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Churchill Dulwich Ltd was contracted to provide accommodation for asylum seekers with Migrant Helpline acting on behalf of the Home Office. Migrant Helpline decided in January 2007 that after the contract with Churchill Dulwich (transferor) lapsed it would dispense with its services and use Metropolitan Resources Ltd (transferee) instead. The transferee then provided accommodation and support for most of the asylum seekers at a different location to previously. The new location was more remote and thus more secure in relation to absconding. Services provided also changed to some extent.

The claimants worked for the transferor until the end of the contract in 31 March 2007 despite there being practically no work for them apart from a few asylum seekers it was for different reasons difficult to remove to the new accommodation. The employees attended an interview with the transferee but they were not contacted again. The transferee used only its own staff to run the transferred business. It was found by an Employment Judge there had been a service provision change under TUPE 2006 reg. 3(1)(b)(ii) on 26 January 2007 when the business transferred from Churchill Dulwich Ltd to Metropolitan Resource Ltd.

At appeal the respondents argued that there had been no relevant transfer under TUPE 2006, that the unfair dismissal claims were presented out of time and therefore the ET had no jurisdiction to hear the case. It was also argued that a grievance had not been made under Section 32 of the Employment Act 2002. It was further argued that the wrong test had been applied by only looking at the essential service, that the employment judge should have used a ‘multi-factoral’ approach as in a traditional TUPE transfer and as per the case of Cheesman v Brewer Contracts Ltd [2001] IRLR 144. The appeal in the EAT under HHJ Burke QC stated that important changes in how the activities were carried out by the transferee had not been taken into account and that in any case there had not even been a TUPE transfer (as per Celtec Ltd v Astley [2006] IRLR 635) as the transfer took place over time rather than all at one.

The inclusion within the definition of a relevant transfer in TUPE 2006 of service provision change has provided, for the first time, that a TUPE transfer could occur without it being necessary to prove the transfer of a stable economic entity into the hands of the transferee. It is also not needed to show the entity retained its identity after transfer The intention behind the changes was to remove problems of TUPE 1981.

Cheesman and the ‘multi-factoral’ approach has been quite deliberately ruled out by the legislators in the ERA 1999 in order that judges should concentrate upon activities carried out before and after a transfer. Judges have the discretion to decide as fact whether service provision changes are fundamental or superficial to the business.

A service provision change under TUPE 2006 reg 3(1)b derives from section 38 of the Employment Relations Act 1999 which relates to labour intensive service provision changes and is intended to remove uncertainties dating back to TUPE 1981 whereby transferees “arrange matters” such as avoiding a single date for the transfer to take place in “so as to avoid the effect of TUPE.” The EAT gave the thumbs down to such practices in this case in favour of deciding that 26th January 2007 was the date when the essential activities of the business transferred.

As far as service provision changes are concerned, courts will decide that a TUPE transfer has taken place in the absence of convincing evidence to the contrary. To this extent (of service provision changes) TUPE has become a lot more difficult for employers to avoid and evade.

The transcript of this case can be found (usually at the Bailli or Employment Appeals websites)  Here