Ward Hadaway Solicitors v Capsticks LLP and ors

A “service provision change” under the 2006 Transfer of Undertakings (Protection of Employment) Regulations (TUPE) applies to a situation in which “activities” carried out by one person are then carried on by someone else, post transfer. In Ward Hadaway Solicitors v Capsticks LLP and ors, the Employment Appeal Tribunal (EAT) said that the “activities” being carried out by a contractor must actually “cease” for the regulations to apply.

Basic facts

Ward Hadaway, a firm of solicitors in Newcastle, was contracted by the Nursing & Midwifery Council (NMC) to carry out investigative and advocacy work on its behalf. There was no obligation on the NMC to allocate any work to them, nor was there any obligation on the firm to accept. In 2005, for example, the NMC did not allocate any work for six months.

In 2007 the NMC decided to tender out the work and chose another firm of solicitors, Capsticks. It did not give any more work to Ward Hadaway after October 2007, but two members of staff continued to work on their existing case files for at least six months and were still working on two major cases at the end of March 2009. Only new work went to Capsticks and no employee transferred.

The two employees were dismissed and claimed unfair dismissal. This raised the issue as to whether there had been a relevant transfer under Regulation 3 of the TUPE provisions to decide the question of which firm was liable to pay their compensation.

Relevant law

Regulation 3 states that a service provision change occurs when “activities” which were being carried out by one contractor on behalf of a client “cease” and are then carried by another contractor.

The legislation states that there must have been an “organised grouping of employees ...which has as its principal purpose the carrying out of the activities concerned on behalf of the client” just before the service provision change.

Tribunal decision

The tribunal said that the “activities” carried out by Ward Hadaway were restricted to cases in which they had been given and had accepted instructions. In other words, they did not apply to future potential cases.

As those activities had not “ceased” when the contract was reallocated, there could not be a service provision change under the 2006 Regulations.

It concluded that “…it cannot be said that the services provided by Capsticks would have been provided by Ward Hadaway but for the “transfer”. As we have found there was no obligation on the NMC to have given the work to Ward Hadaway in the first instance.”

EAT decision

The EAT agreed with the tribunal’s finding that the “activities” carried out by Ward Hadaway on behalf of the NMC did not “cease” in 2007.

It also agreed that the definition of “activities” could not include the expectation of new work, not least because Ward Hadaway had continued to do “work in progress” in 2005 while not expecting or taking new work for six months.

As the identification of the “activities” was a question of fact for the tribunal (as opposed to law), it could not be overturned on appeal unless it was perverse which it quite clearly was not in this case.

Comment

The introduction of a service provision change into the 2006 TUPE regulations has resulted in more TUPE- related tribunal claims. This decision gives helpful guidance on what issues tribunals should focus on in such cases. In this case, there was no TUPE transfer because none of the work in progress transferred and no employee transferred. If the work in progress had transferred there may well have been a different outcome.