Enterprise Management Services Ltd v Connect-Up Ltd & Ors (Transfer of Undertakings : Service Provision Change)

For a service provision change under the TUPE Regulations 2006, the tribunal must first identify the activities carried out by the original contractor. It must then decide whether the incoming contractor carries out activities that are fundamentally or essentially the same. Minor differences may be disregarded, but the question is one of fact and degree. A transfer may also fall outside the service provision change regime where the service is fragmented among several providers. These issues are for the employment tribunal to determine on the evidence. An appellate tribunal should not interfere unless the conclusion is legally erroneous or perverse.

Enterprise provided ICT support to schools for Leeds City Council under a framework agreement. It declined to tender for a replacement agreement, which Connect-Up obtained from 1 April 2009. The original service included support for both administrative and curriculum systems, whereas the replacement agreement excluded curriculum work. After the changeover, services were also provided by several other suppliers.

The Employment Judge held that no service provision change occurred under regulation 3 of the TUPE Regulations 2006. Enterprise appealed, arguing that the activities were materially the same and that the other suppliers were irrelevant because they were not parties to the replacement framework agreement. The central issues were whether the activities remained essentially the same and whether post-change fragmentation prevented an SPC transfer.

1. The appeal was dismissed. The Employment Judge was entitled to conclude that no service provision change took place.

2. The relevant prospective SPC arose under regulation 3(1)(b)(ii) of the TUPE Regulations 2006. The first task was to identify the activities carried out by the original contractor. The next critical question was whether the incoming contractor carried out activities fundamentally or essentially the same as those previously performed. Minor differences could be disregarded, but this was a question of fact and degree for the tribunal.

3. The Employment Judge correctly identified Enterprise’s activities as providing ICT support for both administrative and curriculum systems. The omission of curriculum work, which represented about 15 per cent of the work performed by the relevant organised grouping, entitled him to find that Connect-Up’s activities were not essentially or fundamentally the same.

4. Fragmentation could also prevent an SPC transfer. The Employment Judge was entitled to consider services supplied by providers other than Connect-Up. Leeds City Council’s framework agreement identified a preferred provider but did not require schools to use that provider. The evidence showed that the services formerly provided by Enterprise were spread among Connect-Up and several other suppliers. That supported the conclusion that no SPC occurred.

5. The proposed argument that the activities should be divided into administrative and curriculum support was a new point requiring further fact-finding. There were no exceptional reasons to permit it on appeal.

6. The organised-grouping and assignment requirements under regulations 3(3) and 4(1) were recognised, but the assignment issue did not arise because no SPC had occurred.

• Leeds Employment Tribunal: Following a seven-day pre-hearing review, the Employment Judge held that no service provision change had taken place.
• Employment Appeal Tribunal: The appeal by Enterprise Management Services Ltd was dismissed. The tribunal upheld the Employment Judge’s factual and evaluative conclusions.