TUPE and removal requests
Employers will generally be aware that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply to a service provision change whereby a client, who engages a contractor to undertake work on its behalf, reassigns this contract or brings the work in-house. In this situation, the contractor’s employees assigned to that contract or work, will generally have their employment transferred under TUPE to the new service provider on no less favourable terms and conditions that they enjoyed with their employer.
Several tribunal cases have highlighted that for TUPE to apply to a service provision change, there must be an ‘organised grouping of employees whose principle purpose is carrying out the relevant activities on behalf of a client’. In other words, there needs to be an organised and structured team that is dedicated to the provision of services for the employer’s client or customer.
In order to safeguard themselves, clients will look to ensure that they have clauses within commercial contracts in place with contractors, which give them some power over which of the contractor’s staff are assigned to their account. This means that if the client is unhappy with one of the contractor’s staff, they can ask the contractor to reassign them to another client. In the case of Jakowlew v Nestor Primecare Services Limited T/A Saga Care and Westminster Homecare Limited UKEAT/0431/14 (Jakowlew), the Employment Appeal Tribunal (EAT) looked at whether a client’s request by itself amounts to removal of the worker.
Jakowlew worked as a care worker, employed by Saga Care, working principally on a contract for the London Borough of Enfield. In June 2013, following concerns about her conduct and that of two of her colleagues, Enfield wrote to Saga instructing it to remove the Claimant and her colleagues from working on its contract. As Enfield had the relevant clauses under commercial arrangements with Saga, this was a lawful instruction by Enfield. Whilst Saga were considering what to do with the Claimant (they were progressing with disciplinary action and had removed her from the client site but not indefinitely), the contract was removed from Saga and awarded to Westminster Healthcare Limited, resulting in a service provision change.
Immediately before the day of the transfer of the service to Westminster, Saga went through a disciplinary process, and reinstated the Claimant and her colleagues and issued the Claimant with a written warning. This resulted in confusion over whether or not the Claimant’s employment had TUPE transferred to Westminster. Saga had continued to pay the Claimant throughout, and eventually dismissed her in September 2013 on the grounds of redundancy. She brought a claim for unfair dismissal, asserting that her employment had transferred to Westminster under TUPE.
The Employment Tribunal (ET) found that the Claimant had been removed from that ‘organised grouping of employees’ by Saga, on Enfield’s instruction; as this had been a lawful instruction based on the commercial arrangements between Saga (as the contractor) and Enfield (as the client). Therefore her employment had not transferred and she had remained Saga’s employee.
As highlighted by Browne Jacobson the Employment Appeal Tribunal (EAT) concluded that ‘although Enfield had a contractual right to instruct Saga to remove employees from its contract, this did not permit Enfield itself to assign the employee; this was down to Saga as her employer’. Saga did not, however, take this course of action. Saga had protested the instruction and tried to change Enfield’s mind. As a result, Saga did not remove Mrs Jakowlew (or the other employees) from the organised grouping of employees before the transfer and the EAT held that she had transferred to Westminster with the services.
The key point here is that an instruction from a client, however legitimate, does not change an employee’s status in this way unless the employer acts upon it. The client is entitled to issue the instruction, but does not have the power to enforce any such reassignment. Only the employer has the authority to determine which group of workers the employee is assigned to.
Clearly by not acting on the client’s instruction, the employer may risk a breach of contract claim by the client, but the level of that risk would depend on the loss suffered as a result of the non-compliance.
It is also a clear reminder that where the client is unhappy with the service provided by specific staff, simply changing the service provider is not the quick answer.
- The EAT has highlighted that an employer must act upon a client’s instruction to reassign an employee in order for it to have the effect of removing the employee from the organised grouping. On its own, such an instruction is insufficient as proven in this case.
- When drafting outsourcing contracts, clients may wish to strengthen their indemnities to allow for provisions in favour of the client if such an instruction is not acted on by the service provider – and service providers should watch out for such provisions.
- Clients should ensure that no transfer takes place until any instruction they have given regarding removal of particular staff has been carried out
Just another issue to be mindful of when dealing with the complex world of TUPE…