EAT creates lottery on whether TUPE applies to contractor changes
Williams v Lockhart Security Services Limited, EAT
Williams was employed by Lockhart as a security guard at a retail park run by
DRP. Lockhart lost the guarding contract and DRP appointed a new security firm,
Allied. Lockhart had three security guards at the DRP site. One resigned before
the transfer, and his replacement was re-deployed by Lockhart at another site.
The other expressed a wish to work for Allied at the DRP site, but was told DRP
did not want any of Lockhart’s employees to remain there. He resigned. When
Allied consulted with Williams, he said he wanted to remain with Lockhart.
Lockhart insisted that TUPE applied and Williams claimed unfair dismissal.
No employees transferred from Lockhart to Allied, and there was no transfer
of assets. Could TUPE apply? The EAT overturned the tribunal’s decision that
TUPE did apply. The tribunal should have examined all circumstances of the case
when considering whether the identity of Lockhart’s economic entity was
retained after Allied took over the guarding contract at DRP. This included
considering all circumstances behind the fact that no employees had transferred
from Lockhart to Allied. The critical fact was DRP’s objection to any of the
Lockhart employees remaining on the site. Had any of the guards transferred to
Allied, they would not have been employed on the DRP contract, not because
Allied was seeking to avoid the TUPE regulations but because of the DRP
objection.
Williams had objected to a transfer to Allied. However, since TUPE did not
apply, he was free to bring his complaint of unfair dismissal against Lockhart.
Key points
This is, to some extent, an unusual case. The refusal of DRP to allow any
Lockhart employee to remain at the site was the decisive factor in the EAT’s
conclusion that TUPE did not apply. The case demonstrates that, although the
prevailing trend is for tribunals to find that TUPE does apply on a change of
contractor, every case has to be considered on its own facts. This creates
something of a lottery, particularly as the DRP objection was something that
neither contractor could predict or control.
Had TUPE applied, Williams would have had no complaint against Lockhart or
Allied, given that he had objected to the transfer. The problem for Lockhart
was that it staked everything on TUPE applying, and had not consulted with
Williams about redundancy or considered re-deploying him elsewhere.
What you should do
– Bear in mind that in most contractor changeover cases, TUPE is likely to
apply
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– Outgoing contractors should ask the new contractor if it accepts that TUPE
will apply. In the event of a dispute, take legal advice. The outgoing
contractor may wish to hedge its bets by consulting with the employees on the
proposed TUPE transfer, but also considering with them the possibility that
TUPE does not apply, and consulting over the redundancy situation this would
create and considering redeployment
– Contractors should seek indemnities from the client organisation to cover
termination liabilities that may arise at the end of the contract if TUPE does
not apply, or agree with the client that the appointment of a successor
contractor will be treated as if TUPE does apply
