TUPE: Service Provision Change

In Costain Ltd v Armitage UKEAT/0048/14, the Employment Appeal Tribunal (EAT) considered the correct test to be applied to determine whether an employee's employment transferred under TUPE in the context of a service provision change.

Mr Armitage was employed as a telecommunications project manager for ERH Communications Ltd (ERH).  His time was split working on two contracts for the same client.  One of the contracts transferred to Costain Limited (Costain) under TUPE.  Mr Armitage brought various claims against both ERH and Costain. There was a preliminary dispute about whether Mr Armitage's employment had transferred to Costain under TUPE, with ERH arguing that it had because immediately prior to the transfer he had spent the majority of his time working on the transferring contract.

The EAT held that to determine whether an employee's employment transferred under TUPE in the context of a service provision change, a two-stage test should be followed: (i) clearly identify the grouping of employees whose principal purpose is carrying out the transferring activities; and (ii) establish if the employee is assigned to this grouping.  Both are questions of fact; with regard to limb (ii) the EAT clarified that it is not enough to rely on the amount of time spent by an employee on a particular activity immediately before the transfer.  While Mr Armitage had spent the majority of his time on the transferring contract, it was also important to consider all the facts and circumstances of the case, including his activities under the other contract and the fact that he worked on projects on a troubleshooting basis.  These matters had not been considered at first instance so the case was remitted to a fresh Employment Tribunal.

This case is not new law but it serves as a useful reminder that all relevant facts and circumstances must be considered when determining the employees who will transfer from one contractor to the next under TUPE.