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TUPE

In July the EAT upheld an Employment Tribunal's decision that TUPE did not apply where residents of a care home were moved, on the care home's closure, to individual homes. 

In summary, TUPE applies to a 'relevant transfer' which is either:

  • the transfer of all or part of an undertaking or business in the UK to another person which includes the transfer of an economic entity which retains its identity (often referred to as a ‘traditional transfer'); or
  • a service provision change where the activities carried out by one person are 'outsourced', reassigned to a new contractor or brought back 'in house' (referred to as a ‘service provision transfer').

One purpose of TUPE is to protect the employees affected by the transfer and to provide for the transfer of their terms and conditions to the new employer or service provider who inherits all the employment liabilities.

Nottinghamshire Healthcare NHS Trust v Hamshaw & Others

The case of Hamshaw arose following the closure of Hillside House, a care home operated by the NHS Trust, for adults with learning disabilities on 31 March 2010.  The residents of Hillside were moved to their own homes under the care of new service providers.  Those employed at Hillside were informed by the NHS Trust that TUPE applied and they were told which of the two new providers was to be their new employer.  The NHS Trust stopped paying the Hillside employees on 1 April 2010.  

At Hillside the residents were monitored and managed on a 24 hour basis which included ‘waking night' shifts.  Cleaning and catering services were provided and there was no opportunity for the clients to develop their own catering skills.  The Employment Tribunal decision that TUPE did not apply relied on the following key differences between the services provided at Hillside and the support given to the former residents of Hillside in their new homes:

  • the residents were moved from the institutional setting of Hillside House to their own homes;
  • in their own homes the residents were largely autonomous and had service plans intended to develop their greater independence in respect of the cleaning, care and management of their own homes.  Also, routine domestic tasks would be undertaken by them such as shopping and food preparation; and
  • the residents were encouraged to take greater responsibility for their own finances.

Separately there were differences in the duties required of the staff and in particular staff were on hand only to provide assistance as and when required and there was no requirement for active night shifts.  Instead, staff were required to 'sleep in' in the clients' own accommodation.

The Employment Tribunal's view was that these changes were a "material shift in the ethos of the service and the manner of its provision".  In effect, the residents were moved from 'institution' to 'home', from 'management' to 'support' and from the provision of care services to services which supported the residents' lives and welfare. The Employment Tribunal's view was that there was 'no scope for the suggestion the economic entity of Hillside House retained its identity after 1 April 2010.' 

Whilst the statutory test for a service provision transfer does not expressly require the activities to retain their identity after transfer case law confirms this to be an implicit requirement.  In  Metropolitan Resources Ltd v Churchill Dulwich Ltd Judge Burke identified the test to be "..... whether the activities carried on [post transfer] are fundamentally or essentially the same as those carried out by the alleged transferor.  The answer ..... will be one of fact and degree to be assessed ..... on the evidence in the individual case."

In the Hamshaw case the EAT decided the activities of the new service providers were not "fundamentally or essentially the same" as those the NHS Trust had provided previously at Hillside House. The EAT agreed with the Employment Tribunal's original decision that there had not been a relevant transfer and accordingly the NHS Trust was potentially liable to its former employees in respect of their various claims which included claims for unfair dismissal and notice monies.

The EAT's decision does not represent a sea change in the way the Courts and Tribunals regard TUPE.  Instead it serves as a reminder that when considering whether or not TUPE applies each case must be assessed by reference to its facts.  Of course even should TUPE not apply the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector confirms the policy that TUPE should be applied save where there are exceptional reasons.  Where the application of TUPE is in doubt the Statement of Practice needs to be replicated and imposed through the contract governing the changes to the services.

Guildford

Contact James Davies email: james.davies@laytons.com or

Stephen Cates email: stephen.cates@laytons.com

London
Contact James Davies email: james.davies@laytons.com or

Stephen Cates email: stephen.cates@laytons.com or

Keith Corkan email: keith.corkan@laytons.com

Manchester
Contact Keith Corkan email: keith.corkan@laytons.com or

Michelle Gray email: michelle.gray@laytons.com

 

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This Focus is offered on the basis that it is a general guide only and not a substitute for legal advice. Laytons cannot accept any responsibility for any liabilities of any kind incurred in reliance on this Focus.