TUPE can still apply if service split on functional lines

The Employment Appeal Tribunal has confirmed that the definition of a service provision change can still be satisfied if a single service is split on functional lines when being transferred. There is no requirement that all the constituent activities must be transferred to a single transferee.

This case was about the provision of drug and alcohol dependency services to Bolton Council. For some years it had been provided by a NHS Trust, but the Council decided to remodel the service when it put it back out to tender. This involved splitting the case management and the delivery of interventions between different providers. The case management element was awarded to Arch Initiatives, who declined to accept that there had been a TUPE transfer.

The employment tribunal decided that while the service was being delivered by the Trust there was an “organised grouping of employees” which, as its principal purpose, carried out the activities of case management. It concluded that these activities remained fundamentally the same when they were taken over by Arch. It followed that the definition of a service provision change (SPC) had been satisfied and there had been a TUPE transfer of those employees to Arch. This decision was upheld by the EAT.

The EAT accepted that where a service was split along functional lines, that may well suggest that the underlying activities did not remain fundamentally the same, but this was not so in this case. That was because the functional split was already reflected in the way the Trust delivered the service prior to the transfer.

The principle that a service can be split when being outsourced, re-tendered or insourced and still meet the SPC definition was recognised in a case involving Kimberley Group Housing almost 10 years ago. That involved dividing a service providing accommodation to asylum seekers between two new providers who continued to provide the same service, but at lower volumes. However this is the first appellate decision which recognises that a service can also be split on functional lines and still give rise to a TUPE transfer.

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