Impact Of TUPE (The Transfer Of Undertakings (Protection Of Employment) Regulations) On A Sale Of A Property

A large property will generally require provision of services such as security and cleaning. What happens to the services and, particularly, to the employees carrying out the service, when a purchaser buys the property? Will the purchaser, or the service providers it appoints to provide these services, inherit these employees under TUPE?

This was the issue considered in Taurus v Crofts.

Mr Crofts was employed by Reliance as a security officer at student accommodation, known as the Glasshouse. Ownership of the Glasshouse passed to the Mansion Group and Reliance lost the security contract to Taurus. Reliance told Mr Crofts his employment had transferred under TUPE, but Taurus disputed this and Mr Crofts brought claims against both for unfair dismissal. The Tribunal held that TUPE applied, because otherwise facilities staff, such as security guards or cleaners, would lose the protection of TUPE on a change of contractor every time there was a change of ownership of a building or a change in the managing agents.

However, on appeal the Employment Appeal Tribunal found that, under the Service Provider Change ("SPC") provisions within TUPE, the "client" needs to retain its identity before and after the SPC. In this case, as there had been a change in ownership of the building, the client was not the same before and after and the SPC provisions did not, therefore, apply. The liability for the employees therefore remained with the outgoing security contractor.

Potential scenarios on purchase of a property

It may be that a purchaser wishes to continue to use the same service providers as used by the seller. In this scenario, the contracts in place between...