Taurus Group Ltd v Crofts & Anor (Transfer of Undertakings : Service Provision Change)

Factual and Procedural Background

This appeal concerns a dispute arising from the transfer of employment under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE"). The Plaintiff was employed as a security officer by Company B, which lost its contract to provide security services at a student accommodation building known as Glasshouse. The new contract was awarded to Company A, which denied that the Plaintiff's employment transferred to it. The Plaintiff brought a claim for unfair dismissal against both Company B and Company A. The Employment Tribunal held that the employment had transferred to Company A under TUPE as a service provision change. Company A appealed this decision.

Legal Issues Presented

1. Whether the employment of the Plaintiff transferred to Company A under TUPE as a service provision change pursuant to regulation 3(1)(b).
2. Whether the concept of "the client" in regulation 3(1)(b)(ii) requires that the client remain the same person before and after the service provision change.
3. The proper interpretation and application of the decision in Hunter v McCarrick [2012] IRLR 274 to the facts of this case.

Arguments of the Parties

Appellant's Arguments

• The Appellant (Company A) argued that there was no novation of contract and that since the client had changed (due to change in ownership of the building), there was no service provision change within the meaning of TUPE.
• Relying on Hunter v McCarrick, the Appellant contended that "the client" in regulation 3(1)(b)(ii) refers to the same specific client before and after the transfer, and a change in client defeats the application of TUPE.
• It was submitted that the Employment Judge erred in law by interpreting "the client" as the person who from time to time requires the provision of services, rather than the specific client identified in the contract.

Respondents' Arguments

• The Respondent (Company B) argued that the Plaintiff's employment had transferred to Company A.
• It was submitted that the client did not have to remain the same for TUPE to apply, and any other interpretation would undermine TUPE’s purpose of protecting employees during business transfers beyond their control.
• In the alternative, Company B argued that a novation of contract occurred transferring the contract to the new client, Mansion Group.
• The Respondent’s counsel also contended that the concept of service provision change should be construed purposively to protect employees, contrary to the strict interpretation in Hunter v McCarrick.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed the application of regulation 3(1)(b) of TUPE concerning service provision changes. It considered the decision in Hunter v McCarrick, which held that "the client" must be the same specific client before and after the transfer for TUPE to apply. The court rejected the argument that "the client" could be interpreted purposively to include any person requiring services at the time, emphasizing the importance of consistency in the statutory language.

The court examined the factual circumstances surrounding the change of ownership of the building and the termination of the contract with Company B. It found no sufficient evidence that the purchaser (Mansion Group) was the client of Company B prior to completion or that a novation of contract occurred. The email communications did not establish that Company B’s contract was transferred or that the purchaser became the client before the transfer.

The court expressly rejected the submission that the vendor’s duty to the purchaser to maintain the property created a dual client relationship. It held that the vendor remained the client of Company B for security services until the contract ended.

Given these findings and the binding nature of the Hunter decision, the court concluded that there was no relevant transfer of employment from Company B to Company A under TUPE.

Holding and Implications

The appeal was allowed. The court held that there was no relevant transfer of the Plaintiff’s employment from Company B to Company A under the TUPE regulations because the client had changed. Consequently, the Employment Tribunal’s decision that the employment transferred was overturned.

As a result, the claim against Company A was dismissed, and Company B was restored as the respondent to the claim. The court noted that this decision follows established precedent and does not create new legal principles. The direct effect is that employees in similar circumstances will not have their employment transferred under TUPE where the client changes, even if the service provision continues at the same premises.