TUPE service provision change - how fundamental is 'fundamentally the same'?

In The Salvation Army Trustee Company v Bahi & Others the Employment Appeal Tribunal has considered whether TUPE applies to a change of service provider where there is a difference in how the services will be performed post retender. 

Coventry City Council wanted to consolidate its provision of homeless services through a single point of access. The Salvation Army Trust (SAT) was awarded the single contract. This affected four employees of CCL (a previous service provider) as SAT refused to employ them after the transfer, arguing TUPE did not apply. TUPE only applies to a service provision change where the activities performed are “fundamentally the same” before and after the change. SAT argued that the services it provided were sufficiently different from those provided previously by CCL. 

The key differences between the services provided by CCL and SAT were: 

  • CCL provided support in 10 unstaffed houses, whereas SAT operated the service from 2 hostels which were staffed overnight;
  • CCL support workers worked 9am-5pm whilst SAT support workers worked from 7am-7pm; and
  • Under CCL, residents were expected to stay for 12 months and could stay for up to 24 months. Under SAT, residents could stay for a maximum of 112 days. 

The Employment Tribunal found that TUPE did apply and the Employment Appeal Tribunal agreed, dismissing SAT’s subsequent appeal.  It held that the tribunal judge had steered “a correct course between the twin dangers of overgeneralization and pedantry”, finding that activities should be given their ordinary everyday meaning and must be defined in a common sense and pragmatic way. It went on to state that an excessively detailed definition of activities would risk defeating the purpose of the service provision change requirements. Despite the differences between how the services were provided by CCL and SAT, they were found to have remained fundamentally the same and not to have altered to a material extent. 

The main purpose of TUPE is the protection of employees on a transfer. This case reconfirms the broad interpretation that courts tend to adopt when considering the application of TUPE to a service provision change. If the new service provider will be undertaking very similar activity with similar outcomes to the old service provider, the services will likely be regarded as fundamentally the same even if there are some differences in the way the services are provided. 

Employers should be aware that it is not easy to avoid the application of TUPE. Incoming service providers may be wise to assume that TUPE will apply unless very material alterations are made to both the manner and the nature of the activities being carried out.  

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Stephanie Dale, Kerry Garcia

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