If we win this contract, will we need to TUPE? Matthew Whelan and Esther Smith advise.

The question:

I am tendering against another company for the contract to run the canteen in a local factory – does this mean I will have to TUPE the employees of the other catering firm should I will the contract?
 

Legal advice:

Matthew Whelan, solicitor, Speechly Bircham

You are right to be alive to the possibility of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (the Regulations) applying to the situation you describe.

The Regulations set out two types of transfer. One of these specifically deals with service provision changes such as the one that you describe. There is another more general type of transfer, which can still apply to the re-tendering of services, even if the service provision changes are not triggered.

There are a number of different elements to the test of whether there has been a service provision change which triggers the application of the Regulations. These include that there must be an organised grouping of employees situated in Great Britain before the change whose principal purpose is carrying on services for the client to whom the services are provided. It is possible for a single employee to be an organised grouping of employees. The organised grouping must have, as its principal purpose, the provision of services to a particular client.

The test also means that the “activities” carried out before the transfer must be carried out by you after the transfer. You therefore need to consider the nature of the current activities and whether you will carry these out after you win the contract. There has been some case law on how this part of the test will operate and there is some uncertainty on this. In one case, which involved the provision of a catering service, a fairly narrow interpretation of this requirement was applied, which meant it was found that there had been no service provision change which attracted TUPE. The name of this case is OCS Group UK Limited v Jones and another.

There are some important consequences if the Regulations apply. The employment of those assigned to the undertaking transferring will transfer to you on their existing terms in the event that you take over the contract.  The employee may have a claim for automatic unfair dismissal in the circumstances where a dismissal is by reason of (this has a specific meaning) a TUPE transfer. There is also an obligation to inform, and possibly consult, representatives of your employees that are affected by the transfer. Both you and the existing contractor are jointly and severally liable for any claims for breach of these obligations in the event the affected employees transfer to you, even though it may be that the obligation to consult falls with the current contractor because the affected employees are at that time employed by the current contractor.

The existing contractor will also be obliged to provide you with certain information (known as employee liability information) and if they fail to do this you may be entitled to compensation.

In short, whether TUPE would apply in the event that you won the catering contract is something which depends on the circumstances, although there is a risk that it will apply in the circumstances you describe. You should therefore take legal advice so you can fully understand the possibility of it applying, as well as the implications.

Matthew Whelan can be contacted at matthew.whelan@speechlys.com. For further information, please visit www.speechlys.com.

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Esther Smith, partner, Thomas Eggar