05/08/2011

Employment e-Brief – TUPE and Service Provision Charges

The recent decision from the Employment Appeal Tribunal in Nottinghamshire Healthcare NHS Trust v Hamshaw and Others has challenged the safe view approach of blind acceptance that the service change provisions of TUPE will always apply in a change of service provider situation.

The Law

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (the “Regulations”) provide that a relevant transfer occurs where there has been either a “transfer of an economic entity which retains its identity” or where a “service provision change” occurs. In these instances, the Regulations protect an individual employee’s employment rights, and put simply, an employee’s employment transfers from their “old” employer to their “new” employer.

The Facts

Nottinghamshire Healthcare NHS Trust provided a care home. When the care home was closed, the residents were moved to their own houses. The care was to be provided by two firms who specialised in this field. As a result of the change of moving residents from a care home to an individual flat, the work undertaken by employees was to be different.

The Trust had informed the Claimants that their employment would be transferred, but did they?

The Decision

The Employment Tribunal held that there was no relevant TUPE transfer nor a service provision change, and the Employment Appeal Tribunal agreed. It was decided that there were “important changes ….in the daily routines…..these were important changes which marked the commencement of a new phase of residential care and support”. Accordingly, it was held that the changes “represented a material shift in the ethos of the service and the manner of its provisions“.

Although the activity of providing care remained, the methods of operation had “fundamentally” changed, due to the level of independence and dependence of the residents. As such there was no transfer, and accordingly, liability for the Claimants’ employment rights remained with the Trust.

TUPE and in particular, the service change provisions of TUPE, remain a subject for debate in many cases where a contract switches between providers. Very often new providers will try to argue that the way in which they intend to carry out the contract in the future should mean that TUPE will not apply. This recent case should not be seen as an indication that such an approach will always work – indeed, far from it. Effectively it reinforces what we already knew, namely that if the “new” service is genuinely a different service from the original, then certainly there may be scope for arguing that TUPE will not apply in such a case.

However, we always recommend seeking expert advice in such circumstances because almost inevitably, such a stance will be challenged.

If you have any questions on TUPE then please contact any member of the Employment Team.