Does a service provision change under regulation 3(1)(b) of TUPE 2006 take place if services carried out after the change are to be carried out on behalf of a different client? This was the question considered in the recent case of Taurus Group Ltd v Crofts and another.
Mr Crofts was employed as a security guard by Reliance at a building known as Glasshouse, which was managed by a property company named Ely Properties. Ely Properties went into administration, and the management of the site was taken over by a company called CRM, who continued to pay Reliance for their services. In February 2008, Reliance lost the contract to provide security for Glasshouse, but informed Mr Crofts that his contract would transfer to the new contractors, Taurus. Taurus, however, denied that this was the case – their contract to provide security was with a company called Mansion Group, who had acquired the Glasshouse.
At first instance, it was held by the Tribunal that there was a service provision change for the purposes of regulation 3(1)(b) of TUPE 2006, and that Mr Crofts’ employment did therefore transfer to Taurus under TUPE. However, this decision was overturned by the EAT on appeal. The EAT made reference to the earlier case of Hunter v McCarrick, where it was held that the wording of the service provision change definition requires the services carried out before and after the change to be on behalf of the same client. The EAT felt obliged to follow the decision reached in that case, and they did not consider that it could be distinguished in this instance. There was therefore no service provision change, and Mr Crofts’ employment did not transfer.
This decision and that of Hunter are significant cases with the potential to seriously affect a large number of transactions as it is not uncommon for the ownership or management of a commercial property and the facilities services to change at the same time. Hunter is due to be heard on appeal in October of this year, so we may not have heard the last on this point.