Ottimo Property Services Ltd v Duncan

For a service provision change under regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, the client may comprise more than one legal entity. The entities must remain the same before and after the change and must be sufficiently linked to permit identification of a common intention concerning the future provision of the activities. A single contract is not essential, although common intention may be harder to establish without an umbrella contract. Reading the singular to include the plural follows section 6 of the Interpretation Act 1978; it does not require a purposive construction.

Mr Duncan was employed by Ottimo to provide on-site property maintenance services at an estate through contracts with several separate residents’ management companies and a general management company. Warwick subsequently acquired several of those contracts. The Employment Tribunal held that there was no service provision change because regulation 3(1)(b) referred to a single client, and it therefore did not determine whether the clients had a common intention or whether the other statutory conditions were satisfied.

Ottimo appealed on the construction of “client”. The central issue was whether the statutory reference to the singular client could include identical clients comprising more than one legal entity.

1. The appeal was allowed on the service provision change point. The Employment Tribunal had erred by treating the existence of several legal entities as necessarily fatal to a transfer under regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.
2. Section 6 of the Interpretation Act 1978 provides that words in the singular include the plural unless a contrary intention appears. Regulation 3(1)(b) did not disclose such a contrary intention. There was no principled reason why a service provision change could not involve a contract made between a contractor and a group collectively defined as the client.
3. The client or clients must retain their identity before and after the service provision change. In addition, the clients must be sufficiently linked to permit ascertainment of a common intention for regulation 3(3)(a)(ii). An umbrella contract may make that intention easier to establish, but neither one contract nor one legal entity is essential.
4. The statutory mechanism by which services are provided may assist in identifying the client and its intention, but separate contracts do not necessarily prevent a service provision change. The Employment Tribunal had not considered the required commonality of intention because it had adopted an incorrect legal premise.
5. The case was remitted to the same Employment Tribunal, so far as practicable, to reconsider whether there had been a service provision change. Warwick was ordered to pay Ottimo £1,000 towards fees.

• Employment Tribunal: The East London Employment Tribunal held that no relevant transfer had occurred and that there was no service provision change under regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.
• Employment Appeal Tribunal: The appeal succeeded on the construction of “client”. The matter was remitted to the same Employment Tribunal, so far as practicable, to determine whether there was a service provision change.