First Personnel Services Ltd v Halfords Ltd

A contractual transfer-fee clause may apply to a transfer of temporary workers between employment businesses under TUPE, provided its wording covers that event. The fact that the transfer occurs automatically under TUPE does not itself exclude a fee.

Where the contract gives the hirer an effective option to elect for an extended period of hire, the arrangement may comply with regulation 10 of the Conduct Regulations. A poorly drafted clause is not void for uncertainty if the court can identify a workable commercial meaning. A fee calculated by reference to annualised remuneration may be assessed using evidence of the remuneration normally applicable to the relevant position.

Composite hourly charges do not, without more, warrant that each stated component equals the supplier’s actual cost or that any surplus will be repaid.

First Personnel Services Ltd supplied temporary workers to Halfords Ltd for many years. Following a retendering exercise, Halfords appointed Staffline Group plc, and most of the workers transferred from First Personnel to Staffline under a service provision change within TUPE.

First Personnel claimed transfer fees under its standard terms, together with unpaid invoices and interest. Halfords disputed liability, arguing that the relevant clauses did not cover a TUPE transfer, were onerous and insufficiently incorporated, breached regulation 10 of the Conduct Regulations, or were void for uncertainty. Halfords also brought a counterclaim concerning alleged overcharges for holiday pay, national insurance and workers’ pay, and alleged a Quistclose trust.

The central issues were whether a fee was payable, how it should be calculated, whether the interest clause was enforceable, and whether the counterclaim succeeded.

1. Transfer fee. The transfer was a temp-to-temp transaction. Clauses 6(i) and 6(v) were directed respectively to temp-to-perm or temp-to-third-party situations and did not apply. Clause 10 was directed to a temp-to-temp transfer and applied where workers supplied by First Personnel were retained by Halfords while supplied by Staffline. A TUPE transfer was not excluded by the contractual language.
2. Conduct Regulations. Clause 6(i) did not satisfy regulation 10 because it contained no sufficient linkage to an extended period of hire. Clause 6(v) did provide an alternative extended-hire option, but it did not apply to these facts. Clause 10 operated with clauses 6(ii) and 6(iii), making an extended-hire election available. Clause 6(vii) identified the duration of that period, and clause 6(viii) was construed as referring to clause 6(vii). The relevant provisions were therefore enforceable.
3. Incorporation and certainty. The transfer-fee provisions were not hidden, onerous or unusual in the relevant context. They had appeared in the parties’ dealings for years, were on the front page of the conditions, and were a recognised feature of the industry. The provisions were sufficiently certain. The fee scale in IPS clause 9 was to be used, with clauses 3.4, 3.5 and 3.9 supplying mechanisms for calculating annualised remuneration where necessary.
4. Quantum. Remuneration was to be assessed by reference to the position occupied and annualised using the year preceding transfer. The calculation based on actual annualised hours and pay rates before transfer was the appropriate methodology, subject to excluding workers not retained by Halfords.
5. Counterclaim and interest. The hourly charges were composite rates. They did not give rise to warranties, representations or a trust requiring each component to equal First Personnel’s actual cost. The counterclaim therefore failed. The contractual interest rate of 2 per cent per month was penal and unenforceable. Statutory interest was awarded, reduced for a twelve-month period of unreasonable delay.

First instance decision. The judgment states that proceedings were commenced by claim form issued on 7 August 2014 and that the matter proceeded to trial after amendments, directions and interlocutory rulings.