Qlog Ltd v. O'Brien & Ors (Transfer of Undertakings)

For a service provision change under Transfer of Undertakings (Protection of Employment) Regulations 2006, the tribunal must identify the activities performed for the client before and after the alleged change. It must then decide whether they are fundamentally or essentially the same. Differences in the method of performance do not necessarily alter the activity. The inquiry is one of fact and degree.

In identifying the activity, a tribunal may consider contractual terms which accurately reflect the parties’ actual arrangements, including the client’s intended service and the incoming contractor’s responsibility for delivery. A failure to invite submissions on material considered by the tribunal is unfair only where it was influential and caused material injustice capable of affecting the result.

McCarthy Haulage Ltd had provided Ribble’s bulk transport and delivery service. Qlog Ltd succeeded it but arranged physical carriage through subcontracted hauliers rather than operating vehicles or employing drivers itself. Qlog accepted that certain logistics staff transferred under TUPE, but disputed that the HGV drivers did.

The Employment Tribunal held that there had been a service provision change. It identified the relevant activity as the transportation of Ribble’s goods and found that Qlog had assumed responsibility for that activity, notwithstanding its different operating model. It also referred, without inviting submissions, to a 2005 Government consultation document.

Qlog appealed against the finding of a service provision change and contended that the undisclosed consultation material deprived it of a fair hearing.

1. Appeal dismissed. The Employment Tribunal was entitled to find a service provision change under regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

2. The central inquiry was the identification of the activities undertaken by the outgoing contractor and those intended to be undertaken by the incoming contractor. Applying Metropolitan Resources, Enterprise Management and Johnson Controls, the question whether those activities were fundamentally or essentially the same was one of fact and degree. A tribunal must not define the activity so narrowly that a different method of performance obscures the substance of the service.

3. The Tribunal had identified McCarthy’s activity as transporting Ribble’s goods. It was entitled to find that Qlog’s activity was also principally the transportation and distribution of those goods. Qlog’s use of subcontractors, lack of vehicles and lack of drivers showed a different mode of delivery, but did not compel the conclusion that the activity had changed.

4. The Tribunal was entitled to rely on the contractual documentation. It had heard evidence about Qlog’s day-to-day operation and could treat the later written agreement as accurately recording the arrangements from their commencement. The agreement, the client’s intention, Qlog’s obligations to arrange transport, and Qlog’s assumption of risk until delivery all supported the finding that Qlog had undertaken responsibility for the transport activity.

5. It would have been preferable for the Tribunal to invite submissions on the 2005 consultation document. Applying Stanley Cole Ltd v Sheridan, however, the document merely amplified points already addressed through the authorities. The Tribunal’s reasoning on the activities stood independently of it. Qlog suffered no material injustice, since further submissions could not have affected the outcome.

• Employment Appeal Tribunal: Qlog’s appeal was dismissed and the Employment Tribunal’s finding of a service provision change was upheld.
• Employment Tribunal: On a preliminary issue, it held that McCarthy’s transport service for Ribble transferred to Qlog under the Transfer of Undertakings (Protection of Employment) Regulations 2006.