TUPE – service provision changes and the ‘principal purpose’

Jason Braier looks at a recent Employment Appeal Tribunal decision on how and when to identify the principal purpose in relation to service provision changes.

The case of Tees Esk & Wear Valleys NHS Foundation Trust v Harland & Ors (Transfer of Undertakings : Service Provision Change) [2017] UKEAT 0173_16_0303 is a useful case on the ‘principal purpose’ aspect of the definition of a service provision change under Reg 3 of the TUPE Regs. Its facts are accessible and it provides a simple exposition of the relevant principles, that employment lawyers may find useful when explaining this aspect of the test to clients and judges alike.

The facts

The claimants had been employed by the Appellant NHS Foundation Trust for a number of years as part of an organised grouping of 11 employees charged with looking after an individual care user, CE. As time passed, however, CE’s health had improved and the extent of his care needs diminished, so that whilst at one point he needed seven-to-one care, this had reduced first to four-to-one care and subsequently on the whole (save for Fridays) to one-to-one care. Although the care need diminished, the team who had cared for CE were retained and maintained an identity as an organised grouping. However, as CE’s care need lessened, the team was charged with providing for the care needs of other service users as well, and the majority of their time was taken up with other service users.

That was the position as at 5 January 2015.  On that date, the contract to provide CE’s care was taken over by Danshell. The NHS Foundation Trust contended this was a relevant transfer, whilst the claimants contended they remained employed by the NHS (they preferred to remain NHS employees). The NHS Foundation Trust asserted 7 of the 11 employees transferred.  They distinguished those 7 because they had worked more than 75% of their contracted hours with CE in the year to June 2014.

The ET decision

The ET disagreed with the NHS Foundation Trust’s assertion. The relevant date for consideration of the principal purpose was 5 January 2015, not a period ending over 6 months prior to transfer. The ET made a finding of fact that at the date of transfer, the organised grouping of workers was providing C with 125 hours of care per week, but that their contracted hours were 375 per week. They were thus only spending one-third of their contracted hours caring for CE. The ET held that the care of CE by this grouping had become so diluted it was no longer the principal purpose, but was subsidiary to the provision of care of other service users at the care unit. At the time of transfer, the principal purpose was the care of those other service users.

The EAT decision

The EAT (HHJ Eady QC) dismissed the NHS Foundation Trust’s appeal against the ET’s refusal to find there had been a relevant transfer. Concentrating on the final stage of the four stages in Rynda (UK) Ltd v. Rhijnsburger [2015] IRLR 394, and applying the guidance given on that last stage in cases such as Eddie Stobart Ltd v. Moreman and Others [2012] IRLR 356 and more recently Amyrillis Ltd v. McLeod (UKEAT/0273/15/RN (09.06.16, unreported), the EAT held the ET correct to look at the position going into 2015, rather than the year to June 2014.  Save in the case of a temporary cessation of work (which was not the situation here), the appropriate assessment is of the position immediately before the service provision change, recognising that the principal purpose at that point may differ from the historic position.

The EAT grappled with the question of whether one looks at the actual activities of the employees or the transferor’s intention in the organisation of the group. The NHS Foundation Trust argued that its intention in organising the group of employees remained – at the transfer date – CE’s care. The EAT held this was a fact sensitive issue, without a bright-line between the two positions. The activities themselves immediately before transfer cannot be determinative – the example of temporary cessation of work is prescient. However, the TUPE Regs are not primarily interested in the subjective purpose of the putative transferor (although that will be relevant to whether there is an organised grouping and may be of some relevance to purpose), but the principle purpose of the organised grouping in the carrying out of its activities: it is this focus which accords with the wording of Reg 3(3)(a)(i). Where the grouping carries out work other than that subject to the service provision change, or where the grouping comprises far too many employees for the carrying out of the work in question, that may (although it need not necessarily in all cases) point to the principal purpose lying elsewhere.

Practical lessons

The real lesson from Harland is the need to focus principally on the point immediately before transfer. It may be that the historical context gives some flavour to the identification of the principal purpose, but where that historical context provides for a different picture to the actualities at the point of transfer, serious thought needs to be given to whether that indicates there has been a change of principal purpose. In Harland the numerical position was given star billing, though this may not always provide an accurate reflection. One can, for example, imagine an ET properly reaching the opposite conclusion on the same base facts.  It might, for example, have been that all the employees were retained because of their continuing role in CE’s care, notwithstanding the diminution of the hours that each of those employees needed to carry out that role. It might have been that care for others – even if for the majority of contracted hours – was incidental to the need for the grouping to be employed to care for C – for example because they had a particular blend of specialist skills necessary for CE’s care. In those circumstances it would be open to the ET to find the principal purpose of the organised grouping was CE’s care notwithstanding most of their time was spent doing other things.

Jason Braier is a barrister at Field Court. He can be contacted on 020 7405 6114 or This email address is being protected from spambots. You need JavaScript enabled to view it..