The EAT's decision in Tees Esk and Wear Valley NHS Foundation Trust v. Harland and Others  UKEAT/0173/16 provides guidance on how the "principal purpose" of an organised grouping of employees should be determined when considering whether those employees should transfer under the Transfer of the Undertaking (Protection of Employment) Regulations 2006 (TUPE), in the context of a service provision change.
Under TUPE a service provision change will occur if a client: outsources work to an external provider; reassigns a contract to a new provider (as was the case in Harland); or brings such work back "in house", provided that certain conditions are met. In Harland, the condition at issue was the requirement that: "immediately before the service provision change there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client".
Tees Esk and Wear Valley NHS Foundation Trust (the Trust) had provided care for an adult with severe learning difficulties on behalf of NHS South Tees Care Commissioning Group (the CCG) for a period of 10 years. The patient resided at a building which also contained flats housing other individuals who required specialist care. Initially the patient required seven carers at any one time and as many as 27 Trust employees were dedicated to providing this. Happily, the patient's conditions substantially improved so that from 2011 he required only 4-to-1 care, and from 2012 the team looking after him reduced to 11 Trust employees. These 11 were not dedicated to caring for the patient, but also cared for other service users resident in the same building. From February 2014 the patient's condition improved further, and in general he required only 1-to-1 or 2-to-1 care. During the night he rarely required assistance at all and, when he did, the night staff on duty at his building would attend to him. They would also attend to the other service users resident in the building when required. The patient's care continued to be split between the same 11 employees who had cared for him since 2012, but necessarily less of their time was spent in caring solely for the patient.
In 2014 the CCG put the contract for the patient's care out for tender and it was awarded to Danshell Healthcare Limited (Danshell), who took over the patient's care from January 2015. The Trust argued that the 11 employees who had cared for the patient since 2012 were assigned to the patient's care under the contract and that they would therefore transfer to Danshell under TUPE. Following consultation with the employees concerned the Trust determined that, in fact, only those employees who spent more than 75 per cent of their shifts (including nightshifts) caring for the patient should transfer to Danshell. This amounted to seven employees. Danshell accepted that there had been a service provision change, but disagreed that there was an organised grouping of employees which had the "principal purpose" of caring for the patient (and argued that three full-time equivalent employees should be sufficient to provide the patient's care). However, Danshell still accepted the seven employees the Trust had identified as assigned to the patient's care. After the transfer some of the transferring employees resigned, others were made redundant, and only one continued to work for Danshell and provide care for the patient. A number of the affected employees brought claims in the tribunal.
At the preliminary hearing the tribunal determined that there was an organised grouping of employees put together to provide the services (i.e. care for the patient), which maintained its identity up until 5 January 2015. However, it held that as these employees undertook other work (and were not dedicated to the patient's care), by 5 January 2015 the "principal purpose" of the organised grouping had been diluted so that it was no longer the provision of the patient's care (and was, instead, the care of other service users), and that there was not, in fact, a service provision change for the purposes of TUPE.
The Trust appealed, primarily on the ground that the tribunal had taken the incorrect approach in determining the "principal purpose" of the organised grouping of employees in respect of the service provision change. The Trust's argument was that TUPE did not require the tribunal to consider the actual activities carried out by the relevant employees, but simply the Trust's intention at the time the grouping was organised. The Trust therefore argued that in considering the actual activities carried out by the organised grouping (rather than the continued purpose behind retention of the organised grouping), the tribunal had fallen into error.
The EAT dismissed this ground of appeal. It held that in order to determine the "principal purpose" of an organised grouping of employees in the context of a service provision change, the key question for the tribunal to answer was: "what did the organised grouping have as its principal purpose immediately before the service provision change?" The EAT observed that, whilst the activities performed and the intention behind the organisation of the grouping were both relevant factors to be considered in determining the "principal purpose" of an organised grouping, neither point was necessarily determinative. Acknowledging that determination of the "principal purpose" will turn on the facts of each case, the EAT held that, in this case as the purpose of the organised grouping had clearly changed over time, the tribunal had properly focused on the "principal purpose" of the organised grouping in the period immediately before the service provision change. The EAT found that TUPE does not specify how the "principal purpose" of an organised grouping of employees should be determined in the context of a service provision change. However, it acknowledged that it was not necessary for provision of the services to be the sole purpose of the organised grouping at the time of the transfer for there to be a service provision change, but provision of the services did need to be the dominant purpose. On the facts, it was permissible for the tribunal to reach the conclusion that, at the time of the transfer, the "principal purpose" of the organised grouping was the provision of care to other service users. The appeal was allowed, however, on other grounds (although this is not relevant here).
What is the practical impact of this for employers?
This case does not change the existing legal position. However, it provides useful guidance on factors that should be considered in determining the "principal purpose" of an organised grouping of employees. When determining the "principal purpose" of an organised grouping, the employer should consider whether the services which are transferring are the main or dominant purpose of the grouping at the time of the transfer. In circumstances where there are more employees than necessary carrying out the relevant services, or where the employees who form part of the organised grouping are carrying out other work, this might mean that their "principal purpose" is not provision of the services. However, this will depend on the facts of each case.