The Salvation Army Trustee Company v Bahi & Ors (Transfer of Undertakings: Service Provision Change) September 2016) [2016] UKEAT 0120_16_0109

EAT
The Salvation Army Trustee Company v Bahi & Ors (Transfer of Undertakings: Service Provision Change) September 2016)
[2016] UKEAT 0120_16_0109 · 2016-09-01
[1]This appeal is concerned with the concept of service provision change (hereafter “SPC”) in the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). The concept is defined in Regulations 3 and 4 of TUPE , which, so far as relevant, provide as follows:
“3. A relevant transfer (1) These Regulations apply to - … (b) a service provision change, that is a situation in which - (i) activities cease to be carried out by a person (“a client”) on his own behalf and are carried out instead by another person on the client’s behalf (“a contractor”); (ii) activities cease to be carried out by a contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person (“a subsequent contractor”) on the client’s behalf; or (iii) activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by the client on his own behalf, and in which the conditions set out in paragraph (3) are satisfied. … (2A) References in paragraph (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. (3) The conditions referred to in paragraph (1)(b) are that - (a) immediately before the service provision change - (i) there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client; (ii) the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; and (b) the activities concerned do not consist wholly or mainly of the supply of goods for the client’s use.”
[2]This appeal is particularly concerned with Regulation 3(1)(b)(ii) and Regulation 3(2A). It is argued that the Employment Tribunal incorrectly defined the activities that were carried out prior to cessation and incorrectly concluded that fundamentally the same activities were carried out by the subsequent contractor. The appeal is brought by The Salvation Army Trust Company (hereafter “SAT”). By a Judgment dated 28 August 2015, Employment Judge Alliott declared that the contracts of employment of four persons were transferred to SAT from Coventry Cyrenians Ltd (hereafter “CCL”). SAT appeals against that Judgment. The Background Facts[3]The Claimants were employed by CCL, a charity. They worked in a department called the Adult Services Team. Mrs Gordon was the team manager; the others were three support workers. Coventry City Council provided a range of services to homeless people. Mrs Gordon worked mainly and the three support workers almost entirely in connection with two contracts between CCL and the Council to provide “accommodation based support” for men and women. Under these contracts, made in 2009, CCL was required to provide 25 units of accommodation for homeless men and 16 units of accommodation for homeless women. The units of accommodation were in ten houses of multiple occupation at different locations in Coventry. The cost of accommodation would be usually be paid by housing benefit. The contract was for the support.[4]CCL’s work under the contract involved the following. First, CCL would make an assessment of potential service users. Secondly, if and when they were accepted, CCL would allocate a support worker to them while they lived in a house of multiple occupation. The support worker would produce an individually tailored support plan and support them in accordance with that plan. Thirdly, CCL would provide what is known as “floating support”: that is, further support once a service user moved on into other accommodation, generally in the private sector.[5]The Employment Judge did not describe the support work in detail, but it is described in my papers, and there is no dispute about it. It could include such matters as liaison with other agencies, assistance to solve problems with benefits and form filling, helping with budgeting and monetary management and addressing a variety of issues such as alcohol and drug misuse, offending behaviour, mental health, healthcare and disability. It could include help with accessing education, work, leisure activities and developing domestic/life skills. When service users moved on, it could include help with maintaining a tenancy. The expectation was that service users would be moved on to other accommodation. The service users were expected to be at the service for a maximum of 12 months, with many service users moving on after 6 months. The contract provided, however, that a service user could stay for up to two years.