Tupe valid in transfer of identical services

A Court of Appeal ruling deems transfer of Tupe applies where identical
services, but not the staff, are relocated

Yet again the Court of Appeal has confirmed in RCO Support Services Ltd v Unison,
2002, 12.4.02, EWCA Civ 464, that Tupe can apply to the transfer of cleaning or
catering services even though the new employer does not take on the staff.

The claim arose as a result of RCO’s refusal to consult with Unison over a
new catering and cleaning contract when in-patient services were moved from
Walton Hospital to Fazakerley Hospital – both managed by the Aintree Hospital
NHS Trust.

Cleaning work at Walton Hospital was first contracted out in 1972.
Immediately before the transfer, the contract was held by Initial Hospital
Services. The cleaners employed by Initial were permanently dedicated members
of the in-patients’ cleaning team. They were known as ‘ward girls’ or ‘theatre
girls’. They needed a certain amount of training and operated established
systems with the medical staff.

The transfer was carried out in two phases. Under phase one in 1996, some of
the cleaners transferred to the new hospital (although RCO denied that Tupe
applied). In phase two, RCO denied that Tupe applied and the employment of the
remaining 25 cleaners and three supervisors came to an end on 31 March 1998.

Catering staff at Walton Hospital were initially employed by the trust
directly. There were six chefs and a larger number of catering support staff
who provided a complete catering service for patients and staff.

At Fazakerley, where RCO held the catering contract, the staff restaurant
was replaced by a new catering facility but, apart from that, catering services
were virtually identical to those at Walton hospital. The six chefs at Walton
were moved to Fazakerley but remained employees of the trust. Six members of
staff were redeployed. The remainder were made redundant, although two were
taken on by RCO at a later stage.

Upholding Unison’s complaint, the employment tribunal ruled there was a Tupe
transfer. It found that the arrangement which had been made for cleaning
services at Walton Hospital constituted an "economic entity" because
people did "particular jobs in particular places for particular
people".

Furthermore, each group had "its own identity. Each was staffed by
people dedicated to particular tasks". The tribunal also found that the
"core business" of the domestics moved to Fazacherley "ward for
ward, theatre for theatre… It was no more than a change of location for the
same business carried on by a different firm". As the business was labour
intensive, the transfer of "tangible assets was of little
significance".

The Employment Tribunal adopted a similar approach to the transfer of the
catering facilities.

The Employment Appeal Tribunal rejected RCO’s appeal. The main issue raised
on appeal was that the ET’s ruling was inconsistent with the ECJ’s
"guidance" in Suzen, 1997, ICR 662 to the effect that Tupe should not
apply where the new employer fails to take on the majority of the staff if no
other tangible or intangible assets transfer.

Court of Appeal ruling

Dismissing the appeal, the Court of Appeal ruled:

– The Employment Tribunal was entitled to conclude on the facts, there was a
Tupe transfer of both cleaning and catering services

– The question of whether the new employer takes on staff is just one of the
factors to be considered in deciding whether Tupe applies even in a labour
intensive contract, such as cleaning or catering. No single factor is
determinative of that question

– In the present case, the Employment Tribunal had reached the conclusion
that the economic entity which it had identified prior to the transfer had
"retained its identity" after the transfer and that essentially the
same business was being carried on at a new location.

Anthony Korn is is abarrister at 199 Strand Chambers

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