Swanbridge Hire & Sales Ltd v Butler & Ors (Transfer of Undertakings : Transfer)

For the exception in Regulation 3(3)(a)(ii) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, the tribunal’s primary factual finding must address the client’s intention at the time of the alleged service provision change. It must identify the single specific event or task in connection with which the incoming contractor is intended to carry out activities, and decide whether that event or task is of short-term duration.

The relevant task is the work intended for the incoming contractor, not necessarily the entire project or work previously completed by the outgoing contractor. Evidence such as contractual completion dates and project delays may be material to the client’s intention. The EAT also expressed the obiter view that “of short-term duration” qualifies both “event” and “task”.

Kitsons had provided labour to insulate and clad five boilers at Pembroke Power Station for Shaws. After the contractual relationship broke down, Swanbridge took over the work. The Employment Judge held that a service provision change had occurred on 5 October 2011 under Regulation 3(1)(b)(ii) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, with the result that employees’ contracts transferred to Swanbridge.

Swanbridge appealed. It contended that the Employment Judge had failed to determine Shaws’ intention, had wrongly assessed duration by reference to the whole 18-month project, and had conflated the activities with the relevant event or task. The central issue was whether the statutory conditions in Regulation 3(3)(a)(ii) were satisfied.

1. Appeal allowed. The Employment Judge’s conclusion that there was a service provision change could not stand. The case was remitted to a different Employment Judge to determine whether there was a relevant transfer under Regulation 3(1)(b)(ii) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

2. The primary finding required by Regulation 3(3)(a)(ii) was Shaws’ intention, at the time Swanbridge was engaged, as to whether Swanbridge’s activities would be carried out other than in connection with a single specific event or task of short-term duration. The Employment Judge did not make that finding. It was not enough to decide that there had been no argument or evidence about intention.

3. Intention may be inferred where there is no direct evidence, but the inference is fact-specific. It is not a universal rule that intended duration is retrospectively established by the time the work took. Documentary and oral material, including contracts, completion dates, delays and project communications, may bear on the client’s intention. Here, such material appeared likely to be relevant.

4. The Employment Judge also erred by treating the whole boiler project, including work completed by Kitsons, as a single event lasting 18 months. Insulating and cladding the boilers was a task, not an event. The relevant task was the remaining work on boilers one to three and all the work on boilers four and five which Swanbridge was intended to undertake. The duration of work already performed by Kitsons was irrelevant to Shaws’ intention concerning that task.

5. It was unnecessary to decide the grammatical issue, but the EAT preferred the view in [2013] ICR 101 that “of short-term duration” qualifies both “event” and “task”. In light of the fundamental and further errors of law, remittal to a different Employment Judge was appropriate. The existing findings that there was an organised grouping of employees and that the relevant transfer date was 5 October 2011 were preserved.

• Employment Appeal Tribunal: Allowed Swanbridge’s appeal, set aside the finding of a service provision change, and remitted the issue to a different Employment Judge.
• Employment Tribunal: Employment Judge Sharp, by a judgment sent on 28 September 2012, held that a relevant transfer had occurred under Regulation 3(1)(b)(ii) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.