Services rendered

OCS Group UK Ltd v Jones and anor

The contracting out, re-tendering and contracting back in of services constitute a “service provision change” (and therefore a “relevant transfer”),under the 2006 Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). In OCS Group UK Ltd v Jones and anor, the Employment Appeal Tribunal (EAT) has said that, to establish that there has been a service provision change, the activities carried out must be essentially the same.

Basic facts

In April 2005, OCS entered into a contract at the BMW car plant at Cowley to provide a centrally located restaurant and deli bar facility supported by four kiosks and a general shop. Mrs Jones worked as a chef supervisor in the kiosks where she spent a great deal of her time preparing hot meals.

OCS wanted to renegotiate the contract because it was losing money, but on 1 August 2007 it was taken over by another contractor, MIS. Under the new contract, the kiosks only sold pre-prepared salads and sandwiches and there was no need for any hot food to be prepared.

A number of employees including Ms Jones were dismissed. She and another colleague brought test claims against OCS and the issue then arose as to whether or not regulation 3 of TUPE applied. OCS argued that, as there had been a “service provision change” Ms Jones’ contract had transferred to MIS when it won the catering contract.

Relevant law

Regulation 3(1)(b) states (among other things) that there is a relevant transfer of an undertaking if the situation is one in which "… activities cease to be carried out by a contractor on a client's behalf, ...... and are carried out instead by another person ...... and in which the conditions set out in paragraph (3) are satisfied"

Paragraph (3) states (among other things) that ".... immediately before the service provision change ...... there is an organised grouping of employees ... which has its principal purpose the carrying out of the activities concerned on behalf of the client"

Tribunal decision

The Tribunal held that TUPE did not apply because the new contract was “materially different” to the one operated by OCS, as the service had been substantially reduced in that there was no longer any requirement for hot food.

It concluded that essentially, "… the operation had changed from the provision of a full canteen service where the Claimants were chefs to them becoming sales assistants in a kiosk."

OCS appealed arguing, among other things, that the tribunal had focused too closely on the change of activities between OCS and MIS instead of looking at the overall service being provided.

EAT decision

The EAT dismissed the appeal. It said that the first thing to do was to define the activities to be carried out by the first contractor and establish whether or not they were “fundamentally or essentially the same as those carried out by the alleged transferor ..”.
It was satisfied that the tribunal had done this and had “correctly identified the activity not merely as the provision of food for staff but ... a full catering service”.

Having studied the differences between the schedules to the two contracts in some detail - the former set out in precise detail the requirements in relation to food provision and management structure, while the latter confined such matters to a single paragraph - the tribunal had been entitled to conclude that the activities under the MIS contract was a “wholly different operation” to that under the OCS contract. As the contracts were materially different, there had been no service provision change and TUPE did not apply.