[6]The Council had provided its services to the homeless through a network of 22 separate contracts with different providers. It wished to do away with the 22 separate contracts and merge the provision of homelessness and ex-offender support through a single point of access. It also wished to improve the throughput of individuals so that there would be a quicker supported return to private accommodation. It tendered out a contract for this purpose during 2013. SAT was awarded it in October or November 2013 with a start date on 1 April 2014. For a while it seemed likely that CCL would be taken on by SAT as a subcontractor, but in the event this did not occur. SAT acquired large hostel premises, which, combined with its own hostel, provided units sufficient for the purposes of the contract. There had been nothing in the contract with the Council to require SAT to use hostels, but there would be obvious advantages of economy and scale.[7]With effect from 1 April 2014 SAT operated the overall service in the following way. There was an assessment centre or hub that dealt with all referrals. Where possible, low- to medium-needs service users would be found private accommodation with floating support. Otherwise, service users would be admitted to an assessment unit and a support care plan produced. The service user would then go to accommodation. If this was supported accommodation, it would be one of the two large hostels. The hostels would be staffed overnight, but support workers would attend between 7.00am and 7.00pm. Support services could be delivered more efficiently at two sites than in accommodation over ten sites. So, support work did continue but at two sites not ten.[8]There were other differences in the service from 1 April 2014 onwards. For example, the service was provided to those over the age of 25 rather than over the age of 18 as before. The service was to be delivered in supported accommodation for 112 days rather than the longer period before. The usual hours of support workers ranged from 7.00am and 7.00pm rather than 9.00am to 5.00pm as before. The Employment Tribunal Hearing and Reasons[9]The Employment Tribunal hearing took place over five days in December 2014 and June 2015. The Employment Judge heard evidence from five witnesses. He had substantial relevant documentation, including key parts of the relevant contracts. He received written closing submissions from the parties’ representatives. Although SAT’s submissions were wide-ranging, a key part of them was that the services were no longer provided through what SAT described as “dispersed accommodation”; that is to say, the 10 houses of multiple occupation that CCL operated in Coventry. I should make it clear that this use of the word “dispersed” has nothing to do with policies of dispersal that are sometimes discussed and controversial. All the houses were within Coventry. The service users were not being widely dispersed. They were simply in houses of multiple occupation as opposed to hostels.[10]The Employment Judge set out the law in paragraphs 6 to 12 of his Reasons. No issue is taken by SAT with his summary of the law. It is a lucid summary of the relevant statutory provisions and principles. It is, I think, important to quote paragraph 12 from this summary:
“12. … What I do draw from these cases in a general way is as follows: (i) Any definition of an activity cannot be too general and simplistic, e.g. “the provision of food”, and what was actually done needs to be examined. (ii) Equally, the definition of activity cannot be too narrow in that changes in premises or the nature and quantity of activities or the time over which such activities take place do not necessarily mean that the activities are not fundamentally the same.”
[11]The Employment Judge then set out in paragraphs 14 to 32 findings of fact on which I have already drawn in this Judgment. Again, no issue is taken with his findings of fact. It is an accurate, necessarily selective, summary of a great deal of material.[12]The Employment Judge then turned to his conclusions in paragraphs 33 to 39. He described the activities prior to 31 March 2014 as being (paragraph 33) “the provision of accommodation based support for homeless men and women”. Later, he said that (paragraph 37):
“37. … the fundamental activity is the provision of accommodation and the input of a support worker to facilitate the individual returning to mainstream private accommodation. …”
[13]He also said that (paragraph 38):
“38. … the fundamental activity was to move on the service user to private accommodation as soon as reasonably practicable. …”
[14]The Employment Judge found that the Claimants constituted an organised grouping of employees having as its principal purpose the carrying out of these activities. There is no appeal against the Employment Judge’s finding that the Claimants constituted an organised grouping of employees. The Employment Judge said this about what he described as “the key issue in this case” (paragraph 34):
“34. … The key issue in this case is whether the activities that ceased to be carried out by [CCL] were carried out instead by [SAT] on behalf of Coventry City Council. For this purpose, I need to consider whether the activities are fundamentally the same.”
