SNR Denton UK LLP v Kirwan

For a service provision change under Transfer of Undertakings (Protection of Employment) Regulations 2006, the relevant activities are primarily identified by what is done. Purpose may matter where it gives the activities a distinct character, but the issue is generally one of fact and degree.

The client must be the same person before and after the change. Statutory agency does not automatically mean that professional advisers retained by administrators act on behalf of the company. The retainer and the particular activities must be examined.

The short-term exception depends principally on the client’s intention concerning the actual activities transferred. The appeal was allowed and the EAT substituted a finding that there had been no service provision change.

The claimant was the Director of Legal of Jarvis Accommodation Services Ltd. Her principal work involved disposing of the company’s facilities-management contracts. After administrators were appointed, they retained Dentons to advise them, including on the disposal of those contracts. The claimant was made redundant shortly afterwards.

An Employment Tribunal found that the disposal work constituted a service provision change under regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 2006. The appeal concerned whether the relevant activities were the same, whether Dentons acted for the same client, and whether the work was connected with a single specific event or task of short-term duration.

1. Appeal allowed. The Tribunal had erred on the client and duration issues. The EAT rejected the argument that the relevant activities were necessarily different merely because the administrators pursued the interests of creditors. Identifying the activities is a question of fact and degree. The statute primarily concerns the nature of what is done, although purpose may shape the nature of the activities in some cases.

2. The requirement in regulation 3(1)(b) that activities be carried out on behalf of the client requires the same client before and after the change. The agency provisions in Schedule B1 to the Insolvency Act 1986 have a purpose-specific operation. The fact that an administrator acts as the company’s agent does not automatically establish that solicitors retained by the administrator act on behalf of the company.

3. The relevant question is whether the particular retainer and advice were undertaken for the company or for the administrators in their own capacity. The possibility of conflicting duties to creditors and the company supported that conclusion. The Tribunal had wrongly assumed that Dentons acted for JAS merely because the administrators could act as its agents. The EAT stressed that the decision was confined to the material and arguments in this case and did not necessarily determine every case involving professional advisers retained by administrators.

4. The exception in regulation 3(3)(a)(ii) requires attention to the client’s intention, rather than an objective assessment detached from that intention. The Tribunal had to assess the actual activities transferred, namely disposal of service contracts, and determine whether the client intended them to be carried out otherwise than in connection with a single specific event or task of short-term duration. The assessment is fact-sensitive and must take account of the general employment context and the particular employment relationship.

5. The Tribunal had not identified the relevant intended period and had instead considered the possible continuation of wider legal services for JAS. Since the evidence did not establish the client’s intention and the Tribunal made no clear finding about the duration of the disposal work, its decision could not stand. Although the time issue alone would have been remitted, the EAT substituted the decision that there had been no service provision change.

• Employment Appeal Tribunal: allowed the appeal from the Employment Tribunal’s preliminary decision and substituted a finding that there had been no service provision change.
• Employment Tribunal, London Central: held that the claimant’s activities in disposing of service contracts had transferred to Dentons and that the short-term exception did not apply. The Tribunal’s Reasons were sent on 8 December 2011.