Metropolitan Resources Ltd v Churchill Dulwich Ltd & Ors

Factual and Procedural Background

This appeal concerns the application and interpretation of the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE 2006"), which replaced the 1981 Regulations from 6 April 2006. The Claimants, originally ten in number (one withdrew), brought claims of unfair dismissal, wrongful dismissal, unpaid wages, and unpaid holiday pay against Metropolitan Resource Limited ("MRL"), the First Respondent before the Employment Tribunal. The Claimants alleged their employment had transferred to MRL from Churchill Dulwich Limited ("CD"). MRL denied a relevant transfer under TUPE 2006 and challenged the Tribunal's jurisdiction on time limits and grievance procedures.

CD was later joined as Second Respondent, acknowledging a transfer under TUPE 2006 but also contesting jurisdiction. The Employment Tribunal held a pre-hearing review before Employment Judge Spencer, who determined there had been a relevant transfer from CD to MRL on 26 January 2007, making MRL the correct Respondent. MRL appealed this conclusion. CD had since entered voluntary liquidation and did not participate in the appeal, with their liquidators indicating they would not oppose the application.

Legal Issues Presented

1. Whether a relevant transfer occurred under Regulation 3(1)(b) of TUPE 2006, specifically concerning a service provision change.
2. Whether the activities previously carried out by CD on behalf of the client (Migrant Helpline) ceased and were instead carried out by MRL, satisfying the conditions of Regulation 3(3).
3. The proper application of the legal test for service provision change under TUPE 2006, including the relevance of the multi-factorial approach established in prior case law under TUPE 1981.
4. The correct date of the transfer for the purposes of TUPE 2006 application.

Arguments of the Parties

Appellant's Arguments (MRL)

• Argued that under TUPE 1981, no transfer of an economic entity occurred; thus, no transfer should be found under TUPE 2006.
• Contended that the multi-factorial approach from Cheeseman v Brewer Contracts Limited should apply to service provision changes, requiring analysis of whether the service provision had actually transferred.
• Highlighted essential differences between services provided by CD and MRL, including location differences (Barry House vs Coombe Farm), security levels, additional services by MRL, different employees, and no transfer of assets.
• Maintained that the transfer could only occur at a single point in time (citing Celtec Limited v Astley) and that the Tribunal erred by finding the transfer date as 26 January 2007 instead of 31 March 2007.
• Asserted that the Tribunal improperly considered events after 31 March 2007, despite disallowing cross-examination on those events.

Appellee's Arguments (Claimants)

• Submitted that TUPE 2006 introduced the concept of service provision change, removing the need to prove a stable economic entity transfer, thus departing from the multi-factorial approach of TUPE 1981.
• Argued for a broad, inclusive approach focusing on whether the core activity ceased to be carried out by the original employer and was instead carried out by the new provider, without detailed examination of differences in service delivery.
• Supported the Tribunal's factual finding that the essential service provided by MRL was the same as that provided by CD.
• Contended that the transfer could be effected by a series of transactions, so a single date for transfer is not required.
• Asserted that the Tribunal was entitled to consider subsequent events to the extent they supported the conclusion that location was not integral to the definition of the activity.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analysed the statutory framework of TUPE 2006, focusing on Regulation 3(1)(b) which introduced the new concept of service provision change, distinct from the transfer of an economic entity under TUPE 1981. The Court emphasized that the definition of service provision change is set out clearly in the Regulations and requires a factual determination of whether activities ceased to be carried out by the transferor and were taken over by the transferee, provided certain conditions are met.

The Court rejected the Appellant's submission that the multi-factorial approach from Cheeseman should be applied to service provision changes, noting that such an approach is only relevant to transfers involving an economic entity under Regulation 3(1)(a). Instead, a straightforward application of the statutory wording to the facts suffices.

The Tribunal's factual findings were upheld, including that the essential activities provided by MRL were the same as those previously provided by CD, notwithstanding differences such as location, additional services, and different employees. The Court found these differences insufficient to negate the existence of a service provision change.

Regarding the timing of the transfer, the Court agreed with the Claimants that Regulation 3(6)(b) permits a transfer to be effected by a series of transactions and that the date of transfer is a factual question determined by when the core activities ceased to be performed by the transferor and began to be performed by the transferee. The Tribunal was entitled to find the transfer date as 26 January 2007, when MRL took over the contract and asylum seekers were diverted to Coombe Farm.

The Court also found no error in the Tribunal's limited reference to subsequent events, which supported the conclusion that the location of the activity was not integral to its definition.

Holding and Implications

The appeal was DISMISSED.

The Court upheld the Employment Tribunal's finding that a relevant transfer under TUPE 2006 Regulation 3(1)(b) occurred on 26 January 2007, constituting a service provision change from CD to MRL. This decision confirms that the new TUPE 2006 provisions allow for a transfer without requiring the transfer of a stable economic entity and that the essential question is whether the core activities ceased to be carried out by the transferor and were taken over by the transferee. The ruling clarifies the application of TUPE 2006 in cases involving service provision changes, emphasizing a fact-based and pragmatic approach. No new legal test was established beyond the statutory wording, and the decision does not create binding precedent beyond the facts of this case.