Principal Purpose for TUPE

12 April 2017

This case was about the application of TUPE and, in particular, whether there was a service provision change (SPC) so as to transfer employees from the original provider to the new provider.

Tees Esk & Wear Valleys NHS Foundation Trust v (1) Harland & others (2) Danshell Healthcare Ltd

This case was about the application of TUPE and, in particular, whether there was a service provision change (SPC) so as to transfer employees from the original provider to the new provider. For this to happen there needed to be, immediately before the SPC, an organised grouping of employees which had as its principal purpose the carrying out of the activities on behalf of the client.

The client in this case was an individual, known as ‘CE’, who needed extensive nursing care. The contract for this care was originally provided by the Trust. The employees were part of an organised grouping looking after CE, but as CE’s condition improved, fewer people were needed. The team was retained, and it kept its identity, but the Claimants in this case were rostered to provide care for other service users.

That was the position when Danshell took over the contract. Danshell agreed to employ seven of the employees, but most of them went on to resign or be made redundant. Unfair dismissal claims followed.

During a preliminary hearing, the tribunal found that there was a change in the provision of the service (care for CE) from the Trust to Danshell. It also held that there was an organised grouping of employees who had been put together to provide that service, and that group maintained its identity. However, the principal purpose of the grouping had been diluted; the employees didn’t just work for CE, but for others too. So, there was not a service provision change.

Had the tribunal got the ‘principal purpose’ point wrong? Should it have looked at the reason the group was put together in the first place, rather than at the actual work the employees were doing around the time the new service provider took over?

No, said the Employment Appeal Tribunal. It was right for the tribunal to have focused on the situation immediately before Danshell took over the contract. Although ‘principal purpose’ doesn’t have to mean ‘the only purpose’, the tribunal was entitled to find that the dominant purpose of the organised grouping was, at the time Danshell took over, the provision of care to a range of service users and not just CE.


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