[15]In the succeeding paragraphs the Employment Judge set out and considered differences between the activities carried out by CCL and the activities carried out by SAT. There was a difference in the ages covered, but the lower age band had covered only a small proportion of the activities. The Employment Judge did not consider that “the difference is fundamental to that activity” (paragraph 35). The introduction of a “hub” single point of referral was a new feature, but he did not consider that it was a “fundamental change in the activity” (paragraph 36). There was a change in the maximum duration for which a service user could remain in supported accommodation. He said he did not consider this to constitute “a difference that would cause me to consider that the activities were not fundamentally the same” (paragraph 38).[16]It was in paragraph 37 that the Employment Judge considered SAT’s point about dispersed accommodation. I shall quote this paragraph in full:
“37. In the event that supported accommodation was assessed as appropriate, so the first Respondent would accommodate the individual in a house of multiple occupation which has been referred to as dispersed accommodation. Once in that occupation the individual would receive input from a support worker in office hours. Whilst the accommodation was not staffed 24 hours a day there was a 24 hour support available if necessary. Service users were supported across a range of needs and encouraged and assisted in returning to private accommodation. As far as the second Respondent was concerned following the hub assessment, if it was deemed appropriate for an individual to go into supported accommodation, that individual will be referred to one of the multi-unit hostels. There, there would be a 24 hour concierge service and support workers would support the individual between the hours of 7 and 7. In my judgment the fundamental activity is the provision of accommodation and the input of a support worker to facilitate the individual returning to mainstream private accommodation. I do not consider that the 24 hour concierge attendance compared with the on call 24 hour support is a fundamental difference between the two activities. Neither do I consider the fact that so-called dispersed accommodation was offered before and that hostel accommodation was offered afterwards constitutes a fundamental difference in activity. I find that the fundamental activity was the provision of accommodation. The outcomes by which Coventry City Council measured the provision of the service were identical both before and after the change.”
[17]He concluded as follows (paragraph 39):
“39. Consequently, I find that the activities that [CCL] ceased to carry out on behalf of Coventry City Council were fundamentally the same as the activities carried out instead by [SAT] on behalf of Coventry City Council. I further find that Coventry City Council intended that those activities would, following the service provision change, be carried out by [SAT]. Indeed, it is noticeable that in the contract tender documentation reference is made to the application of TUPE provisions.” “Activities”
[18]On behalf of SAT, Mr Jonathan Gidney first submits that the Employment Judge erred in law in his definition of the activities carried out by CCL. He submits that the Employment Judge ought to have defined the activities in the manner for which SAT contended as “the provision of long-term dispersed accommodation based support for homeless men and women”. The omission of reference to “long-term” and “dispersed” was indicative of an error of law. The Employment Judge’s description of the activities was too general and simplistic. The facts that support was given at 10 dispersed homes as opposed to two hostels and was given for up to two years as opposed to 112 days were key aspects of the activity. They indicated that dispersed accommodation was for those with a low level of need for support. As to the meaning of “activities”, he seeks to derive support from OCS Group UK Ltd v Jones UKEAT/0038/09.[19]On behalf of CCL and Mrs Gordon, Mr Iqbal Mohammed submits that the Employment Judge approached his task correctly. He set out in paragraph 12 a broad approach to the definition of “activity”, which was entirely appropriate. He applied this definition in his conclusions. These show that the Employment Judge did not define the activities simplistically or narrowly, but with proper reference to the contract documents, the actual work undertaken and the requirements of the contract provider. The Employment Judge was plainly right not to find that the provision was long-term; it was to be for an average of six months, and the Employment Judge permissibly found that CCL had already been moving to a shorter duration. The Employment Judge was right to concentrate on the activity of support itself. Whether it was carried out at two locations or ten was not a critical feature, especially when the Council had not specified it to be so. Mr Mohammed referred to familiar cases on the limited role of an appellate Tribunal vested only with jurisdiction to entertain questions of law.[20]On behalf of the remaining Claimants, Ms Jenny Andrews supported those submissions. She drew particular attention to the recent decision of the Employment Appeal Tribunal in Arch Initiatives v Greater Manchester West Mental Health NHS Foundation Trust UKEAT/0267/15 for its consideration of “activities” and for the proposition that the assessment of activities and whether they are fundamentally the same is a matter of fact and degree for the Employment Tribunal.[21]I prefer the submissions of Mr Mohammed and Ms Andrews. I consider that the Employment Judge approached this question correctly as a matter of law and that his assessment is not open to appeal on any legal ground.