Change of service
Labour & European Law Review Weekly Issue 302 17 January 2013
Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), there is a service provision change (SPC) when an organisation engages a contractor to provide a service on its behalf. In SNR Denton UK LLP v Kirwan and ors, the Employment Appeal Tribunal (EAT) said that there was no SPC when solicitors for the administrators took over activities previously carried out in-house by the insolvent company.
Ms Kirwan was Director of Legal for Jarvis Accommodation Services Ltd (JAS), part of the Jarvis group of companies, when it ran into financial problems. As a result, she spent most of her time during the last four years of her employment disposing of the company’s service contracts to outside purchasers.
The company’s financial situation did not improve and administrators were appointed in mid March 2010. They decided that Dentons should act as their solicitors. Shortly afterwards, Ms Kirwan was told there was no money to pay her wages and she was made redundant on 31 March 2010.
She claimed that, as most of her work involved disposing of service contracts to purchasers and as Dentons were doing much the same thing, there had been a service provision change (SPC) under regulation 3 of TUPE and her contract as Director of Legal should continue.
Regulation 3(1)(b)(i) of TUPE states that an SPC applies to situations in which activities cease to be carried out by a person (a client) on their own behalf and are carried out instead by another person on the client’s behalf.
And the tribunal agreed. It identified “activities” in regulation 3 as the work involved in disposing of JAS’s contracts.
Turning to the issue of who was the client, the tribunal said that Dentons were providing legal services to JAS even though their contract was with the administrators who were acting as agents for JAS. As the work being done by Dentons was similar to the work done by Ms Kirwan and as the client was the same before and after the handover, the transfer of work was capable of being a service provision change.
The EAT said that the tribunal was right to identify the “activities” as the work involved in disposing of the company's contracts, which was essentially the same whether performed by Ms Kirwan in-house or by Dentons outsourced.
But the tribunal was wrong when it said that Dentons was acting on behalf of JAS. Just because administrators could act as agents did not automatically mean that the solicitors retained by the administrator were acting on behalf of the company.
In this case they had been appointed by the administrators, not the company, and were acting on their behalf. Before the transfer, the in-house solicitor did the work on behalf of the company but after the transfer, SNR Denton carried out the work for the administrators of the insolvent company. The client, therefore, had changed and regulation 3(1)(b)(i) did not apply.