Service Provision Changes and Change in Activities

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) introduced protection for employees in the event of a “service provision change”.  This extended the protection from circumstances where there was a business transfer to outsourcing and changes in the contracting of services.

Under the 2006 Regulations, it is made clear that a service provision change will only be considered under TUPE in circumstances where the activities carried out prior to the transfer and after the transfer are “fundamentally the same”.

There has been a significant amount of litigation on the interpretation of this phrase, and useful guidance has now been handed down by the Employment Appeals Tribunal. Whilst the activities must not be defined in such a level of generality that it does not really describe the activities at all, a common-sense and pragmatic approach has to be taken.

The risk in such cases is that too narrow a focus is taken on determining what the activities are before and after the transfer.  Rather than looking for differences in the activities, what should be considered is whether or not, on the whole, the activities are recognisable as the same before and after the transfer.

This does seem to represent a further shift away from the clear language in the Regulations which requires a “fundamental” similarity.

One further interesting remark in the case was the suggestion that there should be a fast-track arena in which disputes such as this can be heard prior to a transfer taking place.  This would provide much greater clarity for parties, although no firm proposals appear to be in the pipeline in this respect currently.

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