TUPE - Determining Whether Activities are Fundamentally the Same
In this case, the Employment Appeal Tribunal considered the correct approach to activities provided to a client.
In the case of The Salvation Army Trustee Company v Bahi and others the Employment Appeal Tribunal (EAT) considered the correct approach that should be taken when determining whether activities provided to a client are fundamentally the same before and after a service provision change (SPC).
Legal Background
TUPE applies where there is a 'relevant transfer'. This might be the traditional sale and purchase of a business or where there is an SPC.
TUPE provides that an SPC includes situations where a client's activities cease to be carried out by a contractor and are carried out instead by a subsequent contractor. It also states that a number of conditions must be met, one of which is that the activities carried out before and after the SPC must be fundamentally the same.
Facts
Coventry City Council (the Council) provided a range of services to homeless people through numerous separate contracts with different providers. One of those providers was Coventry Cyrenians Ltd (CCL). The Council decided to merge these contracts into a single point of access. The Council tendered out a contract for this purpose which was awarded to The Salvation Army Trustee Company (SAT). Some of CCL's employees alleged that the transfer of CCL's duties to SAT amounted to an SPC, meaning that their employment should have transferred to SAT. SAT's position was that there was no SPC because the service it was providing was not fundamentally the same as that provided by CCL.
The services provided by CCL included assessing potential service users over the age of 18 and allocating a support worker to them while they lived in supported accommodation. Accommodation was provided in ten different locations. The support worker would produce a tailored support plan and provide support in accordance with that plan. CCL would also provide further support once a service user moved on into other accommodation. The support workers were available from 9.00am until 5.00pm. It was expected that service users would use CCL's accommodation for no longer than 12 months with many moving on after 6 months. Once the service users had moved on, CCL would provide 'floating support'.
SAT provided its services through a central referral centre to service users over the age of 25. Where appropriate service users were placed in private accommodation straight away with a system of floating care. Otherwise, service users were assessed and a support care plan was produced. They were then placed in supported accommodation for a maximum of 112 days in one of two much larger hostels. SAT's support workers were available between 7.00am and 7.00pm.
Employment Tribunal (ET)
The ET found in favour of the employees. It found that the activities carried out by CCL before the SPC were fundamentally the same as the activities carried out by SAT after the SPC.
The Employment Judge found that the activity carried out by CCL was 'the provision of accommodation and the input of a support worker to facilitate the individual returning to mainstream private accommodation' and that this had remained the same following the appointment of SAT. Although there were some differences in the service that SAT was providing, such as the minimum age the services would be provided to changing from 18 to 25, these differences were not fundamental.
SAT appealed, arguing that the activities they were carrying out on behalf of the Council were not fundamentally the same as the activities that had been carried out by CCL.
Employment Appeal Tribunal (EAT)
The EAT dismissed the appeal, finding the ET had taken the correct approach in defining activities that are fundamentally the same for the purposes of an SPC.
The EAT confirmed that the activities should not be defined in such a general way that they failed to describe the precise activities being carried out. Equally, the definition should be holistic, taking into account the overall picture and avoiding too narrow a focus.
Best Practice
Whilst every case will be judged on its facts, this is a useful example of a situation where the apparent differences in a service following the appointment of a new contractor were not sufficient to avoid the application of TUPE.
Those familiar with the case law in this area might well be able to point to cases which appear to have been decided differently with a similar balance of competing factors. This illustrates how difficult it is in some cases to predict whether TUPE will or will not apply. Where the situation is not clear, the key for all contractors will be to try and be transparent in pricing and negotiate appropriate indemnity protections into the outsourcing agreement.