In this case, the EAT considered the correct approach to whether activities were "fundamentally the same" before and after an outsourcing, and found that the judge had struck the right balance between "overgeneralisation and pedantry".
Under TUPE, a service provision change will only occur on an outsourcing/insourcing where the activities are "fundamentally" the same before and after the outsourcing/insourcing.
Coventry City Council provided a range of services to homeless people through several providers. One of these providers, CCL, provided accommodation for homeless men and women in ten houses throughout Coventry, and provided support. This support included an assessment of potential service users. If a service user was accepted, they were allocated a support worker. The support worker would produce a tailored support plan for them and provided support in accordance with that plan. Further support was provided once a service user moved into other accommodation. Service users were expected to move on within 12 months, though the contract with CCL provided that a service user could stay for up to two years.
The council wished to move to a single point of access for the provision of homelessness and ex-offender support. It also wished to improve the throughput of individuals so that there would be a quicker supported return to private accommodation. It tendered out a contract for this purpose, and the Salvation Army Trust won the contract.
There were several differences between the services provided by CCL and those provided by the Salvation Army Trust. The Salvation Army Trust used two large hostels rather than houses. It catered for a narrower age group and dealt with all referrals at an assessment centre. Where appropriate, service users would be found private accommodation with floating support straight away. Otherwise, they would go to an assessment unit where a support care plan would be produced before they were provided with supported accommodation in a hostel for up to 112 days. The hostels were staffed overnight and attended by support workers between 7am and 7pm (rather than 9am to 5pm, as with CCL).
CCL considered TUPE to apply, as did the claimants (who were support workers). The Salvation Army Trust disagreed. The employees were left in TUPE limbo.
The key issue was whether the activities carried out by the Salvation Army were fundamentally the same as those that had been carried out by CCL. In summarising the law, the judge said that any definition of an activity cannot be too general and simplistic, and what was actually done needs to be examined. Equally, he said, the definition of activity should not be too narrow: changes in premises or the nature and quantity of activities or the time over which such activities take place do not necessarily mean that the activities are not fundamentally the same.
The judge found that TUPE applied. He said that the activities before the change in contractor had been the provision of accommodation based support for homeless men and women and the input of a support worker to facilitate the individual returning to mainstream private accommodation as soon as reasonably practicable. This had remained fundamentally the same after the change.
The Salvation Army Trust appealed. The EAT dismissed the appeal.
The EAT noted that the activities must be defined in a common sense and pragmatic way. They should not be defined at such a level of generality that they did not really describe the specific activities at all. A pedantic and excessively detailed definition of "activities" would risk defeating the purpose of the service provision change requirements
What does this mean for employers?
The wording of TUPE makes it clear that there can be no service provision change where there is no client, and the facts of this case supported a finding that there was no longer a client. This is not therefore a surprising decision. However, clients should bear in mind that, even where there is no client, there may still be a business transfer, and a TUPE transfer via this route. This is not a change in the law. However, case law emphasising a pragmatic approach to the applicability of TUPE to outsourcings and insourcings is useful for employers and employees. Before the TUPE service provision change regime came into force, the question of whether or not TUPE applied on outsourcings often required a painstaking analysis of differences in how the services were to be provided. Too often, this resulted in protracted and expensive arguments, sometimes taking years of legislation to resolve. Incoming providers should be very certain that there are clear material changes to the manner and nature of the activities being carried out before arguing that activities are not fundamentally the same and therefore that TUPE does not apply.