QLOG Ltd v O'Brien and ors EAT/0301/13
The EAT has confirmed that where there is a service provision change (SPC) under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) the post transfer activities must be identifiable as the pre-transfer activities although those activities may be carried out in a different way. This mirrors previous case law and the effect of The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (2014 Regulations) which defines post-transfer activities being" fundamentally the same as the activities carried out by the person who has ceased to carry them out".
The client was an independent convertor and manufacturer of cardboard packaging. It entered into an agreement with M, a haulage company, to transport and deliver the client's cardboard packaging from its base to its customers throughout the UK. M provided drivers, vehicles, a transport manager and four "shunters" (responsible for moving trailers about the client's site and assisting in the loading of the trailers) to carry out the services on behalf of the client. The client then terminated the agreement with M and chose a new provider, Q which was a logistics company and did not provide transport services. Q agreed with the client to provide the same services and to take responsibility for risk in the goods until the point of delivery. It accepted that the employees associated with the warehousing (logistics) aspect of the services transferred from the client under TUPE. However Q decided that it would engage hauliers on its own account or on a sub-contracted basis to transport and distribute the goods to customers so that the drivers would not transfer, as Q would not be providing these services itself.
The drivers were dismissed by McCarthy and brought employment tribunal proceedings, including claims against Q for automatically unfair dismissal under TUPE. As a preliminary issue the tribunal had to consider whether there had been an SPC under TUPE. It held that the terms of the agreement between the client and Q provided "compelling evidence" of the client's intention that Q should continue the activities previously carried out by M i.e. the transportation of goods from its premises to its customers, and that the services were the same as those carried out by the previous contractor M, although differently operated (as Q did not have vehicles or drivers).
Q appealed but the EAT dismissed the appeal and upheld the employment tribunal's decision. The tribunal had correctly concentrated on the substance of the activity being undertaken, rather than the different modes of operation.
What to take away
Incoming contractors must therefore note that even if they decide to sub-contract certain pre-transfer activities if, overall, the service being provided to the client is essentially the same then TUPE is likely to apply.