April 30, 2015

Service Provision Change under TUPE: Meaning of "Client"

In Ottimo Property Services Ltd v Duncan & Warwick Estate Properties Ltd UKEAT/0321/14/JOJ, the Employment Appeal Tribunal (EAT) considered whether for the purposes of a service provision change under TUPE the meaning of “client” could encompass a number of clients.

Chainbow had a number of contracts to provide property management services to individual residential blocks within Britannia Village, a large housing estate. Mr Duncan, an employee of Chainbow, serviced those blocks. After a number of years, Chainbow’s contracts were sub-contracted to Ottimo Property Services and Mr Duncan’s employment transferred to Ottimo under TUPE.  The contracts were then acquired by Warwick Estate, which took the view that TUPE did not apply.  Mr Duncan brought proceedings claiming that a service provision change under TUPE (SPC) had occurred under which his employment had transferred to Warwick.

At first instance, the Employment Tribunal found that, interpreted literally, an SPC could only occur where “a client” (singular) changes contractor. As each residential block was a separate entity and had entered into separate contracts, they were not one client and as such there could be no SPC.  However, the EAT disagreed and held that “a client” could consist of a number of clients, provided that (i) their identity remained the same before and after the SPC, and (ii) they shared a common intention to appoint the new provider.  The EAT added that it may be more difficult to demonstrate a common intention where there are separate contracts (as in this case), rather than an umbrella contract covering all the clients, although this was not impossible. The case was remitted to the Employment Tribunal to determine whether a common intention existed among the residential blocks.

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