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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Nottinghamshire Healthcare Nhs Trust v Hamshaw & Ors (Transfer of Undertakings : Service Provision Change) [2011] UKEAT 0037_11_1907 (19 July 2011) URL: https://www.bailii.org/uk/cases/UKEAT/2011/0037_11_0107.html Cite as: [2011] UKEAT 37_11_1907, [2011] UKEAT 0037_11_1907 |
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EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
At the Tribunal
Judgment handed down on 19 July 2011
Before
THE HONOURABLE MR JUSTICE BEAN
(SITTING ALONE)
NOTTINGHAMSHIRE HEALTHCARE NHS TRUST APPELLANT
(2) PERTHYN
(3) CHOICE SUPPORT RESPONDENTS
Transcript of Proceedings
JUDGMENT
APPEARANCES
(of Counsel) Instructed by: Mills & Reeve LLP Solicitors 78-84 Colmore Row Birmingham B3 2AB |
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For the Second Respondent
For the Third Respondent |
(One of Her Majesty’s Counsel) Instructed by: Messrs Thompsons Solicitors City Gate (East) Tollhouse Hill Nottingham NG1 5FS
MR STEPHEN JENKINS (Solicitor) Geldards LLP Dumfries House Dumfries Place Cardiff CF10 3ZF
MR CHRIS CURTIS (Representative) Choice Support Ground Floor 100 Westminster Bridge Road London SE1 7XA
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SUMMARY
TRANSFER OF UNDERTAKINGS – Service provision change
The Employment Tribunal was entitled to find that there was no TUPE transfer (whether a transfer of undertaking or a service provision change) where residents of a care home operated by an NHS Trust were rehoused in individual homes; and the Claimant care workers, formerly employed by the NHS Trust at the care home, were then offered employment by the Second or Third Respondents, in most cases to sleep in at the service users’ homes. The economic entity did not retain its identity, and the services provided were not fundamentally or essentially the same after the change as they had been before.
THE HONOURABLE MR JUSTICE BEAN
The material facts found by the Tribunal
“With effect from 1st April 2010 a number of important changes occurred in the daily routines of the clients themselves. These included an expectation that each [would] develop a greater independence in the cleaning, care and management of their own homes, a task in which they were to be assisted by care workers. There was equally an expectation that clients would routinely undertake domestic tasks such as shopping, food preparation and cooking. In the view of the Tribunal, these were important changes which marked the commencement of a new phase of residential care and support. The clients were also encouraged to acquire confidence in handling their own money and possessions. Further, and in contrast to the position at Hillside House, the client would have the benefit of a care worker who would be on hand to assist when required, through the sleep-in arrangements.
In the view of the Tribunal the changes which took effect on 1st April 2010 were not merely geographical, but represented a material shift in the ethos of the service and the manner of its provision… While the tribunal accepts that there remained an obligation on those undertaking day to day provision of the care to call upon the services of medically qualified personnel where necessary, the Tribunal is satisfied that post 1st April 2010 the emphasis was one of supporting living and welfare…
Prior to 1st April 2010 Hillside House was a constituent part of the first respondent trust, located upon one of its hospital campuses. The unit enjoyed dedicated personnel qualified and non-qualified. However, it also drew upon a number of other resources in the delivery of its service. These included (1) the fabric of the building itself and the accommodation it comprised; (2) the benefit – whether directly or indirectly – of NHS funding; (3) the shared use of cleaning, catering and maintenance services and personnel drawn from the same hospital campus; and (4) the clients.
As to the destination of those resources after 1st April 2010 it was common ground between the parties that the property of Hillside House was not the subject of transfer, lease or licence to any third party for the purpose of benefit of the clients. The Tribunal is equally satisfied that the necessary funding for the Hillside House facility ceased to be available to the [Trust]; however, it would be entirely artificial to suggest the funding for social services enjoyed a direct correspondence to the former NHS resource. It is nonetheless clear that whilst qualified staff were found alternative posts within the respondent Trust, a small minority of the healthcare assistants were intended to continue in post, providing services for the clients under the aegis of the second and/or third respondent. In the case of the second respondent, such proposed arrangements extended to only three of the 18 employees formerly based at Hillside House. The other resources and personnel were not intended to be deployed to either the second or third respondent. As for the clients, only two of the seven resident clients were allocated to the second respondent. Similar observations apply to the third respondent.”
