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Administration & Service Provision Change under TUPE

Recent appellant cases concerning service provision change (“SPC”) have included arguments about whether it is necessary for the “client” to be the same person before and after the alleged transfer.  “Yes” said Slade J in Hunter v McCarrick [2012] IRLR 274, with which HHJ Richardson agreed in Taurus Group Ltd v Crofts (UKEAT/0024/12).  Both were cases concerning property ownership and management.  Hunter is due to be heard in the Court of Appeal in the very near future.

Now another division of the EAT has added its voice, but in another commercial context.  In SNR Denton LLP v Kirwan (UKEAT/0158/12/ZT) Langstaff J has adopted similar reasoning in the context of company administration.

The company had an in-house lawyer whose job very largely involved a single, specific type of work.  The company went into administration.  The administrators appointed SNR Denton LLP to act in the administration, and that work included doing the same work as had previously been done by the in-house lawyer.

That being the case, the in-house lawyer asserted that there had been an SPC.  She won in the tribunal but lost in the EAT. David Reade QC acted for the successful appellant.

The EAT held that there had been a change not only in the person providing the service but also in the identity of the client.  Before the administration, the service had been provided to the company, whereas after the appointment of the administrator, the client was the administrator.

Upholding the appellant’s argument, Langstaff J placed weight on the decision in Edenwest Ltd v Cameron McKenna [2012] EWHC 1258, in which it had been held that, ordinarily, an administrator who retains a solicitor does not necessarily do so as agent for the company so as to render the company a party to the solicitor’s retainer.

 The EAT also found that, in any event, TUPE would not have applied because the solicitors had been retained to perform a task of short-term duration.  It was the intention of the client that mattered, and that simply measuring the passage of time might not be the relevant test to decide whether the matter has been taken outside the scope of TUPE.  How long did the client intend the arrangement to last? Had this been the only issue, the EAT would have remitted for the tribunal to make further findings.  However, since there had been a change of client, it was unnecessary to do so.

This appeal thus brought to the fore a rarely litigated aspect of TUPE.  It shows that it is not just in the context of the Olympic Games (an example much loved by those who write and speak on TUPE) that this exception can have relevance.

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