The Court of Appeal has confirmed this week that in the change of a subcontractor scenario (the service provision change ("SPC") limb of TUPE) the client on whose behalf activities are provided must be the same both before and after the change of contractor.
The Court of Appeal’s decision in Hunter v McCarrick upholds the EAT’s earlier decision, which we reported on in our October Law Watch and will be seen as good news for some employers trying to work around TUPE in this type of outsourcing.
The EAT had said that if it had been intended that employees employed on an activity should follow that activity, when it was undertaken for a different client, then the TUPE Regulations would have so provided. A purposive approach need not be taken when interpreting the SPC limb of TUPE, as, in contrast to a business sale TUPE transfer the SPC provisions are not derived from European legislation. The SPC provisions are unique to the UK version of the TUPE Regulations.
The Court of Appeal has agreed with the EAT, stating that the natural construction of the SPC provisions gives effect to the draftsman's purpose and it would be wrong to give it an "artificial or expanded meaning" as the claimant had argued here.
For the SPC provisions to apply the activities need to be carried out for the same client. In this case the properties had changed hands and so the client was not the same and TUPE did not apply.
Although every TUPE case should be judged on its own facts and Tribunals are often at pains to ensure employees are protected in such circumstances - this case is good news for employers. Hunter v McCarrick is authority on how to interpret and apply the SPC provisions and their limits rather than expanding the protection afforded to employees.
It is also worth noting that the Government's consultation and response on the effectiveness of TUPE has recently been published. In its response, the Government has stated that it aims to consider in greater detail whether the SPC provisions should be retained or repealed. Whether the Government decides to retain or repeal the SPC provisions, there is a sense that either TUPE or the guidance on TUPE are up for amendment.