In London Care Ltd v Henry the Employment Appeal Tribunal (EAT) confirmed that when considering whether there has been a service provision change (SPC) under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), a tribunal must identify the relevant activity. Further, the analysis must be conducted in the right order and any fragmentation should be considered when determining whether activities carried on by the subsequent service provider are fundamentally the same as those carried on by the outgoing service provider.
Ms Henry and 16 colleagues were employed by Sevacare (UK) Ltd, providing support and care for 168 adults within their homes. Sevacare provided the care services under a contract with Haringey Council and tried to ensure that the same care assistant would provide the care on each visit, in order to establish continuity and a relationship of trust. A regionalised approach was adopted so that, wherever possible, carers worked and were allocated clients in one zone.
In 2016 Sevacare gave one month's notice that it would be terminating the care service being provided. The council decided to transfer the service to four new residential care providers, allocating between them based on the capacity of the new providers and postcodes.
In some cases, all of a care assistant's work went to the same provider; in other cases, an assistant's work was split between several providers. The question arose as to whether some of the care assistants would transfer under TUPE – and to whom – in circumstances where their work had been fragmented between multiple new providers.
At a preliminary hearing, an employment tribunal found there had been an SPC from Sevacare to at least one of eight respondents. Although the tribunal's decision was somewhat unclear, the EAT believed that its findings were as follows:
- There had been an SPC from Sevacare to at least one of the new providers.
- The client was the council, not the recipients of the care.
- The activity was the package of homecare services being provided to the individual recipients of the care.
- The activities remained fundamentally the same after the transfer.
- There was an organised grouping of employees because the principal purpose of the activity was to deliver care to service users for whom the council was responsible.
The employment tribunal rejected the contention that there had been fragmentation and did not appear to have considered the question until it came to the issue of whether there was an organised grouping of employees.
Two of the new providers appealed, arguing that the fragmentation that had occurred in practice meant that there had been no SPC and no TUPE transfer.
The EAT held that the employment tribunal's reasoning was flawed. While it was true that care was still being provided to the same recipients, there had been disagreement over what the relevant activity was for TUPE purposes. The employment tribunal had not clearly identified whether the activity was the whole service for the council or a subset of that service.
As no single provider took on most of the work, the EAT found it difficult to identify a natural destination for a number of employees given that the people they had been caring for were moved to different providers. The EAT held that the employment tribunal should have considered fragmentation earlier, when considering whether the activities performed before and after the transfer were fundamentally the same.
The EAT also criticised the employment tribunal for reaching a decision about the purpose of the organised grouping, without first considering whether such a grouping existed and had been deliberately or consciously formed.
The case was sent back to a different tribunal for reconsideration.
The EAT's judgment reaffirms that there is a distinct order in which the following steps must be followed to establish whether there is an SPC, and that fragmentation is an early consideration:
- Step 1 – identify the activities that the original provider is carrying out.
- Step 2 – decide whether the activities carried on by the subsequent provider are fundamentally or essentially the same as those carried on by the original provider. Fragmentation between different providers may mean that the transfer is not an SPC.
- Step 3 – identify whether there is an organised grouping of employees in the United Kingdom with the principal purpose of carrying out the activities concerned on behalf of the client. Was the grouping intentionally formed for that purpose?
- Step 4 – check that the activities are neither:
- being carried out in connection with a single short-term event; nor
- wholly or mainly the supply of goods (rather than services) for the client's use.
Crucially, the question of whether a service has become too fragmented as a result of passing to multiple service providers is an early part of the analysis and forms part of the question of whether the activities are the same before and after the transfer. Later questions need not be examined if a failure at an earlier stage has meant that an SPC can be ruled out.
For further information on this topic please contact Alison Clements at Lewis Silkin by telephone (+44 20 7074 8000) or email (firstname.lastname@example.org). The Lewis Silkin website can be accessed at www.lewissilkin.com.
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