In February we reported on the decision of the Employment Appeal Tribunal (EAT) in the case of Hunter v McCarrick. The EAT decided that a simultaneous change of client and contractor meant that there was no "service provision change" (SPC) within the meaning of Regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
The Court of Appeal has now confirmed the EAT's decision. There can't be an SPC where the identity of the client changes when there is a change of contractor. The Court of Appeal did not need to decide whether a change of client might also prevent there being an old style 'transfer of an undertaking' within the meaning of Regulation 3(1)(a). Nevertheless, the Court commented that the identity of the client might be an essential element of some undertakings in a standard business transfer test - but that was an argument for another day.
This case is likely to have a wide ranging effect in the commercial property context in particular. Where ownership or management of a commercial property changes at the same time as facilities services are changed, facilities staff will not transfer to the incoming facilities provider. The outgoing provider will have to bear any redundancy costs of its staff unless it has negotiated protection on termination into its contract.
However, the principle would appear to apply to all potential SPC situations, not just those in the property sector, which means contractual protection is always key.