Service
Provision Changes and Multiple Organised Groupings
Nicholas Siddall analyses the recent
decision of Simler J(P) in Arch Initiatives v GMW Mental Health NHS Foundation
Trust & Others [2016] UKEAT/0267/15/RN and seeks to analyse the wider
importance of the decision.
The
Facts
This decision arises from Bolton Council’s
retendering of contracts for the management and provision of drug and alcohol
treatment services with effect from 1 January 2013 and the cessation of the
previous incumbent provider’s contracts (GMW).
Bolton decided to award new contracts to
two charities in place of GMW: Arch Initiatives and Lifeline whereby the
management and provision of drug and alcohol treatment services was divided on
a functional basis so that:
a) Arch held a contract with the purpose of assessing, monitoring,
planning, managing and supervising the delivery by Lifeline of treatment
interventions for alcohol or drug dependent service users (the case management
contract); andb) Lifeline held four contracts
to deliver those Harm Reduction Services, Brief Interventions, Medical
Interventions and Psycho-social Interventions (the interventions contracts)
Under the previous system of operation, GMW
held contracts requiring it to deliver combined case management and treatment
interventions activities using nurses, doctors and substance misuse
practitioners (“SMPS”).
Arch refused to accept the transfer of 9
claimants (8 SMPS and 1 Manager) from GMW on the 1 January 2013, asserting that
there was no SPC transfer. Arch denied that claimants were an organised
grouping of employees that had as their principal purpose the carrying out of
case management related activities which were fundamentally or essentially the
same as those for which Arch had assumed responsibility under the new system.
Following a 17 day long preliminary hearing
the Employment Tribunal held that there was a relevant SPC transfer of the
Claimant’s employment to Arch holding there to be two separate organised
groupings.
The
Issues
The decision addressed the SPC definition
in regulation 3(1)(b) TUPE and was required to grapple with the following
issues:
(i)The meaning of the word
“activities” for the purpose of establishing a SPC transfer under Reg 3
(1) (b);(ii) Whether the term “activity” must be read so as to equate
to “service”, in which case it would avoid an SPC transfer where only part
of a transferor’s activities found their way into the hands of the putative
transferee; and(ii)Whether it is open to an ET to
find that there can be more than one organised grouping of employees per
transferor.
The
Judgment of Simler J(P)
Arch’s appeal failed on all grounds. In
rejecting the same the EAT made the following relevant observations:
1) It is not a necessary condition for any
relevant SPC transfer for all, or substantially all, of a transferor’s
activities to be carried on in the hands of the putative transferee.
“17. …Instead, Regulation 3(1)(b)(ii)
identifies an SPC as a situation in which “activities” cease to be carried
out by the outgoing provider and are carried out instead by another person. The
word “activities” is not defined, and nor is it qualified in any way by
words that could have been used to qualify it. For example, the provision could
have said “the activities”, “all of the activities” or “the
principal activities”. There is nothing in the Regulations that expressly
requires that the relevant activities should constitute “all of the
activities” carried out by the outgoing contractor…”
2) The word “activities” must be given
its ordinary meaning and additional words should not be read in to Reg 3(1) (b)
in order to qualify its natural meaning.
“18. …Given that this Regulation is
framed by reference to “activities” rather than “the service”, it was
unnecessary to provide expressly that there can be an SPC in relation to part
only. Since “activities” is undefined, there is nothing in principle to
prevent some only of the activities that form part of service from being
considered in the context of an SPC…”
3) There is nothing in the TUPE Regulations
which prevent the splitting of activities on a functional basis, a quantitative
or a geographical basis.
“20.
…I can see no reason why the SPC provisions should not in principle apply in a
case involving a division on functional lines. The ways in which the activities
of a service may be organised are infinitely variable. They may be organised
geographically, in teams, in departments or by reference to particular
functions or processes.”
4) Indeed to hold otherwise would allow a
ready route to frustrate the application of the SPC provisions in a particular
case.
“23. …If, as [counsel] contends, the SPC
regime applies only where the whole of the activities carried out by the
outgoing person are replicated in the hands of the incoming person, the range
of situations in which the SPC provisions are capable of applying would be
substantially restricted and it would be easy for the provisions to be
circumvented so as to frustrate the purpose of the SPC regime.”
5) Should the facts permit, it would not be
an error of law for an ET to find that there can be more than one organised
grouping of employees within a transferor providing both have a principal
common purpose of carrying out the activities that pass to a transferee.
“22. Moreover, once a Tribunal has
decided that there is a sufficient degree of similarity between the activities
of the service in the hands of the putative transferee as compared with those
in the hands of the transferor before the putative transfer, then the question
will be whether before the change there existed an organised grouping of
employees whose principal purpose was the carrying out of the activities for
the client. That, again, will be a question of fact and degree, and there is no
reason in principle to limit the number of organised groupings of employees to
one in any SPC case.”
6) Distinguishing Ceva v Seawell Limited[2013] IRLR 726, the manager of GMW’s Community Alcohol Team could and did
constitute an organised grouping of one.
“43. …This conclusion should not be read
as any encouragement to litigants or Tribunals more generally to regard a
situation in which an employee is managing a team as subject to disaggregation
of that employee from the team and as inviting a conclusion that he or she is
an organised grouping of one. Rather, on the particular facts of this case, my
conclusion should be read as doing no more than saying the Employment Judge was
entitled to come to his conclusion on these facts.”
Analysis
This decision breaks new ground as it is
the first decision (of which the writer is aware) which involves the
recognition of the possibility of two distinct organised grouping of employees
in a putative SPC engaged in the provision of activities. It further endorses
the possibility of a transfer of a “part of” the activities (hinted at in
an aside in the judgment of HHJ Peter Clark in Enterprise Management Services v
Connect-Up Ltd [2012] IRLR 190).
Thus advisors in an SPC case should now be
cautious to address the possibility of a partial transfer of a service being
sufficient to trigger the SPC definition and open up potential transfers of
liability under TUPE.
