The EAT has clarified the meaning of the provision in TUPE that there will not be a service provision change where the client intends that the activities are, following the change, carried out in connection with a single specific event or task of short-term duration.
The Transfer of Undertakings (Protection of Employment) Regulation 2006 ("TUPE") applies where there is a transfer of undertaking or service provision change. There will not be a service provision change under TUPE if the client intends that the activities will, following the change of service provider, be carried out in connection with a single specific event or task of short term duration (Reg 3(3)(a)(ii)).
Swanbridge Hire & Sales v Butler
Shaws had a contract to build five boilers at Pembroke power station. Shaws subcontracted the insulation and cladding of the boilers to Kitsons. Kitsons started work on three of the boilers in January 2011. After ten months, the relationship between Shaws and Kitsons broke down and Shaws engaged Swanbridge to take over the remaining work under the subcontract. The remaining work involved completing the insulation of the first three boilers (around 80 percent had been completed by Kitsons) and insulating the remaining two boilers, which took around eight months to complete. Swanbridge took on approximately 40 employees who had been working for Kitsons.
A number of the employees who had been working on insulating the boilers under Kitsons' subcontract with Shaws brought various pay claims against Kitsons. Kitsons claimed that there had been a service provision change under TUPE with the effect that the employees and liabilities transferred to Swanbridge. The Tribunal held that there had been a service provision change under TUPE and rejected Swanbridge's argument that the exclusion under Regulation 3(3)(a)(ii) applied. Swanbridge appealed.
The EAT upheld Swanbridge's appeal. It considered that the Employment Judge was required to make findings on the following points:
- The intention of Shaws at the time of the alleged service provision change;
- Whether the activities to be carried out by Swanbridge were in connection with a single specific event or in connection with a task, identifying what that event or task was; and
- Whether the single specific event or task was of short term duration.
It found that the test depends not on how long a task or event actually takes but on how long the client intends the task or event will take, at the time of the change. In this case, the Tribunal failed to consider and decide the intention of Shaws at the time it engaged Swanbridge.
The Tribunal had also made the mistake of considering whether the "event" (as the Tribunal had found) of insulating and cladding the boilers was short term by considering the time that it took Kitsons and Swanbridge together to complete the work. Instead, it should have considered the question looking at the duration of the task that Swanbridge was contracted to, which took 8 months.
The EAT also considered whether the drafting of Reg 3(3)(a)(ii) TUPE requires both an "event" and a "task" to be of short term duration for the exclusion from the service provision change to apply. Two previous EAT authorities (SNR Denton UK LLP v Kirwan and others, and Liddell's Coaches v Cook and others) had given different decisions on the question. SNR Denton held that it did whereas Liddells's Coaches held that only the task had to be short term (the event did not). In this case, the EAT preferred the decision in SNR Denton.
This decision is a helpful reminder of the findings that a Tribunal must make when considering whether the exclusion at Reg 3(3)(a)(ii) TUPE applies. We now have two EAT authorities stating that both an "event" and a "task" must be short term to qualify for the exclusion but the position is still open to argument, given the conflicting decisions. However, it is clear that the focus is on the client's intention at the time of the service provision change and on what remains of the task or event at the time of the transfer rather than the length of the whole task.