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23rd March 2021

Employees can be divided amongst multiple transferees on a service provision change

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The Employment Appeal Tribunal (EAT) has held that the pre-Brexit ruling of the Court of Justice of the EU (CJEU) in ISS Facility Services v Govaerts applies to UK law, including to service provision changes (SPCs) under TUPE. 

Consequently, in the case of McTear Contracts Ltd v Bennett and others UKEATS/0023/19 and Mitie Property Services UK Ltd v Bennett and others UKEATS/0030/19, it was held that the contract of employment of an employee who transfers under a SPC can, in principle, be split between multiple transferees.

North Lanarkshire Council re-tendered the work for replacement of kitchens within its social housing stock in 2017. All the work under the previous contract had been carried out by a single contractor (Amey) and a group of Amey’s employees had worked exclusively on the contract. Latterly those employees had worked in two teams, each of which was capable of working independently of the other. When the work was re-tendered, it was split by the council on north/south geographical lines into two separate contracts that were awarded to two new contractors.

The Employment Tribunal found that there were service provision changes between Amey and the incoming contractors and that the employment contracts transferred to the incoming contractors as allocated by Amey. The transferees appealed on the allocation of the employees and between the date of the tribunal’s judgment and the hearing of the appeal, the CJEU issued its decision in Govaerts.

The EAT allowed the appeal and sent the case back to the Employment Tribunal to consider the application of Govaerts. The EAT explained that in principle there is no reason why an employee cannot, following a transfer, hold two or more contracts of employment with different employers at the same time, provided that the work attributable to each contract is clearly separate from the work on the other(s) and is identifiable as such. The division on geographical lines of work previously carried out under a single contract into two new contracts is a situation where there could be different employers on different jobs.

This decision means that, on a transfer or re-tendering, an employee who works across different parts of a business might have their employment contract divided up between multiple transferees. This is likely to cause uncertainty for transferees of part of a business as to whether they may be partly liable for contracts of employees. It means that the parties will need to assess the duties carried out by each individual employee, rather than taking a broad approach on a group-wide basis.

For more information on any of the items raised in this article please contact Charlotte Herrington by clicking here.