In this case, the EAT considered whether there had been a service provision change where the provision of adult care packages for a local authority was fragmented and allocated to multiple providers.
TUPE will apply where there is a service provision change, so long as, immediately before the transfer, there is an organised grouping of employees in Great Britain which has as its principal purpose the carrying out of the activities being transferred. For a service provision change to occur, the “activities” performed by the contractor or client before they are taken over by the client/contractor/another contractor must be fundamentally or essentially the same before and after the change. If services are transferred from a single contractor or from the client to more than one contractor, it is possible that the services become so fragmented that there is no service provision change.
In this case, the claimants were employed by Sevacare (UK) Ltd as carers providing care to adults in their homes in the London Borough of Haringey. These services were provided by Sevacare under a contract with Haringey.
Sevacare gave notice that it was terminating all services in Hackney. Care packages were allocated and transferred to several other providers, including four main providers. There was a dispute as to whether or not there had been a service provision change, and therefore whether TUPE applied.
The tribunal judge held that there had been a service provision change, and that TUPE did apply, transferring employees to one or more of the providers. She considered that the activities performed by Sevacare before the termination of the contract were fundamentally the same after the transfer, and rejected the argument that there had been fragmentation resulting in no service provision change.
Two of the new providers appealed to the EAT.
The EAT held that the judge had not been clear about whether the relevant activity was the whole service Sevacare had provided for Haringey, or a subset of this. The distinction was important because if the work transferring to each of the new contractors was itself an “activity”, the activity remained exactly the same post transfer. However if, on the other hand, the judge had decided that the relevant activity was the whole service provided by Sevacare, that would not be the case.
The EAT held that the judge should have considered fragmentation when she considered whether the activities carried on by the subsequent contractors were fundamentally or essentially the same after the transfer. She had not done so.
The EAT also held that the tribunal judge had not made a finding as to whether there was an organised grouping of employees, which is one of the necessary conditions for a service provision change, and, if there was an organised grouping, whether it had been intentionally formed.
The EAT remitted the case to a different tribunal.
What does this mean for employers?
This case is not surprising. Where employers are involved in the transfer of services to more than one provider, they should be clear what activities are transferring, and whether the fragmentation will be so significant that it is no longer possible to say that there is a service provision change.
Where activities are randomly distributed among new contractors and are not easily identifiable as the activities carried out by the original contractors, TUPE will not apply.