We look at two recent decisions in the Employment Appeal Tribunal (EAT) that have clarified the law relating to service provision changes. In Robert Sage t/a Prestige Nursing Care v O'Connell and others UKEAT/0336/13 and UKEAT/0337/13, the EAT considered the meaning of the word "intends" in the exception to the TUPE service provision change rules; in Qlog Ltd v O'Brien and others UKEAT/0301/13 the EAT decided that the activities were essentially the same before and after the change in provider, despite being carried out in a different way, so that TUPE applied.
Robert Sage t/a Prestige Nursing Care v O'Connell and others
There were two issues in this case: the meaning of the word "intends" in the "task of short-term duration" exception to the TUPE service provision change rules; and whether an employee who had been suspended was assigned to the organised grouping of employees.
The claimants were seven support workers, who were employed by Allied Healthcare Group Ltd (Allied) to provide home care for X, who had severe learning difficulties. Allied had a contract with X's local authority, North Somerset Council (the Council), to provide the care. One of the claimants, Mrs Truman, had been suspended from her duties following a disciplinary issue and Allied wrote to her stating that it had received a request from the Council that she no longer care for X and they would be looking for alternative employment for her. After a serious incident at X's home, Allied gave the Council notice to terminate the contract. The Council decided to make an application to the Court of Protection seeking to transfer X to new accommodation. It was agreed that, once the contract with Allied terminated, Prestige Nursing Care (Prestige) would provide care on an ad hoc basis until the court hearing. The Allied employees were told that they were no longer needed.
Allied claimed that there had been a service provision change under TUPE and started consultation meetings with the employees, including Mrs Truman. Prestige did not accept that TUPE applied and the Council confirmed to Prestige that it had commissioned the service as "temporary emergency cover pending the decision of the Court of Protection". The court case was eventually withdrawn some 10 months after the Allied contract ended. Prestige continued to provide care for X in her home and the Allied employees brought claims for unfair dismissal against Prestige and the Council.
Employment tribunal decision
An employment tribunal held that there had been a service provision change, as the exception in regulation 3(3)(a)(ii) of TUPE ("the client intends that the relevant activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration") did not apply. The Council could not be said to have intended the cover provided by Prestige to be short term, as they had no control over the length of the contract and no certainty over the Court of Protection decision. The Council hoped and wished that it would be a short contract but that was not an intention. At the time of the service provision change Mrs Truman was assigned to the contract, despite the fact she was suspended, so her contract transferred to Prestige. The Council and Prestige both appealed to the EAT.
The EAT agreed with the tribunal that there had been a service provision change. The word "intends" had to be given its ordinary meaning. A "hope and wish" that a particular state of affairs would be short term could not equate to an intention. The Council had no control over the duration of the care package provided by Prestige or whether the Court of Protection would approve X's planned move. Therefore it could not be said that the Council intended the Prestige contract to be short term, which meant that the exception to the service provision change rules did not apply.
The EAT overturned the tribunal's finding in relation to Mrs Truman. She was prohibited from carrying out work for X. This meant that she was not assigned to the organised grouping of employees subject to the relevant transfer and her contract of employment did not transfer to Prestige.
Qlog Ltd v O'Brien and others
In this case, the question was whether activities undertaken before and after a change in service provision were essentially the same for the purposes of the TUPE service provision change definition.
Ribble entered into a three year contract with McCarthy Haulage Ltd (McCarthy) in which McCarthy agreed to transport and deliver Ribble's cardboard packaging. McCarthy employed drivers, a transport manager and four shunters (who moved and loaded trailers) to carry out the services. When the contract ended, Ribble chose a new provider, Qlog Ltd (Qlog). Qlog was a logistics company that did not provide transport services itself but subcontracted the work to haulage providers. Qlog conceded that the transport manager and shunters transferred to it under TUPE but argued that no TUPE transfer arose in respect of the drivers, as Qlog did not provide transport services itself.
The drivers were dismissed by McCarthy and brought claims for automatic unfair dismissal against Qlog.
Employment tribunal decision
The tribunal decided that Ribble intended Qlog to carry out the activities previously carried out by McCarthy. Although Qlog had a very different way of operating, as it had no vehicles and did not employ drivers, the actual activities it had agreed to carry out were the same as those previously carried out by McCarthy. This meant that there had been a service provision change. Qlog appealed.
The EAT dismissed the appeal and upheld the tribunal's decision. The tribunal was entitled to find that Qlog carried out fundamentally or essentially the same activities as McCarthy on behalf of Ribble, despite doing it in a different way.
The Prestige case demonstrates that the "single specific event or task of short term duration" exception is very limited and it is important to consider the client's intention at the time of the service provision change, which must be something more concrete than a hope or a wish. Where an employee is suspended and a transfer is due to take place, whether or not the employee is assigned to the organised grouping of employees will depend on the circumstances; in this case, the employee had been excluded from working on the contract so her employment did not transfer.
The Qlog case demonstrates that TUPE may apply even where an incoming contractor subcontracts part of the activities that were previously carried on by the outgoing provider. It was relevant in this case that the incoming provider took responsibility for the whole service. When TUPE was amended in January 2014, a new regulation 3(2A) was inserted that defines post-transfer activities as "activities which are fundamentally the same as the activities carried out by the person who has ceased to carry them out". It is likely that this case would be decided in the same way under amended TUPE.
We have seen a recent increase in requests for advice in relation to the issue of whether or not there is an organised grouping of employees, and/or whether employees are assigned to a service, in the context of service provision changes. We believe this demonstrates a growing confidence amongst employers to challenge the application of TUPE following the emerging case law around these points. For example, the Eddie Stobart case is proving useful for parties seeking to argue that there is no organised grouping of employees, even where employees spend the majority of their time working on the activities that are to transfer. The above cases provide further clarity on some common issues that arise when parties are considering whether TUPE applies to a service provision change or whether employees are assigned to an organised grouping of employees. No doubt the tribunals will continue to provide guidance on this complex area of law.