In the recent case of ICTS UK Limited v Mahdi & Ors, the Employment Appeal Tribunal (EAT) held that post transfer events may be relevant in cases dealing with the ‘short term’ task exemption under the TUPE Regulations.
Under Regulation 3 of the TUPE Regulations, the termination of a contract for a single specific task of short term duration does not give rise to a service provision change. In order for there to be a service provision change, there must be an intention that, following the TUPE transfer, the relevant activities will continue to be carried out other than in connection with a single specific event or task of short term duration.
In this case, ICTS had a contract to provide services to a university at one of its campuses. Following a tender, the contract was taken over by a new contractor (First Call). The employees were employed by ICTS as security guards. First Call disputed that the employees transferred under the TUPE Regulations on the basis that it was only contracted to look after the campus pending its planned redevelopment by a new owner. It argued that it was a contract of short term duration falling under the Regulation 3 exemption and was not therefore a service provision change. The Employment Tribunal accepted that when the contract had been granted by the new owner, it was intended to be for a short term period only. The Employment Tribunal stated “.. it was logical to infer on the basis of commercial sense that the intention of AUCMS [the new owner] was that the campus would only remain unoccupied for a limited period of time, probably no more than a year, there being no hint of evidence that the site would be retained as an investment. The security of an unoccupied site was therefore ‘a short-term operation'”.
However, subsequent events meant that the granting of planning permission and commencement of building work on the site was delayed. At the time of the first Tribunal hearing some eight months after the transfer, the planning permission had still not been obtained, nor had the building work commenced. Following an appeal by ICTS, the EAT decided that the Employment Tribunal should not have disregarded these post-transfer events and should have taken them into consideration when determining the intention of the parties, i.e. whether the task was really intended to be for a short term duration and so falling under the Regulation 3 exemption. The case was therefore remitted back to the Employment Tribunal.
This decision means that evidence of events which take place following a TUPE transfer is potentially relevant to the issue of the intention of parties under the contract which gives rise to the services being provided. In line with previous case law, the intention of a party must be taken to be something more than a mere “hope and wish” about how things might transpire. So in this case, the remitted Tribunal will need to consider how realistic the new owner’s intention of development was, in light of the post transfer events, namely the delayed planning permission and the failure of building works to commence.