Does TUPE Apply To Sub-Contractors?
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TUPE's Application with Sub-Contractors
A typical query that often arises in respect of the TUPE regulations is whether TUPE applies to Sub-Contractors. Do the regulations still apply when a contracting company sub-contracts a contract, breaking the contractual link between the client and the company initially contracted to carry out the work? ... Well no.
Only 'Employees' Are Given Protection Under TUPE
Only employees are given protection under TUPE, and can consequently transfer under the regulations. Agency workers and self-employed individuals are offered no protection under TUPE.
TUPE is only intended to cover contractual relationships, thus excluding the sub-contractors employees being afforded TUPE protection, as technically, the client has no contractual relationship with the subcontractor.
This issue was considered in Jinks v London Borough of Housing.
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Case Law - Jinks v London Borough of Housing
In this case, Havering Borough Council contracted out the maintenance and running of a car park to Saturn Leisure, who subsequently subcontracted the work to Regal Car Parks.
Importantly, there was no contractual link between the Council and Regal Car Parks.
Jinks was employed by Saturn but argued that his employment had transferred to the subcontractors Regal. The Council eventually took over the running of the car park.
Jinks argued that his employment had again transferred to the Council under the TUPE regulations. The Council denied this, and Jinks then claimed unfair dismissal.
The Employment Tribunal initially dismissed the claim, because Regal was Jinks’ employer, and the client that had engaged their services was Saturn and not the Council, on the basis that there was no contractual relationship between the Council and Regal. The decision gave a very narrow interpretation of the TUPE regulations.
The decision was subsequently overturned by the Employment Appeal Tribunal, who felt that the original analysis had been too simplistic.
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Case Law - Horizon Security Services v Ndeze
Citing another case (Horizon Security Services v Ndeze), the EAT identified 3 key points to establish who is a client under regulation 3 of TUPE is a matter of fact, not law;
- There can be more than one client in any case;
- TUPE regulations 2 and 3 (1)(b)(iii) must be read in conjunction with each other.
- In Jinks, it was found that Regal was carrying out activities on the local council’s behalf and that Regal’s real client was Saturn Leisure, who originally employed Jinks.
This decision by the EAT clarifies the strict legal position that legal or contractual relationships do not cover all of Regulation 3.
The company which is carrying out the activities and on whose behalf are likely to be key considerations for the tribunal.
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About the author
James is on the Business Development & Account Management team at Neathouse Partners and regularly posts articles surrounding issues in HR & Employment Law, including case law & legislation updates. If you have a particular issue you would like addressed, feel free to drop James an email, and he will be happy to offer his assistance.
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