Harmajinder Hayre looks at a case which illustrates the importance of identifying the pre-transfer activities in a service provision change.
In London Care Ltd v Henry and Others, the Employment Appeal Tribunal considered whether there had been a service provision change for the purposes of the TUPE regulations where the provision of adult care packages was fragmented and allocated to multiple providers.
- The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) can apply where a client engages a contractor to do work on its behalf, and reassigns the contract or brings the work "in-house" (a 'service provision change').
- The work carried out must be "fundamentally" the same.
- One of the necessary conditions is that "immediately before the service provision change there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client".
- Where TUPE applies on a service provision change, the employment contracts of those employees assigned to the relevant organised grouping automatically pass from the existing provider to the new provider.
In London Care Ltd v Henry and Others Ms Henry was a carer employed by Sevacare, who provided carers to individual's homes under a contract with Haringey Council. Sevacare organised care rotas so that the same carer would visit the same homes.
Sevacare terminated its contract, and the services in Haringey were transferred to several other providers.
Care packages were allocated to the other providers on the basis of postcodes and the new providers' capacity. In some situations a carer's work was split between multiple providers.
The Employment Tribunal found that there was:
- a service provision change under the TUPE regulations; and
- an organised group of employees whose employment should have transferred when the contract changed.
Employment Appeal Tribunal
On appeal, the Employment Appeal Tribunal overturned the decision and remitted the claim to a differently constituted tribunal.
It found that the Employment Judge had erred:
- By failing to clearly identify the nature of the relevant activities. She had concluded that the activities were fundamentally the same post-transfer, but before considering the effect of fragmentation. There was no evidence that one contractor took on the majority of the work, and in relation to a number of employees it was difficult to establish where the employment should transfer, given that various service users went to different contractors. While the outgoing contractor's work was organised on a regional basis, after the re-allocation, the work was divided on the basis of both capacity and postcodes. It was not the same and the Employment Judge failed to give proper consideration to these factors; and
- As to whether there was an organised grouping of employees, because she had confined her consideration to the purpose of an organised grouping and had not made a finding as to whether such an grouping existed and, if so, whether it had been intentionally formed.
This case is an example that TUPE is never straightforward and, where contracts are retendered to multiple suppliers, the work can 'fragment' such that TUPE will no longer apply.
It is a reminder to businesses to ensure that where there is a potential service provision change, a proper analysis is undertaken, so that they fully understand their liability under TUPE.