EAT Transfer of Undertakings : Service Provision Change – Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’)
Regulation 3(1)(b) – service provision change (‘SPC’) – ‘the client’
The appeal raised a novel point: whether ‘a’ or ‘the’ client, for the purpose of a SPC transfer under Regulation 3(1)(b) was to be understood solely in the singular or whether it could allow for there to be (providing they remain identical) more than one client.
Although the identification of ‘the client’ for the purposes of Regulation 3(1)(b) TUPE has been the subject of earlier consideration in the case-law (see Hunter v McCarrick  ICR 235 (in the EAT,  ICR 533) and SNR Denton UK LLP v Kirwan  IRLR 966), none of the earlier cases had to address, on their particular facts, the question whether – allowing no changes in the end users (‘clients’) before and after the SPC – the singular should not include the plural for these purposes.
Without adopting a ‘purposive approach’, but applying section 6 of the Interpretation Act 1978, the relevant question was whether a contrary intention should be discerned, such that the words expressed in the singular under Regulation 3(1)(b) TUPE are, contrary to the normal rule, not to be read as including the plural?
Without considering the approach laid down by the Interpretation Act, the ET assumed that it must interpret ‘client’ as requiring one single legal entity; the existence of a number of legal entities as clients – even if remaining identical before and after the change in service provision – meant that there could be no SPC transfer.
Held (allowing the appeal):
The ET had erred in adopting such a strict view in this context. There was no reason in principle why ‘the client’ must be a single legal entity for these purposes; why, for example, might the SPC not involve a contract for the provision of particular services drawn up between a contractor and a group of persons who are collectively defined as ‘the client’ under that contract? Allowing that that might be so, the regulation did not evidence an intention that the singular should not encompass the plural for these purposes. The identity of the client or clients must remain the same before and after the SPC but might involve more than one legal entity, subject to the caveat that it would still need to be possible to discern the intention of the client for the purposes of Regulation 3(3)(a)(ii) TUPE. Intention for Regulation 3(3)(a)(ii) purposes would be easier to discern where those entities had evinced common intention by entering into a contract together and would, no doubt, be harder to demonstrate where there was no such umbrella contract. The absence of one single contract would, however, not necessarily be fatal to the finding of some link – some commonality – between the clients in question, so as to allow the identification of intention for those purposes.
The ET in this case did not consider this question. It took the view that there was no SPC because there was no single client. It erred in so doing. It does not require a purposive construction to allow that the use of the singular ‘client’ under Regulation 3(1)(b) includes the plural, ‘clients’. That is not to say that the client or clients do not have to retain their identity before and after the SPC – they do. It is also a requirement that they are sufficiently linked so as to permit the ascertainment of a common intention for Regulation 3(3)(a)(ii) purposes. Otherwise, however, the existence of more than one legal entity and possibly even more than one contract will not necessarily be fatal.
The appropriate course would be to remit this matter back to the same ET (to the extent that it is practicable) to reconsider the question whether there was an SPC.
Upon Ottimo applying for costs (recovery of fees) under Regulation 34A(2A) EAT Rules 1993 (as amended). Noting the guidance laid down by Langstaff P in Look Ahead Housing and Care Ltd v Chetty and Eduah UKEAT/0037/14/MC, it was relevant to have regard to those aspects of the original appeal that had not been successful (five of the original six grounds) and to the steps taken (or not taken) by Ottimo to avoid the need to pursue all aspects of this appeal (Warwick having suggested that it might have been in agreement with the matter being remitted to the ET). In these circumstances, the just award would be for Warwick to pay andpound;1,000 towards Ottimo’s costs incurred by way of fees in this case.
Eady QC HHJ
 UKEAT 0321 – 14 – 0901
Transfer of Undertakings (Protection of Employment) Regulations 2006
England and Wales
Updated: 28 December 2021; Ref: scu.543965