The recent EAT judgement in the case of Jinks -v- London Borough of Havering has confirmed the principle that, where a party (A) contracts out a service to another (B) and B then subcontracts that service to a third party (C), A can constitute the ‘client’ of C for the purposes of a TUPE claim notwithstanding the lack of any direct contractual relationship between them.
To provide some context: A (Havering Council) contracted with B to manage one of its properties; B then sub-contracted the operation of the property to C. The Claimant contended that he had originally been employed by B but that at the point of the subcontracting by B to C his employment had transferred to C by operation of TUPE. Eventually, the contract between A and B (and therefore also between B and C) came to an end, at which point A took the management of the site in-house and the Claimant contended that TUPE operated to then transfer his employment from C to A.
The case was struck out by the Tribunal at the first instance as having no real prospect of success. The decision was made on the basis that A had never been the client of C as there was no contractual relationship between them either before or after A had regained possession of the site.
The EAT did not agree with the Tribunal’s rationale, and in particular took umbrage with the Tribunal’s failure to explore or even consider the fundamental question of whether A was (or at least, could A have been) the ‘real’ client of C. The EAT concluded that the Tribunal took an impermissible short cut by treating the client of a sub-contractor as necessarily being, and only being, the contractor to which it was contractually bound to provide a service, with the EAT’s view instead being that the relevant provisions of TUPE (as evidenced by case law – including the case of Horizon Security Services Ltd v Ndeze) are not so limited. In particular, the EAT considered three of the principles set down by the Horizon case:
- The question of who is the client for the purposes of TUPE is one of fact, not law.
- It is clear that there can be more than one ‘client’ in any given case.
- Reading the relevant provisions of TUPE (Regulations 3(1)(b)(iii) and 2(1)) together shows that the person on whose behalf services are provided by a sub-contractor may not necessarily be the contractor who has sub-contracted the services.
On that basis, the EAT concluded that the Tribunal had misdirected itself in law and accordingly that the appeal should be allowed.