TUPE has become very much a hot topic in Ireland with more and more cases being presented to the Rights Commissioner and EAT year on year. As such, Irish case law and precedent is still developing and in that respect it was ideal for employers, employees, and legal advisors alike to see the position of service provision contracts comprehensively addressed by the EAT in Cavan Industrial Cleaning Services Limited -v- 8 employees (TU29-TU36/2013).
TUPE and Service Provision Contracts
A service provision change relates to a scenario whereby a company outsources an operation (i.e. a service provision contract) to external contractor A. The company may then cancel the service contract with contractor A and transfer it to contractor B. A key question is whether or not the employees of contactor A are entitled to transfer to contractor B. Common examples of this scenario would be contract cleaning contracts and security contracts. It is important to note that Ireland follows the EU approach to this question in line with the judgement set out by the ECJ in Ayse Süzen v Zehnacker (Case C-13/95).
UK Case Law on Service Provision
At Peninsula we have noticed that a lot of UK case law and precedent has been argued before tribunal by representatives seeking to establish that TUPE should apply to a particular service provision change. It is noted that in Ireland TUPE may in fact apply to a service provision change but is also noted that the UK do not follow the EU approach to TUPE and that the UK deviated away from the EU approach through their TUPE Regulations in 2006. It is therefore suggested that it is not safe to rely upon UK case law when arguing if TUPE ought to or nought not to apply to a service provision change in Ireland and that instead one should look to Irish case law and ECJ case law only.
ECJ and Irish Approach
It is noted that the ECJ stated in Ayse Süzen “that the mere loss of a service contract to a competitor cannot therefore, by itself, disclose the existence of a transfer” under TUPE and that in order to establish TUPE that there must have been a transfer to the new contractor “of significant tangible or intangible assets or the taking over by the new employer of a major part of the workforce, in terms of numbers and skills”. The EAT in Cavan Industrial Cleaning Services Limited -v- 8 employees emphasised this point once more stating:
“The Court emphasizes that the mere loss of a service contract to a competitor cannot therefore, by itself, disclose the existence of a transfer within the meaning of the Directive. In those circumstances, the service undertaking previously entrusted with the contract does not, on losing a customer, thereby cease fully to exist, and it cannot be considered that a business or part of a business belonging to it has been transferred to the new awardee of the contract.”
Conclusion
It is important to note that TUPE may apply to a transfer of a service provision contract in Ireland but the key question concerns whether or not the new contractor has taken over the ownership of key assets relating to that contract or the employment of workers who were mainly engaged on that contract prior to the transfer. What is absolutely key is that employers seek advice on any loss of a service provision contract as generally speaking such transfers involve multiple employees and as such there is a significant financial risk for employers in any potential TUPE scenario.
If you have any questions on TUPE then please do not hesitate to contact the experienced Peninsula Employment Law Consultants who are ready and available to take your call 24 hours a day, 365 days a year, on 01 855 50 50.
