The first report of a tribunal decision regarding what amounts to a service provision change under the TUPE Regulations 2006 has appeared - Hunt v (1) Storm Communications Ltd (2) Wild Card Public Relations Ltd (3) Brown Brothers Wine (Europe) Ltd.
An account manager worked on an account which Storm lost to another agency. She spent around 70% of her time on the account. She argued that she had transferred under the TUPE Regulations to the new agency.
The tribunal held that the employee was an "organised grouping" for the purposes of the TUPE Regulations, that there had been a service provision change under the TUPE Regulations and that her employment had transferred.
Impact on employers
This case suggests that there is a low threshold for establishing a service provision change. As per the DBERR guidance, the tribunal found that even a single employee, as in this case, can be an "organised grouping". In looking at the "principal purpose" element of the test, the tribunal considered that an employee who spends a majority of time on the activities in question will be covered where the activity is outsourced, taken in-house or transferred from one contractor to another.
The Government considered excluding professional services from the ambit of the TUPE Regulations 2006 but, following consultation, did not do so. Not all professional service activities will amount to having an organised grouping dedicated to a particular client or account but, if they do, both the client and the outgoing and incoming service providers will need to be aware of the implications of this decision. Under the TUPE Regulations, a change of provider will not necessarily bring about a change in the personnel providing the professional service and this will need to be taken into account when managing tenders and drawing up the relevant contracts.
We understand that this decision is being appealed to the EAT and we will keep you informed of progress.