Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006) protects employees whose services are being transferred to another business. TUPE ensures employees are not dismissed, the terms of their contracts are not worsened and affected employees are informed and consulted properly. Under Regulation 3 (1)(b) TUPE 2006 applies to what are called service provision transfers, a situation in which activities cease to be carried out by a client and are carried out by a contractor, where activities are outsourced by a contractor to a subcontractor, or where activities are taken back in-house by a client.

In the recent case of Jinks v London Borough of Havering UKEAT/0157/14, The London Borough of Havering contracted-out the management of a site they owned to Saturn Leisure Ltd. Saturn then subcontracted part of the management to Regal Car Parks Ltd. In 2013, the council took the management of the site back in-house.

Mr Jinks, an employee of Saturn claimed his employment was transferred under TUPE 2006 to the council when they took the management of the site back in-house. His claim was first struck out of at a preliminary hearing at the Employment Tribunal because the judge considered that Regal’s client for the purposes of Regulation 3 (1) (b) was Saturn, and not the council; The EAT however, upheld Mr Jinks’ appeal.

The EAT followed the decision in Horizon Securities Ltd v Ndeze and another where it was confirmed that there will be no service provision change where the relevant activities carried out by different contractors before and after the change are on behalf of different clients. However, Horizon made it clear that the question of who is the client for Regulation 3 purposes is one of fact, not law, that there could be more than one client, and that reading Regulation 3 (1) (b) shows that the person on whose behalf services are provided by a subcontractor may not necessarily be the contractor from whom the subcontract is held.

While this case only reaffirms the existing case law in this area, it is a useful reminder that even when activities are outsourced to a subcontractor, the original company (in this instance, London Borough of Havering) may still have to comply with TUPE 2006.

Employers should be aware that despite the fact that they are not directly hiring the subcontracted employees, if such services are taken back in-house they might have to comply with TUPE 2006.
For further information, please contact Koichiro Nakada – Head of Japan Business Group (koichiro.nakada@lewissilkin.com) and Yoko Nakada - Senior Associate, Deputy Head of Japan Business Group (yoko.nakada@lewissilkin.com).
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