service provision change requirements are met. Since the decision in Hunter v McCarrick it is also clear that in order for the service provision change requirements to be met, the identity of the "client" for whom the services are provided must remain the same.
This has given rise to questions about what happens to the employees of a sub-contractor if the contractor with whom they have a relationship loses its contract with its client. In that situation, the employees of the sub-contractor will not be automatically transferred under TUPE if their "client" is deemed to be the contractor rather than the contractor's ultimate client.
The identity of the client was the issue for the EAT in Jinks v London Borough of Havering. The Council outsourced the operation of an ice rink and car park to Saturn Leisure Limited. Saturn sub-contracted management of the car park to Regal Car Parks Limited. Eventually the ice rink closed and the Council took control of the site and closed the car park, which was subsequently re-opened. One of Regal's employees claimed to have transferred to the Council as a result of a service provision change.
Initially the tribunal struck the claim out on the basis that Regal's client was Saturn. In the absence of any contractual relationship between Regal and the Council, the employee could not argue that the Council was Regal's client and there was no possibility of a transfer.
The EAT decided that this was too narrow an approach. An earlier decision, Horizon Security Services Ltd v Ndeze did not establish, as the Council contended, that the absence of a direct legal relationship between sub-contractor and ultimate beneficiary was determinative. It merely established that the facts of that case did not support a conclusion that the contractor's client was also the sub-contractor's client.
Given that TUPE expressly states that references to a contractor include a sub-contractor, it clearly envisages that a sub-contractor's "client" could be the ultimate beneficiary of the services (in this case the Council). That was a question of fact for the tribunal and the case was returned to the tribunal to determine the identity of Regal's client – was it Saturn or was it in reality the Council?