McCarrick v Hunter

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006, a service provision change requires one of the statutory situations and the same client throughout. The provisions must be applied straightforwardly, without artificially expanding their natural meaning. A purposive approach may assist with ancillary questions, but not with the scope of regulation 3(1)(b). A transfer of an undertaking under regulation 3(1)(a) requires a multi-factorial assessment of whether an economic entity retained its identity. An organised group of employees may suffice in a labour-intensive sector, but it does not automatically establish such a transfer; assets and other relevant factors must also be considered.

Mr McCarrick was employed first by Waterbridge and then by WCP Management Ltd. After receivers were appointed over the property portfolio, Mr Hunter employed Mr McCarrick and two colleagues and made their services available to assist the new property manager, King Sturge. Mr McCarrick was later dismissed and claimed unfair dismissal, relying on preserved continuity of employment under TUPE.

The Employment Tribunal found service provision changes in February and August 2009. The Employment Appeal Tribunal accepted Mr Hunter’s challenge to the August finding and rejected the alternative argument that there had been a transfer of an undertaking: UKEAT/0617/10/DA. The appeal concerned whether the statutory service provision change required the same client and whether the facts compelled a transfer of an undertaking.

1. Appeal dismissed. Lord Justice Elias gave the judgment. Dame Janet Smith and Lord Justice Maurice Kay agreed.
2. Service provision change. Regulation 3(1)(b) is a purely domestic protection and has no equivalent in the Acquired Rights Directive. Its scope is defined by the natural meaning of the statutory language. The tribunal must ask whether one of the three statutory situations exists and whether the conditions in regulation 3(3) are satisfied. The statutory scheme assumes the same client throughout. The court approved the approach in Metropolitan Resources Ltd v Churchill Dulwich Ltd, namely that no judicially prescribed multi-factorial test or general purposive expansion is required. The guidance in Eddie Stobart Ltd v Moreman and Others was also approved. On the facts, the service was being provided for a different client, namely Aviva and/or the receivership, so regulation 3(1)(b) did not apply.
3. Transfer of an undertaking. Regulation 3(1)(a) implements EU law and must be construed purposively in accordance with Litster v Forth Dry Dock and Engineering Co Ltd. The question is whether an economic entity retained its identity. All relevant factors must be assessed, with their weight depending on the sector. The guidance in Cheesman v R Brewer Contracts Ltd and the cited European authorities recognised that an organised group of employees may constitute an economic entity in a manpower-based sector. However, the absence of transferred assets may be significant in other sectors, as illustrated by Liskojärvi and Another v Oy Liikenne Ab and Abler and Others v Sodexho MM Catering Gesellschaft mbH.
4. The concepts of undertaking transfer and service provision change are distinct but not mutually exclusive. The facts relied on by Mr McCarrick concerned only the organised group of employees and the activities performed. There were no adequate findings about equipment, assets, the work performed before and after the alleged transfer, or the financial arrangements. Those facts therefore could not compel a finding under regulation 3(1)(a).
5. The Employment Tribunal’s reasons were not Meek compliant, and a remittal might theoretically have produced a different result. However, Mr McCarrick had argued only that the facts compelled the conclusion of a transfer, and had not sought a remittal. The EAT therefore made no error of law. The further suggestion that a change of client might itself prevent transfer of a client-specific undertaking was left expressly for another day.

1. Court of Appeal (Civil Division) dismissed Mr McCarrick’s appeal from the Employment Appeal Tribunal.
2. Employment Appeal Tribunal accepted Mr Hunter’s challenge to the service provision change finding and rejected Mr McCarrick’s alternative respondent’s notice relying on a transfer of an undertaking: UKEAT/0617/10/DA.
3. Employment Tribunal found service provision changes when employment moved from Waterbridge to WCP Management Ltd and later when Mr Hunter employed the three individuals.