![[Basket]](images/basket.png){kind=small}
Your order![[cover image]](images/issue/BK201406.jpg)
Service provision changes
[ch 12: pages 359-360]The second category of transfer to which TUPE applies is known as the “service provision change”. The regulations governing service provision change were introduced into TUPE in 2006. A service provision change requires:
• a change in the identity of a service provider;
• an organised grouping of employees whose principal purpose before the transfer was to provide that service; and
• for the activities carried on after the change of service provider to be “fundamentally the same” as those carried on before.
(Regulation 3(1)(b) TUPE)
The requirement for activities to be “fundamentally the same” pre- and post-transfer has developed through various cases. However, for transfers on or after 31 January 2014, this requirement is now reflected in a new regulation 3(2A) of TUPE. The coalition government argues that this change to TUPE simply codifies existing law, but unions are concerned that changing the legislation in this way sends a clear message to employers that they can avoid TUPE by adapting their contract documentation to maximise differences between services contracted for, before and after transfer.
As long as the core activities remain the same after the transfer, minor differences introduced by the new service provider should not stop TUPE applying. This should make it harder for employers to list a large number of non-fundamental differences to the service, and to rely on these differences to argue that TUPE does not apply.
Here are two good case law illustrations, showing when tribunals have ruled that there has been no transfer because the services before and after the transfer were not fundamentally the same. The first case involved a group of catering workers who argued unsuccessfully that their employment transferred to the new service provider. By contrast in the second example, involving an NHS Trust, employees argued successfully against the presence of a transfer, meaning that they had been unfairly dismissed by their old employer, the Trust.
Example 1:
OCS delivered a full catering service to workers at the BMW car plant in Cowley, made up of a restaurant and deli bar serving hot food prepared by OCS employees. BMW replaced OCS with a new contractor running “dry goods kiosks” that did not serve hot food. The role of the in-coming contractor’s staff was to sell ready-prepared sandwiches and salads.
The EAT concluded that the services provided by the new contractor were fundamentally different from those provided by OCS and that as a result, there was no service provision change, and OCS’s staff did not transfer to the new business. Minor differences between roles would not prevent a service provision transfer, but material differences would.
OCS Group UK Limited v Jones [2009] EAT/0038/09
Example 2:
Nottinghamshire Healthcare NHS Trust closed a residential home for vulnerable adults, rehousing its residents to live independently in the community. Two charities, Perthyn and Choice Support, were awarded the contract to supply community-based care. The Trust argued that the employment contracts of the NHS employees had transferred from the NHS to one or other of the two charities via a service provision change. The nurses argued that there was no service provision change.
The EAT found in favour of the NHS staff. There had been no transfer of the employment contracts to the charities under TUPE, because the community-based services were fundamentally different from those provided in the residential home. Fundamental changes included a new focus on developing skills for independent living, such as cleaning, shopping, cooking and managing money.
Nottinghamshire Healthcare NHS Trust v Hamshaw & Others, Perthyn and Choice Support Respondents [2011] UKEAT0037/11
A change in provider of a service usually involves one provider ceasing the activities and being replaced instead by a new provider — or in the case of an “insourcing”, by the original client, who takes the services back in-house. The fact that the old provider carries on with some of the activities on behalf of the client after the transfer date can make it harder to persuade a tribunal that there has been a service provision change (see for example, Ward Hadaway v Love and others [2010] UKEAT/0471/09). But this is not black and white, and as always each case depends on its own facts.
A transfer can take place even where services are temporarily suspended. For example, in Wood v Caledonian Social Club Limited EAT/0528/09, a bar suspended operations when it lost its alcohol licence, and Mr Wood was dismissed. When the bar reopened a few weeks later under new management, he was allowed to bring a claim for unfair dismissal against the new business.