The TUPE Regulations
“(1) These Regulations apply to—
(a) a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity;
(b) a service provision change, that is a situation in which—
(i) activities cease to be carried out by a person (“a client”) on his own behalf and are carried out instead by another person on the client’s behalf (“a contractor”);
(ii) activities cease to be carried out by a contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person (“a subsequent contractor”) on the client’s behalf; or
(iii) activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by the client on his own behalf,
and in which the conditions set out in paragraph (3) are satisfied.
(2) In this regulation “economic entity” means an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.
(3) The conditions referred to in paragraph (1)(b) are that—
(a) immediately before the service provision change—
(i) there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client;
(ii) the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; and
(b) the activities concerned do not consist wholly or mainly of the supply of goods for the client’s use.”
(4) Subject to paragraph (1) these regulations apply to-
(a) public and private undertakings engaged in economic activities whether or not they are operating for gain;
(b) a transfer or service provision change howsoever effected…
(6) A relevant transfer-
(i) may be effected by a series of two or more transactions: and
(ii) may take place whether not any property is transferred to the transferee by the transferor.”
Transfer of an Undertaking
10. Regulation 3(1)(a), which deals with what may be described as the traditional type of transfer, derives from the EC Acquired Rights Directive and was formerly set out (in not quite identical terms) in the 1981 Regulations. The text was designed to spell out the tests derived from the Luxembourg caselaw, notably Spijkers [1986] 2 CMLR 296. There must be an economic entity which retains its identity after the transfer. The factors to be taken into account are conveniently summarised in the EAT’s judgment delivered by the then President, Lindsay J, in Cheesman v Brewer Contracts Ltd [2001] IRLR 144.
12. The Employment Judge held:
“14.Whilst superficially attractive, the Tribunal has come to the conclusion this argument faces a number of insurmountable difficulties, both legal and factual. As a matter of principle, Fairhurst Ward Abbotts is nothing more than confirmation of the proposition that the division of a composite whole into smaller parts will not preclude the finding of a relevant transfer. Put simply, to conclude otherwise would defeat the language of the Directive and the Regulations, which specifically address part disposals. It is nonetheless clear, whether the target of the putative transfer is the whole of the former economic entity or a constituent part, it must retain its identity, if a relevant transfer is to have occurred. Mr Brewer placed additional reliance upon a number of other cases, including Kenny v South Manchester College. However, in each of the cases referred to, the service of undertaking activity was for practical purposes the same – subject to minor modification – before and after the putative transfer, with the most significant alteration being one of venue or the identity of a service provider.
15. The Tribunal has borne in mind a transfer may be achieved by a number of sequence of transactions, and further, a mere change in the manner in which services are delivered does not preclude a determination that there has been a relevant transfer. However, even accommodating those principles, the rationale adopted in the cases cited by Mr Brewer remain far removed from the facts of this case.
16. In the view of the Tribunal there is realistically no scope for the suggestion the economic entity of Hillside House retained its identity after 1 April 2010. On the contrary, the unit known as Hillside House was closed, and the clients formerly resident there took up residence in their own properties, away from facilities managed under the aegis of the first respondent. Indeed, one might have thought one of the principal means by which the aspirations of the framework agreement and individual contracts entered into in respect of the clients was to be realised, was to ensure there was no visible management of these clients, rather, that they should be seen to be supported in their own homes as with other members of the community drawing upon such services from time to time.
17/. Whilst it may be accurate to say the beneficiaries of the services to be provided remained the same, the service was no longer a part of the NHS and was fundamentally different from that operated prior to 1 April 2010. Drawing upon the vocabulary of the past, these clients were being moved from ‘Institution’ to home; from ‘management’ to support. For all these reasons, the Tribunal is satisfied the reliance placed upon arguments of fragmentation do not assist the first respondent; but rather, represent an over-simplification which is unsupported by the facts of this case.
18. In the circumstances, the Tribunal is satisfied there was no relevant transfer for the purposes of regulation 3(1)(a) of TUPE.”
