In recent decisions the Employment Appeal Tribunal has, notwithstanding the usual stricture by the courts that service provision change under regulation 3(1)(b) of TUPE (Regulation 3 of the NI SPC Regs) must be given a plain and literal meaning, advanced a common sense interpretation of the wording concerned in order to achieve a fair result.

In Arch Initiatives v Greater Manchester West Mental Health NHS Foundation Trust and Others the EAT (Simler J (President)) continued this approach.  The issue in this case was whether there could be a service provision change when, on a re-tendering of a service, there was a split in functions, with the separated functions given to two new service providers.

Until 31st December 2002 Bolton Council had engaged Greater Manchester West Mental Health NHS Foundation Trust to carry out the provision of alcohol and drug dependency services itself through its Alcohol and Drugs Directorate (although it had also procured certain services throughout outside independent providers).  All of the claimants in this case were employed within the Trust's Alcohol and Drugs Directorate.

In 2011 Bolton decided to remodel the service by way of a retendering exercise.  The tendered services were spilt into five 'lots'.  Recovery planning and case management formed lot one and delivery and other kinds of interventions identified by a recovery plan formed lots two to five.

From the outset it was clear that lot one was independent of lots two to five, and a successful applicant for lot one would not be awarded a contract for the remaining lots.  So, at the outset, it was intended there would be a division of the two functions.  Life Line Project Limited was the successful tenderer in respect of lots two to five (the delivery of interventions).  Arch Initiatives was the successful tenderer in respect of lot one, which was the case management function.

Arch disputed that there was a service provision change.  However an employment tribunal accepted that there was a service provision change of the case management in lot one and that the employees working on case management represented an organised grouping of employees, the principal purpose of which was to carry out those activities on behalf of the client (Bolton) and the employees were also assigned to that organised grouping.

More accurately the employment tribunal said there were two organised groupings of employees, the majority of claimants in being one group and a Mrs Aulton (a manager) as a single organised group, both of which had the principal purpose of carrying out the case management activities for Bolton.  As there was an SPC TUPE transfer and as Arch refused to take the employees on, the employees were automatically unfairly dismissed.

Arch appealed.  It argued, first, that the employment judge had adopted too narrow an approach to the definition of activities and this led him to a wrong conclusion on whether the activities were fundamentally or essentially the same.  Second, it claimed, the employment judge erred in holding there could be a transfer of a part of a service or activity under the SPC provisions and, thirdly, the employment judge, Arch said, erred in law by concluding there were two organised groupings with the relevant principal purpose.

Simler J rejected these contentions.  The service provision change regime was not to be construed as requiring that all of the activities carried out by the putative transferor before the relevant date cease and are carried out, instead by a single putative transferee.  'Activities' is undefined and unqualified, and is not to be read as analogous or co-extensive with the word "service".  As Simler J said:

"These are domestic provisions that do not depend on any finding that there was a discrete economic entity in the hands of a transferor with or without functional autonomy."

The first question for an employment tribunal in every SPC case is whether the activities carried out by the outgoing person and which are, instead, carried out by the incoming person, are fundamentally the same.  That is a question of fact for the employment tribunal.

In Kimberley Group Housing Limited v Hambley [2008] IRLR 682 Langstaff J rejected the argument that regulation 3(1)(b) can only apply where there is one transferee to whom the activities transfer.  In Kimberley the division of activities involved a quantitative split (with a proportion of properties that the original service provider was looking after henceforth split between two new providers).  But according to Simler J there was no reason why the SPC provisions should not, in principle, apply in a case involving a division on functional lines.

The next question of course is whether there was an organised grouping of employees whose principal purpose was the carrying out of those activities for the client.  Again this is a question of fact and degree and there was no reason Simler J said, in principle to limit the number of organised groupings of employees to one in any particular SPC case.

Simler J also thought this approach was consistent with the Department of Business Innovation and Skills guidance (although she noted that the guidance was non-binding and certainly not decisive in any way as to the true meaning of TUPE).

Full Case Decision:

http://www.bailii.org/uk/cases/UKEAT/2016/0267_15_2101.html