[22]The words in Regulation 3(1)(b), including the word “activities”, are to be given their ordinary, everyday meaning (see Arch Initiatives at paragraph 19). In the context of Regulation 3(2), the activities must be defined in a commonsense and pragmatic way (see Metropolitan Resources Ltd v Churchill Dulwich Ltd [2009] IRLR 700 at paragraph 36). On the one hand, they should not be defined at such a level of generality that they do not really describe the specific activities at all. Thus it would be wrong to characterise a fully catered canteen as merely the provision of food to staff (see OCS Group at paragraph 22). On the other hand, the definition should be holistic, having regard to the evidence in the round, avoiding too narrow a focus in deciding what the activities were (see Arch Initiatives at paragraph 38). A pedantic and excessively detailed definition of “activities” would risk defeating the purpose of the SPC provisions.[23]This, to my mind, is precisely the approach that the Employment Judge followed: see paragraph 12 of his Reasons, which steers a correct course between the twin dangers of overgeneralisation and pedantry. I see no error of law in his approach. Contrary to Mr Gidney’s submissions, I do not think that the Employment Judge forgot this correct legal approach when he reached his conclusions. He was not obliged to find the activities to be limited to the long-term. On the contrary, many service users were moved on relatively quickly, and the expectation was that they would be moved on within 180 days. He was not obliged to define the activity by reference to the locations where it was carried out. The Council’s contract permitted the activity to be carried out either in the existing houses of multiple occupancy or at some different location or locations. The support continued. It did not dissipate because the houses of multiple occupancy were no longer in use. The Employment Judge reached a conclusion that was entirely permissible. It was a question of fact and degree for his decision. “Fundamentally the Same”[24]Mr Gidney’s second submission is that the Employment Judge erred in law by replacing the statutory definition, which requires that activities before and after the putative transfer be substantially the same, with a test of his own. He refers to four passages in the Reasons of the Employment Judge. At paragraph 35 the Employment Judge said that he did not consider the difference to be “fundamental to that activity”. At paragraph 36 he used a similar phrase. At paragraph 37, which, again, I have already quoted, the Employment Judge said that the features in question did not constitute fundamental differences between the activities. Mr Gidney submits that this is indicative of an error of law by the Employment Judge. He should have asked whether the activities were fundamentally the same. By asking whether there were fundamental differences between them he left out of account a middle category. It was possible that the activities were neither fundamentally the same nor fundamentally different. The Employment Judge’s formulation did not allow for this possibility. It was only if the activities were fundamentally the same that Regulation 3(2A) was satisfied. Mr Gidney submits that the Employment Judge’s formulation made it easier to discount differences between activities than Parliament had intended.[25]I have no hesitation in rejecting this submission. It is entirely plain that the Employment Judge correctly directed himself in law. He stated the law correctly in his summary of the law; he stated the issue correctly at paragraph 34; and he stated his conclusion correctly at paragraph 39. I consider that it is entirely plain from the Employment Judge’s Reasons as a whole, and from paragraph 37 in particular, that he used the language of “fundamental difference” in antithesis, in direct opposition, to the phrase “fundamentally the same”. He was rejecting the contentions of SAT that the features in question were such that the activities were not fundamentally the same. Whether the concepts of fundamental similarity and fundamental difference could ever be used in relation to a particular subject other than in antithesis is a semantic question that I need not resolve on this appeal. I am sure that the Employment Judge used the terms as direct opposites here and that he never strayed from the correct legal test. Concluding Remarks[26]I have dealt with SAT’s two grounds of appeal against the Judgment of Employment Judge Alliott. A third ground was dismissed at a Preliminary Hearing. It follows that the appeal must be dismissed.[27]I would add one further comment as I leave this appeal. The Employment Judge remarked, in effect, that it was unfortunate to find two charities in receipt of public donations and taxpayers’ money in a dispute of this kind occupying significant time before an Employment Tribunal and significant resources for the parties. I agree. I have no doubt that on both sides the opinion as to whether there was a TUPE transfer was honestly held. The dispute was a genuine one. In my experience disputes of this kind are not uncommon. It seems to me that some form of speedy dispute resolution (whether by a “fast track” Employment Tribunal or by some form of agreed procedure to which the parties subscribe) is highly desirable. It would enable the putative transferor and transferee - and employees - to know their position speedily. Quite apart from the expense incurred by the putative transferor and transferee, employees are left in real difficulty when disputes of this kind are not resolved. Sometimes a putative transferee will not take on employees, even where there is available work, because it is keen to hold the position that there has been no TUPE transfer. I do not underestimate the problems in designing a system of speedy dispute resolution. It would require careful thought and the guarantee of a judge or arbitrator (I use the term in a non-technical sense) who has real familiarity with TUPE issues. It is not something that can easily be arranged by parties when a dispute of this kind actually arises. But it would be a better way of resolving disputes such as this than a “set piece” Employment Tribunal occupying significant time and resources and producing a decision long after the events in question.