Service provision changes and the principal purpose test21/03/17
In a decision that will be of interest to all those involved in the commissioning and provision of services and care plans, the EAT has ruled in the case of Tees Esk & Wear Valleys NHS FT v Harland and others, that there was no service provision change for the purposes of TUPE where the principal purpose of the organised grouping of employees had changed over time and, whilst still relevant, was now only a subsidiary purpose.
Regulation 3(3)(a)(i) of the Transfer of Undertakings (Protection of Employment) Regulations 2016 (TUPE) provides that, for there to be a transfer, immediately before the service provision change “there is an organised grouping of employees…which has as its principal purpose the carrying out of the activities concerned on behalf of the client…”. Case law has determined that the employees must be deliberately organised to carry out the particular activities, and not all employees who carry out the activities will be assigned to the grouping.
From 2005 to 2015, the Claimants were employed by the Trust to provide personal care to CE, an individual with severe learning disabilities. Over the course of that period, CE’s care requirements significantly decreased, from seven-to-one to largely one-to-one care. The team put together by the Trust to care for CE had been retained although, as a result of the reduction in CE’s needs, the team was also required to provide care to other service users at the same location.
In January 2015 the contract to provide care for CE was transferred from the Trust to a private provider, Danshell Healthcare Ltd (Danshell). The Trust argued that there was a relevant transfer for the purposes of TUPE and the individuals who provided CE’s care should transfer to Danshell. Danshell disagreed, as did the employees who wished to remain employed in the NHS.
A preliminary hearing was listed before the Employment Tribunal (ET) to determine (1) whether there had been a relevant transfer and (2) whether any of the claimants were assigned to the relevant organised grouping of employees prior to the transfer. The ET found that there had been a change in the provision of the service (care of CE), that there was an organised grouping of employees put together to provide that service, and that immediately prior to the transfer 11 employees had been assigned to that grouping, including the Claimants. However, the principal purpose of the grouping had been diluted so that, immediately before the transfer, it was no longer the provision of care to CE. Therefore there was no service provision change and the Claimants’ employment did not transfer to Danshell.
The Trust appealed to the Employment Appeal Tribunal (EAT).
The EAT dismissed the Trust’s appeal and held that there was no service provision change. To determine whether the principal purpose test was satisfied, the ET had to ask itself: what did the organised grouping have as its principal purpose immediately before the service provision change? To answer this question the ET could look at the activities actually performed by the group, or to the intention behind the organisation of the grouping, although neither would necessarily determine the issue. Here, the ET had been correct in looking at the dominant purpose of the organised grouping immediately prior to the service provision change. At this time, the care of CE took up approximately one third of the time spent by the group providing care to other service users. Although the care of CE was still the reason behind the organisation of the team, it had now become a subsidiary purpose of the group and therefore the test in Regulation 3(3)(a)(i) had not been satisfied.
What to take way
This decision will be of particular interest to all those in the health, social care and social housing sectors who are involved in the recommissioning of services and changes in care plans. Whilst each case will turn on its own facts, this decision is a useful reminder of the factors that the tribunals will take into account when determining an organised grouping’s “principal purpose” and the importance of looking at the dominant purpose immediately before the transfer and whether this has evolved from the original purpose .
For further information on how this issue might affect your organisation, please contact Raj Basi.