The Court of Appeal has upheld the decision of the Employment Appeal Tribunal (“EAT”) in the case of Hunter v McCarrick (view the full article on this decision from 6 Feb 2012), confirming that there will be no service provision change under TUPE in circumstances where there is not only a change in service provider, but also a change in client.
Mr McCarrick had originally been employed by Waterbridge Group Ltd but transferred to WCP Management Ltd in February 2009 to manage a portfolio of properties on behalf of Waterbridge. In August 2009, the mortgagee of those properties, Aviva, appointed receivers who assumed control of the properties. Mr McCarrick then became employed by Mr Hunter, the Managing Director of Waterbridge, who, it seems, was keen to employ Mr McCarrick to keep on good terms with Aviva and to try to rescue the situation. Mr McCarrick claimed that his employment in August 2009 was by operation of TUPE.
The EAT upheld the employer’s claims that, as the property management activities on which Mr McCarrick was employed were carried out on behalf of Aviva and not on behalf of Waterbridge, there was no service provision change under TUPE. For there to be a service provision change under TUPE, the activities (property management in this case) carried out by the new contractor had to be carried out on behalf of the same client on whose behalf the old contractor carried out the activities. As the client as well as the contractor had changed in this case, there was no service provision change under TUPE.
Mr McCarrick appealed this decision to the Court of Appeal, and the Court has upheld the decision of the EAT, rejecting the argument that the service provision change provisions under TUPE should be given a purposive interpretation so as to apply in these circumstances. The Court confirmed that the wording of the service provision change provisions under TUPE were clear, and were “only consistent with the situation where there is the same client throughout".
Impact for employers
- Whilst the facts of this case are fairly complicated and perhaps unusual, this decision is of great importance, particularly for commercial property transactions, where ownership or a lease of commercial property changes at the same time as the service providers, such as managing agents or cleaning staff. In these circumstances, for example, where ownership of the property changes at the same time as the managing agents, it is now clear that the employees of the outgoing managing agent would not TUPE transfer either to the new owner or the new managing agents, as there had been a change in both the client and the contractor.