TUPE – Service Provision Changes and Single-Purpose Agencies

The Employment Appeal Tribunal (EAT) has found that not all of the employees of a single-purpose operation offering services to vulnerable people needing support with housing matters formed part of an ‘organised grouping’ for the purposes of Regulation 3(3)(a)(i) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) when the local authority decided to take the services in house (Edinburgh Home-Link Partnership and Others v The City of Edinburgh Council and Others).



Mr McAleavy and Ms Morrison were directors of Edinburgh Home-Link Partnership (HL), which provided the services under a series of annual contracts to Edinburgh Council as its only client. In April 2009, the Council decided to take the activities in house. The transfer was one to which TUPE applied, and it was not in dispute that there was an organised grouping of employees whose contracts of employment would automatically transfer to the Council. Mr McAleavy and Ms Morrison were not included, however, and brought claims for unfair dismissal.



The Employment Tribunal (ET) found that neither of the claimants was assigned to the organised grouping of employees whose principal activity was the provision of the service for which the Council had contracted. In its view, they had both sought to exaggerate the time they spent on direct service provision. Although the ET could not, on the evidence before it, reach a conclusion as to exactly how much time this was, it was clear that their roles were largely strategic, being concerned with the maintenance of the corporate entity as distinct from the delivery of the services, which indicated that their contribution to direct service delivery was small.



On appeal, the EAT upheld the ET’s decision as one it was entitled to reach on the facts of the case.



There was no indication that all the work undertaken by Mr McAleavy and Ms Morrison related to the Council contract. Indeed, it was conceded that work on tendering and several other aspects of their work did not fall into this category. Their function could best be described as ‘keeping the show on the road by attending to the maintenance and subsistence of the HL entity’, which was not an activity for which the Council contracted.



The EAT said that it is not the case that if a link can be demonstrated between the claimant employee and the client work, TUPE must apply. If that were the case, a handyman employed to maintain the transferor’s building or a cook hired to provide nutritional meals for employees to enable them to work efficiently could fall to be assigned to the transferee, without any knowledge of the client or the contract in question.



The correct test is whether or not a particular employee, prior to the transfer, was assigned to the organised grouping of employees that had as its principal purpose the carrying out of the activities for which the client contracted. In this case, Mr McAleavy and Ms Morrison had failed to satisfy the ET that they were assigned to that grouping.