Bolton NHS wanted to outsource its drugs and alcohol service. To do this they split it into two functions; case management and delivery of interventions. Different companies were given the contracts to provide the separate services. Did TUPE apply?
In this case, a company called Arch Initiatives was given the case management services. However, they refused to take any NHS staff on, and the staff went on to claim that they had been unfairly dismissed because their employment should have automatically transferred under TUPE.
TUPE applies to automatically transfer employees in two different scenarios. First, where there is a transfer of an economic entity that retains its identity. Secondly, where there is a service provision change, which can happen when services are outsourced to contractors.
On the basis of previous case law, where there is a service provision change, the activities pre and post transfer need to be “fundamentally or essentially” the same for TUPE to apply. Furthermore, there needs to be an organised grouping of employees doing the services in question.
In this case, the EAT held that there had been an organised grouping of employees carrying out the case management services, and that these services were done in essentially the same way by Arch Initiatives. This meant that TUPE should apply.
Arch Initiatives had argued that, because the services were split, there was no economic entity that was being transferred. The EAT responded that this was not the required test when it comes to service provision changes. All that the employees needed to establish was that the services continued to be carried out in essentially the same way and that there was an organised grouping of employees doing them.
This case clarifies that TUPE will apply where functions are split and given to separate companies to do. Indeed, this is a common way of dealing with outsourcing.