OCS Group UK Limited v Mrs S Jones and Miss N Ciliza UKEAT/0038/09/CEA

In the OCS case, the facts were as follows: OCS provided catering services to BMW at the Cowley car plant. The contract began in 2005 and provided for a centrally located restaurant and deli bar facility supported by four satellite shops. The services included the provision of English and continental breakfast, beverages, a lunch involving hot soup and hot meals, and vegetables as well as a salad bar, sandwiches, rolls, pizza and jacket potatoes together with hot and cold desserts.

In 2007 the contract was re-tendered and MIS was appointed as the replacement service provider. OCS assumed that having lost its bid, and the services having transferred to MIS that there had been a TUPE transfer of the staff in the usual way. MIS took the view that there had not been a transfer under the 2006 regulations. They claimed there was no service provision change as a result of “substantial changes” to the activities performed under the 2005 contract when compared to a new contract. Although the services to be provided by MIS were catering related, they were limited to fi ve dry goods kiosks with no requirement for hot food preparation at the satellites. The satellites were selling pre-prepared sandwiches. Staff did, however, have to ensure the cleanliness of the tables, the presence of clean trays and condiments and the rotation of sandwiches.

The Tribunal held that the services operated by MIS were “wholly different” to the services provided by OCS. Their decision was upheld on appeal. In its decision, the Appeal Tribunal referred to a number of cases including Metropolitan Resources Ltd v Church Dulwich Limited in liquidation 2009 UKEAT 0286/08. In this case the judge held that: -

“The statutory words require that the Employment Tribunal concentrate upon the relevant activities; and Tribunals will inevitably be faced, as in this case, with arguments that the activities carried on by the alleged transferee are not identical to the activities carried on by the alleged transferor because there are detailed differences between what the former does and what the latter did or in the manner in which the former performs and the latter performed the relevant tasks.

However it cannot, in my judgment, have been the intention of the introduction of the new concept of service provision change, that that concept should not apply because of some minor difference or differences between the nature of the task carried on after what is said to have been a service provision change as compared with before it or in the way in which they are performed as compared with the nature or mode of performance of those tasks in the hands of the alleged transferor.

A common sense and pragmatic approach is required to enable a case in which problems of this nature arise to be appropriately decided, as was adopted by the Tribunal in the present case. The Tribunal needs to ask itself whether the activities carried on by the alleged transferee will fundamentally or essentially be the same as those carried out by the alleged transferor. The answer to that question will be one of fact and degree, to be assessed by the Tribunal on the evidence in the individual case before it.”

Accordingly it will be up to the Tribunal in each case to decide whether or not there is a service provision change based on a subjective assessment of whether or not the activities (performed by the incumbent service provider) are carried on after the alleged transfer by the replacement service provider. In the OCS case on the face of it, it seems perhaps hard to understand why the Tribunal felt that the changes to the catering service amounted to a fundamental change in the relevant activities. However such cases will be diffi cult to appeal if the Tribunal has asked itself the right questions.

Although this approach may conform with the wording of Regulation 3 of TUPE 2006, it seems unsatisfactory that whether or not a transfer has occurred, has to be judged retrospectively on a relatively subjective basis. The net effect of this decision is that service providers coming to the end of existing contracts are exposed to redundancy costs and possibly unfair dismissal claims where the “activities” performed prior to the transfer are no longer continued after the transfer for any reason including, for example, as a result of the customer changing its requirements. Such changes may be agreed by the customer in consultation with bidders for the specifi c purpose of reducing headcount and costs.