TUPE Tuesday: service provision changes

Hello and welcome to our TUPE Club podcast.

This is the second podcast in our "TUPE Tuesday" mini-series, which we've put together to bring you up to speed with the important TUPE news this year in TUPE Club.

There are four podcasts in this series, the first one was last Tuesday, and a new one will be released every Tuesday, until 6 December 2022.

For the first three podcasts, we're looking at a key appeal level TUPE case, and then in the final podcast, we'll look forward to what developments might be coming down the tracks in 2023.

I'm Siobhan Bishop, a principle associate in the Employment, Labour & Equalities team at Gowling WLG and this week, in "TUPE Tuesday", I'll be talking about a case on Service Provision Change and whether the activities pre and post transfer were fundamentally the same.

So, this week's case is Tuitt v London Borough of Richmond Thames.

In this case, the Employment Appeal Tribunal confirmed that the CCTV related activities pre and post transfer were not fundamentally the same and there was no service provision change under TUPE, and the relevant employee did not transfer.

So I think it's helpful to have a quick reminder of the main TUPE issues which are relevant here:

So, under TUPE, there are two types of transfer - a business transfer and a service provision change. For there to be a service provision change, the activities carried out after the transfer must be 'fundamentally' the same as those carried out before the transfer.

The 2014 amendments to TUPE added a provision that refers to the service provision changes which are set out in regulation 3(1)(b) to activities being carried out instead by another person (including the client) are to activities which are fundamentally the same as the activities carried out by the person who has ceased to carry them out (regulation 3(2A)).

The statutory test and case law shows that the key issue is identifying the activity undertaken and whether it has changed after the alleged transfer and, if so, by how much?

Previous case law confirms that those activities need not be identical; it will be sufficient if they are 'fundamentally or essentially the same as those carried out' by the alleged transferor. This was confirmed by the EAT in Metropolitan Resources Ltd v Churchill Dulwich Ltd case in 2009.

In the Tuitt case, the EAT upheld the Employment Tribunal's finding that the claimant's employment did not transfer under TUPE because the activities carried out before and after the alleged transfer date were not fundamentally the same.

It also said that the explanation or reasons behind the change are not directly relevant unless they showed some deliberate engineering to avoid TUPE.

In this case, as the activity was fundamentally different, it didn't matter why that was the case, or whether it arose from staff's availability or capacity to take on additional duties or for other reasons.

Now the question as to whether the activities are "fundamentally the same" is one of fact and degree for the tribunal's assessment, and so it is very helpful to have examples to consider when looking at a particular situation that you might be dealing with.

So, given that the facts and circumstances of the case are always relevant, let's have a look in detail the background.

Ms Tuitt was employed by Broadland as a CCTV monitoring operator from 2005 until 30 June 2018.

Now from 2005 to 2018, the local authority outsourced its CCTV monitoring to Broadland. The CCTV operatives working on the CCTV proactively monitored 12 screens for 12 hours, over the period of a night. They reported any suspicious behaviour to the police, and they also responded to safety-related calls from the police, businesses and from the public.

In 2018, Broadland gave notice to the local authority to end the contract. When the contract ended, the local authority, which was facing mounting pressures to make budget cuts, chose to divert the CCTV funding, and the local authority no longer employed full time CCTV operatives.

So what they did instead, was to provide some CCTV services but any future CCTV monitoring would need to be done by the local authority's Careline operative who was on duty, and who also happened to work out of the CCTV monitoring room.

However, the Careline work was to take priority over any CCTV monitoring. So, in reality, on any given shift, the Careline operator on duty was already 'overloaded' with time consuming calls in relation to vulnerable residents. The Careline work would routinely take up to 95% of the on duty operative's time and so they were only able to perform 'minimal' CCTV monitoring. The Careline staff could only provide reactive support as a result and, even then, the majority of calls went unanswered. As there was only one Careline operator who worked each night, there was vastly less CCTV monitoring performed overall than previously, and at all times the Careline work took priority. So, any CCTV monitoring which the staff member managed to do, was very limited and reactive only.

However, Ms Tuitt claimed that the local authority's Careline staff, who had previously worked alongside her in the control room, and who now undertook the CCTV monitoring, were providing essentially the same activities that were carried out after the alleged transfer as she had undertaken beforehand.

The local authority argued that there was no service provision change because the activities carried on or after the transfer were fundamentally different.

So what did the Employment Tribunal say at first instance?

At a high level, the Local Authority was continuing to provide CCTV monitoring services of sorts, but that was the extent of any similarity in the activities.

The monitoring which took place before by Broadland was fundamentally different and the Local Authority no longer engaged a company to provide CCTV operatives.

It wasn't only the amount of monitoring which significantly reduced, but the type of monitoring changed considerably as well. It was important that there was no 'proactive support' which previously had been a large part of the role.

The CCTV cameras were not checked and there was no routine surveillance of areas in which the cameras were situated. Calls from the police and public were unanswered and the local authority could no longer routinely provide the previous service. So, proactive support was really a key part of Ms Tuitt's role, and that had effectively disappeared over night.

However, it also said that there was no deliberate action on the local authority's part not to fund the service to prevent TUPE applying. It was simply that the demand on the local authority's budgets meant that the money for the service unfortunately disappeared to pay for something else. There had been a genuine attempt to cut costs across the board in light of budget constraints which the local authority faced.

Ms Tuitt appealed to the Employment Appeal Tribunal and claimed that the Employment Tribunal had been wrong to conclude that the activities pre and post transfer were not fundamentally the same.

So turning to the decision at the Employment Appeal Tribunal.

