When it comes to service provision changes one of the central issues for the incoming and outgoing provider to determine is whether the activities performed are ‘fundamentally the same’ before and after the change. That will determine whether or not TUPE applies and so whether employees transfer over. In a useful case, the EAT has ruled TUPE does not apply when the activity is fundamentally different due to staff availability. We’ll consider that.
The case is Tuitt v London Borough of Richmond which centred on Richmond Council’s insourcing of CCTV monitoring services previously carried out by a company called Broadland over a period from 2005 to 2018. The claimant, Lucille Tuitt, was employed by Broadland as a CCTV operator. The issue was whether her employment transferred from Broadland to the council by virtue of TUPE.
The facts, briefly. Tuitt’s job was to operate and monitor surveillance cameras situated around the borough in order to safeguard the public, prevent and detect crime. She proactively monitored 12 screens from the council’s control room which was shared with staff working principally for the Careline operation provided by the council. In 2018 Broadland gave notice to end the contract and so the council decided to take the service inhouse. To save costs, the council decided not to employ full-time CCTV operatives but, instead, to farm out the monitoring of the cameras to the Careline staff. Those staff were already overloaded with other duties and so the extent to which they were able to perform CCTV monitoring was minimal, so a lot less monitoring was carried out and, even when it was being done, the range of activities was significantly reduced. The claimant brought a claim alleging that there had been a service provision change for the purposes of the 2006 TUPE Regulations on the basis that the Careline staff were carrying out essentially the same activities that she had carried out previously, and that she had been automatically unfairly dismissed.
Both the employment tribunal at first instance and the EAT on appeal rejected that. They said that the focus should solely be on the activities before and after the alleged transfer and not the reasons for any changes, which in this case were down to staff availability.
Inevitably, these cases turn on their own facts – so whether activities are fundamentally the same before and after the transfer is a factual question. In this case the decision was that TUPE didn’t apply, but in our view it’s a case that could easily have gone the other way which shows how difficult it can be for transferees in these situations to know whether or not they will be inheriting staff when a service is brought inhouse. So why might this case have gone the other way? On the line from Glasgow, Gill Ross:
Gill Ross: “Well, when you look at it, the claimant was a CCTV operator, she was working for a contractor that was providing those services to London Borough, and when she assessed the situation, from her perspective, that activity was being insourced by London Borough, and those activities were still going to be carried out by them. So, you know, from a simple point of view, the activities weren't disappearing, they were still going to be carried out, they were going to be carried out by London Borough on their own behalf and, on the surface, then a service provision change could be applicable under TUPE. So, I think, looking at the basic facts where the, you know, the activity was being insourced, I can I have some sympathy with her argument that TUPE should have applied in that situation and she should have transferred over to London Borough.”
Joe Glavina: “Putting yourself in the position of the transferee, this case shows it can be very difficult to be certain whether or not you’ll be inheriting staff when a contract ends and the service comes inhouse. How does the tribunal arrive at a view on that question, and is there anything the transferee can do to protect its position?”
Gill Ross: “What the tribunal said in this case, and what the Employment Appeal Tribunal says, and what they really focus on in all these service provision change cases - and we've seen quite a lot of case law on this - is the activities pre-transfer and post-transfer, they will do a factual analysis of what the activities are, how they're carried out pre-transfer, and then look at the possession post-transfer and when they did that in this case - the tribunal did a really detailed analysis that identified a number of differences between the activities such that, you know, there couldn't be a service provision change under the TUPE regulations when they looked at activities post transfer, which ultimately defeated the claim for the claimant. I think what transferees should do in this situation, if they are either insourcing a service, or there's a change of contractor and they are an incoming contractor in that situation, is to almost have an audit, or a paper trail, to say well here are the activities pre-transfer, this is what we're going to do different differently, there's going to be material differences in what we're doing, and that wouldn't be things like a change of location, that wouldn't be enough to be a material difference. Maybe the way they carry it out if they use a slightly different number of staff, or if they use different systems or something, that wouldn't be enough to defeat the application of TUPE. But in a situation like this, where essentially, the service was being carried out by a dedicated group of people who worked full-time on it, fully resourced, to being handed over to a team of people that were overloaded with other work and there's really no possibility of them dedicating any particular time to the activities that were carried out pre-transfer, and they were able to evidence those material differences in that situation. So, if you're an incoming contract, or a client taking a service back inhouse, and you know that there is going to be a fundamental difference between the activities pre and post transfer, if you can have that paper trail and evidence, then if there is subsequently a challenge on TUPE then you have the information there to show here's why it's different, and we knew at the point of transfer that we were going to be cutting out the activities in a completely different way, such that there wouldn't be a service provision change.”
Joe Glavina: “What’s the position where a service is taken back inhouse and the same type of activity is carried out, but there’s just less of it being done. So, you can imagine lots of companies out there taking services back inhouse to save money, and running a very slimmed-down service. Is that a case where TUPE really shouldn’t apply?”
Gill Ross: Yes, that can be a case where TUPE shouldn’t apply as well and I've had that in a couple of instances where clients have come to me for advice to ask, you know, here's what our contractor is doing, here’s what we're going to be doing, it's only going to be, say, 20% of the activity that was previously carried out and in that sort of scenario my advice would be TUPE would be unlikely to apply in that situation. Obviously, there could still be an argument, but where there is a significant reduction such that it's a material difference in the activities that are being carried out pre and post transfer then you know, the likelihood in that case is TUPE won't apply, but it's always one of these ones that you know, we've seen so many cases on service provision changes, the tribunal will do a detailed factual analysis. There's always a risk that TUPE will apply where there's an insourcing, or a change of contractor or an outsourcing for the first time so it’s really about looking at the facts and, you know, coming to your best analysis of the law.”
Joe Glavina: “You mention a figure of 20% - so where just 20% of the previous activity is carried out then TUPE probably won’t apply - but, of course, it’s not a science so who knows what the percentage will have to be for the position to switch round. How do you manage that risk?”
Gill Ross; “It depends on a number of factors, because I guess, if they are insourcing an activity and there's somebody who's working on those activities for the contractor, and they feel actually we need that person's expertise, we could bring them onboard, we could give them other duties to make them into full-time role, that may be something that they want to consider and they might want to say well actually we will just go down the line where TUPE will apply. If, similar to this situation, they are trying to save costs and they don't want to inherit headcount, then it might just be they hold the line and they convey to the potential transferor, TUPE doesn't apply, here are the reasons, set it out very clearly in writing and just hold that line and then if there's any challenge then they have to deal with that at the time. In most circumstances, the existing employer will try and do something with their own employee and either meet them redundant or redeploy them onto another client contract but it can be, sometimes, a case of holding your nerve in this situation and, you’re right, where there is, for example, a reduction in the amount of work that’s going to be carried out, or a reduction in the amount of activities, it can just be a question of fact and degree. So, we can never say with 100% certainty that TUPE won't apply or will apply, so it's just really about analysing everything and getting as much information as we can from the clients to give them the best advice.”
That case is called Tuitt v London Borough of Richmond and is a decision of the Employment Appeal Tribunal. We have put a link to it in the transcript of this programme.