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Service fragmentation
[ch 12: page 436-437]Occasionally, when services are retendered, activities are distributed so diffusely and in such a fragmented way, among so many new service providers, that it becomes impossible to say which of the new service providers should take responsibility for which employees, meaning that TUPE may not apply (Clearsprings Management Limited v Ankers [2009] UKEAT/0054/08/LA). This problem is described in TUPE case law as “service fragmentation”.
This is what happened in this Legal Services Commission outsourcing case, which is a good illustration of the problem:
This case concerned the allocation of Legal Services Commission (LSC) contracts. Cornwall County Council was one of 17 providers of free legal advice, with a contract from the LSC, the body previously in charge of administering legal aid. It employed a dedicated team to provide this service. The LSC used a call-routing system, under which calls from the public were routed to the next available adviser, who, in practice, could work for any one of the 17 service providers. In the re-tendering exercise, that number was cut to nine and the council lost its contract.
The tribunal decided that even though there was clearly an organised grouping of council employees dedicated to providing the service before the transfer, it was impossible to match specific functions carried out by the council to specific functions carried out by any of the new contractors. The tribunal took into account the random allocation of calls between the 17 service providers which meant that it was impossible to make a direct match between the percentage of service provided and the allocation of hours pre- and post-transfer, as a result of the cut in the number of providers. The tribunal suggested that if the activities had been defined alphabetically, by location, or in some other way, and then allocated to the new providers according to that definition, a different conclusion might have been reached. There was no service provision change in this case and the employees’ contracts did not transfer.
Thomas-James v Cornwall County Council, unreported ET1701021-22
Although service fragmentation affects some transfers, it is important not to overstate its significance. It should only occur in cases where the retendered services are split up randomly across a significant number of service providers, as in the LSC example above. Nevertheless, for affected workers, service fragmentation is a live issue and a significant hole in TUPE protection, as this next case shows:
Seventeen homecare support assistants brought tribunal proceedings, supported by their union, UNISON when their employer, Sevacare, ended its service contract to provide home care services in Haringey. The council retendered the care package by dividing the activities among at least four new care providers, allocating service users to each new provider on the basis of capacity and postcode. In the employment tribunal, the careworkers, who were all dismissed by Sevacare, persuaded the judge that there had been a service provision change transferring their employment to one or other of the new care providers. On appeal to the Employment Appeal Tribunal, the case was sent back to the tribunal to decide again, because the tribunal had failed to consider the impact of “fragmentation” of the activities once allocated to the different service providers.
London Care Limited v Henry & Others [2018] UKEAT/0219/17/2102