TUPE Service Provision Changes – ‘split’ transfers

TUPE 2006 still hasn’t produced much caselaw on service provision changes, but one thorny point has been helped by the case of Kimberley Group Housing Ltd v. Hambley & Ors (UK) Ltd [2008] which deals with ‘split’ service provision.

By way of reminder, the event that triggers a transfer under the service provision change provisions is when:

activities cease to be carried out by a contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person on the client’s behalf

In this case the activities weren’t outsourced to just one successor, but two. So what happens to the jobs? The employment tribunal at first instance performed a strange exercise where they divided the contract between the two transferees.

In truth, a ‘split’ transfer is a very similar problem to that quoted by opponents to service provision change transfers in the professional arena – sure, I do 70% for client A, but if I transfer to him then is it 70% of my job or 100% that goes? The only answer on a reading of the regulations can by that 100% goes, and Lady Smith applies the same principle to split transfers. The tribunal must analyse the facts to determine which of the transferees had received the majority of the activities to which the employees were assigned. That transferee is therefore the recipient of the employee’s principal activities and is thus the sole transferee.

The EAT also makes the valid point that this present case shouldn’t have caused so much of a headache, there is a line of authority deriving from ‘conventional’ transfers that some work performed for a third party won’t preclude an employee from belonging to the entity that transfers.