17. The EAT in Cheesman continued:
“An activity of itself is not an entity. The identity of an economic entity emerges from other factors such as its workforce, its management and staff, the way in which its work is organised, its operating methods and, where appropriate, the operational resources available to it.”
Describing the economic entity as “Hillside House” is convenient shorthand for the entity of Hillside House, its premises, staff (nurses, care assistants and any ancillary staff), residents, equipment, resources and organisation. The care assistants and residents transferred but the premises, equipment, resources and organisation did not.
18. Mr Brown submitted that in defining the economic entity as the whole of Hillside House the judge failed to “apply the Fairhurst test”. In Fairhurst, Ward, Abbotts Ltd v Botes Building Ltd [2004] IRLR 304 the respondents had provided Southwark Council with building maintenance services for the whole borough for three years. When the council invited new tenders it split the borough in two and invited tenders for each area separately. One of these was won by Fairhurst. The Employment Tribunal found that there had been a transfer of part of an undertaking. The decision was affirmed on appeal. The EAT held that there is no requirement that a part of an undertaking transferred is itself a separate economic entity before the transfer. In the present case it was common ground that the division of residents and care workers after the transfer between Choice Support and Perthyn makes no difference. Even if all the residents and all the Claimants had gone to Choice Support the Tribunal’s finding that the economic entity did not retain its identity would in my view be clearly justified.
“One factor which is always to be taken into account is the type of undertaking in question. Here it is an undertaking for the provision of medical services. Medical science does not stand still, as it advances methods of giving… care are naturally modified and improved… It does not mean that the object of the undertaking is changing but only that new means of achieving it are being adopted… We are therefore dealing with a type of undertaking in which it is particularly likely that different ways of carrying on the undertaking may be adopted without destroying its identity. In my judgment the undertaking of providing neo-natal and paediatric care has retained its identity through the change of provider and there has been a transfer of the undertaking.”
“The services are to be provided for the same population under the new contract as under the old. The buildings and the installations of the Grantham and Kesteven hospital were used under the old contract and are used under the new. At least 16 nurses and three doctors who were providing services by the old contract have been taken on by the Defendants to provide services under the new. Only four people – the two plaintiffs and two nurses – have not been taken on. The old contract and the new each contain a service specification. The aim and object stated in the two specifications are closely similar… Indeed, the similarity between the old contract and the new goes beyond aims and objectives; it extends to provision for liaison with community units and general practitioners, access to other specialist providers, family centred care, day care rather than admission to hospital, overnight accommodation for parents and a number of other matters.”
In short, both the old and the new systems for the provision of neo-natal and paediatric services in the district were very similar indeed, and were based in the same premises. Porter is far removed from the present case.
Service provision change
28. There have been two decisions of the EAT on regulation 3(1)(b). Kimberley Group Housing Ltd v Hambley [2008] ICR 1030 was a case where the relevant activities were agreed to be “the provision of suitable accommodation and related support services to asylum seekers in Middlesbrough and separately in Stockton”. The outgoing provider had run 140 properties in Middlesbrough and 50 in Stockton.” Two different companies took over the activities. The EAT upheld a finding by the Employment Tribunal of a service provision change, contrasting the case with “circumstances in which a service, which is being provided by one contractor to a client, is in the event so fragmented that nothing which one can properly determine as being a service provision change has taken place.”
29. Metropolitan Resources Ltd v Churchill Dulwich Ltd [2009] IRLR 700 also concerned accommodation for asylum seekers. The Home Office had a contract with the charity Migrant Helpline Ltd to provide such accommodation. Migrant Helpline in turn had a series of six month contracts with Churchill Dulwich Ltd, who operated a hostel called Barry House where the claimants were employed. Churchill Dulwich lost the relevant contract, which was won by Metropolitan Resources, who operated a hostel called Coombe Farm. New asylum seekers arriving after a particular date, instead of being sent to Barry House, were diverted to Coombe Farm. Churchill Dulwich later became insolvent. Again, the EAT upheld the Tribunal’s finding of a service provision change. Judge Burke QC noted that regulation 3(1)(b), unlike regulation 3(1)(a), does not derive from the Acquired Rights Directive but from section 38 of the Employment Rights Act 1999. He said:
Conclusion