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TUPE: no service provision change where change of client

06 July 2012 #Employment


The EAT has recently heard Taurus Group Ltd v Crofts and another UKEAT/0024/12, which is a significant case for second generation outsourcing and commercial property transactions.

The EAT followed its earlier decision in Hunter that there can be no service provision change under TUPE if there has been a change in the identity of the client to whom the service is provided as well as a change of provider. This is often the case where a commercial property is sold.

The Facts

Mr Crofts was employed by Reliance Security Services Limited (Reliance) as a security guard at student accommodation. Reliance had a contract to provide security services with the original owner of the building, which eventually went into administration. Management of the building was then taken over by another company which continued to pay Reliance for the security services.

However, when the building was subsequently acquired by the Mansion Group, Reliance lost the security services contract. The new contractor was Taurus Group Ltd (Taurus).

Reliance informed Mr Crofts that his employment had automatically transferred to Taurus, but Taurus disagreed and Mr Crofts’ employment was terminated. Mr Crofts brought a claim of unfair dismissal against Reliance and Taurus (the alleged transferor and transferee respectively).

Summary

Both Hunter and Crofts confirm that where ownership or management of a commercial property changes and at the same time facilities services are changed, facilities staff will not transfer to the incoming provider. Therefore liability will remain with the outgoing provider and Mr Crofts’ claim against Taurus failed.

Employers should note that in some cases TUPE will still apply if the “business transfer” test is satisfied. The Court of Appeal is due to hear Hunter in October 2012 and we will keep you updated with developments.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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