The Court of Appeal has handed down it’s Judgment in the case of Bicknell and the BMA v NHS Nottingham and Nottinghamshire ICB, confirming the position taken by the Tribunal and the Employment Appeal Tribunal that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE Regs’) do not apply to commissioner to commissioner transfers.   

They conclude that:

1. Commissioning (purchasing) alone is not an “economic activity” for the purpose of the TUPE Regs;
2. The Employment Relations Act 1999 did not relax the meaning of economic activity in the TUPE Regulations beyond that set out in EU law;
3. In deciding whether TUPE applied to a Clinical Commissioning Group, the Tribunal was entitled to rely solely on the test of economic activity. It did not need to go on to consider whether there was also exercise of public authority; and
4. The Tribunal had appropriately determined the activities of the Clinical Commissioning Group to be non-economic in nature. 

Background

Dr Bicknell was employed by Nottingham City CCG (NC CCG) as a Clinical Advisor.  He brought claims against his employer and its successor organisation Nottingham and Nottinghamshire CCG.  As a consequence of the move within the NHS towards Integrated Care Systems, a decision was taken that the role of Clinical Advisor would be better served by a broader range of self-employed advisors, rather than the employed advisors.  Dr Bicknell was made redundant at the time of the creation of Nottingham and Nottinghamshire CCG.

He argued that he should have transferred under the TUPE Regulations to the newly formed Nottingham and Nottinghamshire CCG and that he had therefore been automatically unfairly dismissed because of the connection to the TUPE Transfer.  The BMA brought a claim for failure to inform and consult on the transfer. 

For our analysis of the decisions in the Tribunal and Employment Appeal Tribunal see our article TUPE Regulations do not apply to the reorganisation of Clinical Commissioning Groups (CCGs). 

The Court of Appeal

The Court of Appeal was asked to consider three grounds of appeal.  Those being that:

• The Employment Tribunal had misunderstood the test of economic activity on the basis set out in Nicholls.  The appellants initially argued that use of the commissioned services, even by a third party, could amount to an economic activity if those commissioned services were then offered on a market; and, in the alternative, that Nicholls was an improper interpretation of the law as it relied on FENIN (a European competition law case) which was not applicable to employment law cases;
• Economic activity under the TUPE Regulations must have a wider meaning than in EU law due to the purposive approach of UK statute interpretation (i.e. it must consider the purpose of the legislation, and any ambiguity should be interpreted so as to render further protection to the employee);
• The Tribunal needed to look at both the test for economic activity and that of “public administrative function” as a check and balance to determine whether TUPE did/did not apply; and
• That the full range of activities of the CCG had not been properly considered by the Tribunal. 

The Court of Appeal has confirmed that the Nicholls decision correctly used FENIN in an employment context as EU competition law and employment law utilise the same terminology, and there is no reason to extend the definition of economic activity when considering an employment law context over competition law.  They went onto say that the existing case law only determined that purchasing itself is not an economic activity (not whether third party use of commissioned services could be) and the CCG was not doing anything other than purchasing.

On the issue of interpretation of the statutory position, the Court rejected the submission that the Secretary of State had intended to go further that the EU position under the TUPE Regulations, as the wording used in the TUPE Regs accurately reflects that in the EU law. 

The Court agreed that the test of economic activity and that of public administrative function were mutually exclusive (as per Nicholls). When it was determined that there was no economic activity, TUPE did not apply, there was no need to undertake a “check and balance” exercise by looking at the public administrative nature of the functions of the CCG. 

Finally, the Court agreed that the Tribunal had made relevant findings on the ancillary activities of the CCGs which it was entitled to make, and which did not render the activities economic. 

What to take away

The Court of Appeal decision confirms that organisations and teams which deliver purely commissioning activities in the public sector (and others who do not deliver economic activity) are not caught by the protection of the TUPE Regs.  To be caught, the commissioner (purchaser) must also be supplying goods or services on a market – (engaging in economic activity). 

However, commissioner transfers are likely to be caught by the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector and subject to Transfer Orders made by the Secretary of State which offer similar protections in respect of terms and conditions (without the right to bring claims under the TUPE Regs).

In this time of significant public sector reorganisation across a range of public sector organisations, it is important to understand and fully assess the roles and responsibilities of any team or organisations to determine whether they are engaged in economic activity when considering whether TUPE applies to them.

How Capsticks can help

TUPE in relation to commissioning organisations (and the public sector generally) can be a minefield. We have specialists in TUPE who can help you identify the activities being delivered by an organisation or team who are potentially subject to a TUPE transfer and ensure that you are compliant with your obligations under the relevant legislation or guidance.

For further information on how we might assist your organisation, please contact Raj Basi, Sian Bond or Sean Hick.