Service Provision Changes under TUPE

22 August, 2014

In the recent case of Horizon Security Services Limited v (1) Ndeze (2) The PCS Group, the EAT explored two interesting questions in determining whether there was a service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).

In this case, PCS, a security contractor, had been engaged to provide security services at an office complex owned by the London Borough of Waltham Forest (“LBWF”) and managed by Workspace plc.

The management of the site was subsequently taken back by LBWF who engaged a new security company, Horizon, to provide security services at the site for a period of 8-9 months until the office complex was demolished and a supermarket was erected.

Employees who worked for PCS on the site claimed that there was a service provision change under TUPE and that their employment should have transferred to Horizon.

The EAT held that there was no relevant transfer for the purposes of TUPE and the employees were not entitled to transfer to Horizon because the service provision change test had not been met. This was for two reasons:

  1. The client for whom the services are provided must be the same. This rule derives from the Court of Appeal’s decision in the case of Hunter v McCarrick. In this case the client had changed. PCS was providing services to Workspace plc, whereas Horizon was providing services to LBWF. 
  2. TUPE transfers cannot occur if the client intends the contract to relate to an event or task of short term duration. In this case, LBWF intended the contract that it had given to Horizon to be of short duration i.e. 8-9 months, pending the building’s demolition.

This case demonstrates how owners of commercial property may, in some circumstances, be able to protect themselves from the effects of TUPE through the use of subcontractors.