In this case, the EAT considered the correct approach to determining the "principal purpose" of an organised grouping of employees.

The Facts

There will only be a service provision change under TUPE if various conditions are met. One of these conditions is that "immediately before the service provision change there is an organised grouping of employees…which has as its principal purpose the carrying out of the activities concerned on behalf of the client". This case looked at the "principal purpose" of an organised grouping.

The claimants had been employed by an NHS Foundation Trust as part of an organised grouping of employees put together to look after CE, an individual who was in care, with severe learning disabilities. Over time, CE had improved such that his need for assistance had reduced from seven-to-one care to largely one-to-one care. The team put together by the Trust had, however, been retained and had maintained its identity, albeit that the staff concerned were required to undertake work for other service users who were also in care. The contract was taken over by Danshell Healthcare. The NHS Trust argued that this was a service provision change, and that the employees assigned to the team organised to provide care for CE would therefore transfer. Danshell disagreed, as did the employees concerned, who preferred to remain in NHS employment.

At a preliminary hearing, the employment tribunal held that there had been a change in the provision of the service (the service being the provision of food and accommodation and the required level of personal care for CE). There were 11 employees ordinarily carrying out the activities. These 11 employees were an organised grouping of employees, put together to provide the service, that maintained its identity (albeit with differing numbers and identities of employees). It found 11 employees had been assigned to the grouping, and had remained so until the time of the transfer.

The tribunal then considered whether the principal purpose of the grouping remained the care of CE. The grouping provided a total number of working hours of 375, against a need for CE of some 125 hours: it was a larger grouping than was required for the provision of the service by 66%. The grouping was too large, the tribunal decided, and the principal purpose of the grouping was no longer the care of CE. Care of CE was no longer the dominant purpose, but a subsidiary purpose. The provision of care to other service users at the same accommodation had become the principal purpose by the time of the transfer. There was therefore no service provision change.

The NHS Trust appealed, saying that the ET had erred in its approach to the determination of "principal purpose" by looking at what was actually happening – the actual activities being carried out by the employees rather than the continued intention behind the retention of that group. This, according to the NHS Trust, amounted to an additional requirement not contained in the provisions of TUPE.

The EAT dismissed the appeal. The principal purpose of an organised grouping is fact-sensitive and should be determined by close reference to the wording of TUPE. Simply carrying out activities does not mean that the organised grouping meets the "principal purpose" condition: the carrying out of those activities has to be the principal purpose of that grouping. If the grouping carries out other work, this might point to its organisation being for a purpose other than the activities relevant to the service provision change. Similarly, if the grouping comprises far too many employees than would be necessary for the activities in question, that might suggest either that not all the staff were assigned to the grouping, or that the real purpose behind the organisation of the group was not the carrying out of the relevant activities for the client. The tribunal had made a finding of fact that, over time, the requirement for employees to care for CE had diminished, although caring for CE did continue to be a subsidiary purpose of the grouping. The principal purpose of the organised grouping need not be the sole purpose, but, at the time of the transfer, it must be the dominant purpose. Here, the dominant purpose was providing care to other service users.

What does this mean for employers?

The decision in this case is not a departure from existing case law.

The tribunal referred to the four stage test for a service provision change which has come from previous case law. Employers who are trying to decide whether or not there is a service provision change may find this useful:

  1. Identify the service which the current service provider is performing for the client;

  2. List the activities performed by the staff in order to provide that service.

  3. Identify the employee or the employees of the service provider who ordinarily carry out those duties.

  4. Consider whether the service provider organises that employee or those employees into a "grouping" for the principal purpose of carrying out the listed activities.

When considering the principal purpose at the fourth stage of this test, employers should look at whether the activities are the "dominant" purpose of the grouping. If there are many more employees in the organised grouping than are required to perform the activities, and/or the employees in the organised grouping carry out other work, this may demonstrate that the principal purpose is not the carrying out of the activities, but (as ever with TUPE) this will depend on the facts in that particular situation.

Tees Esk & Wear Valley NHS Foundation Trust v Harland and others