Ms Tuitt had claimed a number of things at this level, including that the tribunal's approach to the categorisation and identification of the 'activities', and the comparison between activities before and after the change of providers was wrong and too pedantic.

In particular, she claimed that the fact that Careline staff performed additional duties or functions did not prevent there being a service provision change. So, the fact that the employee availability was limited was irrelevant and should not have been taken into account by the Employment Tribunal; the activity itself was still there to be done.

She also appealed on the grounds that there had been an error of law and/or perversity in the tribunal's conclusion that there was no deliberate action on the part of the local authority to avoid TUPE from applying.

So, the EAT helpfully reviewed the case law and noticed some key points, which I think is worth mentioning.

The case law reiterates that whether the services are fundamentally the same is a question of fact and degree.

In considering whether the activities undertaken after the alleged transfer are fundamentally the same as those carried out before it, minor differences between the two will not prevent a service provision change.

On the one hand, the activities should not be defined at such a level of generality that they do not really describe the specific activities at all. So on the other hand to that, the definition should be holistic, it should have regard to the evidence in the round, and avoid too narrow a focus and deciding matters in a pedantic way.

If there was an excessively detailed definition of activities, that could risk defeating the purposes of this service provision change provisions.

So, if there was an addition of some additional duty, or function, its unlikely to prevent there being a service provision change (unless the addition meant that they were no longer essentially the same).

However, it's not a question of simply asking whether the activities carried the same label and that label continued after the alleged transfer. As we know in many areas, labels (and job titles for example) do not always reflect the reality of what is being done on the ground.

The Tribunal must make a factual assessment and it must consider both the character and types of activities which were carried out but also the quantity of activities. A substantial change in the amount of the particular activity that the client requires could show that the post transfer activity is not the same as it was pre transfer. Where the volume of work undergoes a substantial reduction that may lead to the conclusion that the activities being carried out are not essentially the same as before, even if the same categories of work apply.

The EAT upheld the tribunal's findings in this case and that there was no service provision change from Broadland back to the local authority, because the activities pre and post transfer in this case were fundamentally different.

And we've touched on a number of those reasons, that they were essentially fundamentally different for quite a few reasons, including:

1. Broadland had provided the full-time CCTV operator between the hours of 6 pm and 6 am, and their entire role was to proactively monitor the CCTV footage on the 12 control room screens and to respond to safety-related calls from a variety of sources - the police, pubs, clubs and high street stores. And there was "a great deal" of proactive monitoring.
2. After the alleged transfer date, any monitoring of the cameras was done by the one single member of Careline staff who was on duty and it was merely in addition to their main Careline duties. The Careline duties of the existing staff were not merely something additional to the CCTV duties which had existed beforehand. The Careline duties were at the heart of the activity that was being undertaken by the Careline employees. And they were already "overloaded with Careline duties'' and therefore the extent to which they were able to perform CCTV monitoring was "minimal".
3. Any CCTV monitoring that they did perform was "only reactive" and that even then, they couldn't get to many of the calls. The Local Authority's Careline staff were not performing the majority of the duties carried out by Broadland.
4. So, not only did the amount of monitoring undertaken reduce very considerably, but also the type of monitoring that was undertaken changed considerably; in particular, this proactive monitoring which had disappeared, and that had played a huge part of the Claimant's role, and had effectively vanished.
5. The Employment Tribunal had found that the Local Authority's Careline staff were not performing the majority of the duties carried out by Broadland. And it was far from the case that the Careline duties were simply additional. As such, the activities pre and post transfer were fundamentally different, there was no service provision change and the employment did not transfer under TUPE to the local authority.

The EAT also rejected her claims that the change in activities had been engineered to avoid TUPE applying. It said that there was simply no evidence that the decision not to employ full time CCTV operatives was driven by anything other than the budgetary pressures which were faced by the local authority. There was no deliberate action on the part of the local authority to avoid TUPE applying to her employment. In fact, Broadland was the party who terminated the contract and the Local Authority needed to make budget cuts. There had been a genuine attempt to cut costs across the board in light of budget constraints.

The reasons behind any change are only directly relevant if they indicate a deliberate engineering to avoid the consequences of TUPE.

Now, Ms Tuitt did try to appeal again to the Court of Appeal but her application for permission to appeal was refused on the papers in October 2022.

So, in conclusion, it's really helpful to look at this case for guidance on factors to be considered when determining whether pre and post transfer "activities" are fundamentally the same. Clearly, each case will be different but this is a useful example of where an activity was no longer fundamentally the same.

It is also an example of the importance of drilling down and understanding what the activities actually entail, especially if they could appear to be the same on the surface. Just because the label "CCTV monitoring" was added to a Careline operative's list of duties, that did not necessarily mean the CCTV monitoring activity carried out before and after the transfer was fundamentally the same. While it is true that the activities do not need to be identical; they do still need to be "fundamentally the same", which is a question of fact and degree for the tribunal's to assess and for the parties to attempt to assess before deciding whether TUPE applies.

As was the case here, there was a significant change from a full, predominantly proactive, monitoring service to a very limited and minimal, reactive service, meaning it was no longer fundamentally the same activity. So, Ms Tuitt's employment did not transfer to the Local Authority and she did not succeed in claiming that there was a service provision change.

Thank you for joining us for and please join us again next week for our third instalment of the "TUPE Tuesday" podcast.

If you want to catch up on last week's "TUPE Tuesday" podcast, it is available on our website and covers the Employment Appeal Tribunal case of Clark v Middleton on TUPE information and consultation.

Next week, we'll be looking at the issue of providing share incentive plans post transfer, even where there is no contractual right to participate in the scheme.

And of course in the meantime, if you have any questions, please do contact one of the team. Thank you.