In McCarrick v Hunter the Court of Appeal has upheld the EAT's decision that there will be no service provision change where post-transfer activities are not for the same client. Reg 3(1)(b)(ii) of TUPE 2006 requires that the activities carried out by one contractor and then by a subsequent contractor, before and after the transfer, have to be for the same client. As there was a change of client when the services were outsourced to a new contractor (second generation contracting out), the service provision change test was not met. Comment: This decision confirms that there will be no service provision change for the purposes of second-generation contracting out where the activities carried out by contractors before and after the change are not for the same client. The decision is particularly relevant to situations where ownership or management of a business changes at the same time as the service providers, e.g. cleaning staff employed by Contractor X to provide a service to Company A, transfer to Contractor Y at the same time as Company B takes over the ownership of Company A.
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