April 29, 2016

TUPE: Service Provision Change

In Arch Initiatives v Greater Manchester West Mental Health NHS Foundation Trust UKEAT/0267/15/RN, the Employment Appeal Tribunal (EAT) considered whether there could be a service provision change under TUPE where only part of the activities carried out by the outgoing contractor were transferring.

Bolton Council (Bolton) contracted out the provision of certain services to an NHS Trust (Trust). During a re-tendering process, these services were split into two separate functions: a case management function and a delivery function. The case management function was allocated to Arch Initiatives (Arch). However, a number of employees who previously worked within the case management function were not taken on by Arch. These employees argued that there had been a service provision change (SPC) under TUPE as a result of which their employment had transferred to Arch. Arch denied there had been an SPC as only part of the activities that had been previously carried out by the Trust had transferred to Arch.

The EAT found in favour of the employees. It held that for there to be an SPC under TUPE it is not necessary that all of the activities carried out by an outgoing contractor prior to a transfer are carried out by a single incoming contractor after that date. “Activities” are not defined under TUPE and therefore an SPC could occur where there was a transfer of a subset of activities, as was the case here. Furthermore, the EAT highlighted that it was established law that there could be an SPC where there is a quantitative split in activities, and found this could also apply where the split is functional.

This case demonstrates the dangers of TUPE and businesses looking to contract inbound or outbound services should seek advice at the earliest opportunity.

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