Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), there is a service provision change when activities which used to be carried out by one person (the client) are carried out by someone else (the contractor) on their behalf. In Jinks v London Borough of Havering, the Employment Appeal Tribunal (EAT) held that when a service is sub-contracted out, there can be more than one client.

Basic facts

The Council contracted out the management of a site comprised of an ice rink and car park to Saturn Leisure Ltd, which subcontracted management of the car park to Regal Car Parks Ltd. When the Council closed the ice rink in April 2013, it took back control of the site and ultimately converted the car park into general use by the public.

Mr Jinks argued that as he had previously been employed by Saturn, his employment transferred to Regal in April 2013 and when the Council took over the car park, his employment transferred to the Council. The Council’s failure to recognise him as their employee, following the service provision change (SPC) from Regal to the Council, constituted constructive unfair dismissal.

The Council argued that Mr Jinks could not show he had been employed by Regal, although it accepted that he was the director of both Saturn and Regal. In any event, it said there had not been a transfer from Regal to the Council.

Relevant law

Regulation 2(1) states that references to “contractors” include “sub-contractors”.

Regulation 3(1)(b)(iii) of TUPE state that an SPC applies when “activities cease to be carried out by a contractor … on a client’s behalf … and are carried out instead by the client on his own behalf”.

Tribunal decision

The employment tribunal judge struck out the claim on the basis that it had no real prospect of success for the simple reason that the “client” that engaged the services of Regal was Saturn, not the Council.

When Saturn gave up its interest in the car park, the sub-contract with Regal came to an end. As there had never been a contractual relationship between Regal and the Council before or after the Council regained possession of the site, the requirements for a TUPE transfer under regulation 3(1)(b)(iii) could not be met.

EAT decision

The EAT, however, disagreed, holding that the employment judge took far too narrow an approach and should have considered regulation 2(1) in conjunction with regulation 3(1)(b)(iii). In failing to do so, he made the mistake of treating the client of a sub-contractor as only being the contractor to which it was contractually bound to provide a service.

Instead of focusing on the strict legal or contractual relationships to answer the regulation 3 question, he should have looked at the facts and asked on whose behalf the sub-contractor undertook the relevant activities. On that basis, if Regal’s client was Saturn and Saturn’s client was the Council, then it could be argued that the Council was the ultimate client of Regal.

The EAT therefore allowed the appeal and remitted the strike out application back to the employment tribunal to decide, on the facts, whether the Council was a client of Regal.