Where it is not possible to identify a new service provider who carries out the activities of the old service provider after a service provision change, there will be no service provision change amounting to a relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
Cornwall County Council was one of 17 service providers contracted by the Legal Services Commission to provide a free legal helpline service to the public in Cornwall. The claimants were part of a team of advisers who worked for the council on the Legal Services Commission contract. Under the scheme, callers would be routed to the next available adviser from any one of the 17 service providers with the required category of legal specialism.
In September 2006, the Legal Services Commission put the contracts out for tender. The council decided not to bid for it. The council’s contract with the Legal Services Commission ended on 31 March 2007, and the number of contractors servicing the Legal Services Commission contract was reduced to nine. The council terminated the claimants’ employment with effect from 31 March 2007. Both the claimants and council claimed that the contracts of employment had transferred to one of the nine new service providers. The new service providers denied this.
The tribunal accepted that the tendering exercise had not resulted in a standard transfer of an undertaking and, as such, there would only be a relevant transfer for the purposes of TUPE if the transaction amounted to a service provision change (as defined by TUPE).
The tribunal accepted that the claimants had been part of an organised grouping of employees whose principal purpose was to carry out activities on behalf of the Legal Services Commission. That said, it could not ascertain which new service provider had been allocated the ‘activities’ (i.e. the provision of employment and welfare advice) originally performed by the council on behalf of the Legal Services Commission.
The tribunal accepted that while TUPE may still apply even if the identity of the activities change or are divided up, it is crucial to be able to identify the ‘activities’ performed by the outgoing contractor (i.e. the council) and for there to be a connection between the ‘activities’ performed by the outgoing contractor and those performed by the new service provider. As it was not possible to identify to which of the nine new service providers the council’s former activities had transferred, there could be no service provision change. The claimants were therefore not protected by TUPE.
Although this is only a first instance decision and, therefore, not binding on other tribunals, this case gives a useful indication of the approach being taken by tribunals where there are a number of potential transferees. It is also one of the first cases to examine in detail the application of the service change provisions in respect of transactions on or after 6 April 2006.
The service change provisions were designed to cover contracting in, contracting-out and re-tendering exercises. However, this case appears to indicate that ‘new’ TUPE does not go so far as to provide a means of identifying a transferee where the transferring activities cannot be traced from the outgoing contractor to the new contractor.
In a similar case, Hambley and others v Leena Homes Limited and others, activities were also split between contractors following a re-tendering exercise. However, the Employment Tribunal decided in that case that there had been a service provision change and a relevant transfer for the purposes of TUPE. Hambley is due to be heard by the Employment Appeal Tribunal and further guidance on this issue will be very welcome.
Daniel Rubin, managing associate, and Liz Farrer, associate, Addleshaw Goddard.