Law Society of England and Wales v Secretary of State for Justice & Anor

For a transfer to fall within the Transfer of Undertakings (Protection of Employment) Regulations 2006, there must be an economic entity whose identity is retained. The assessment is multifactorial and depends on the reality of what passes from the former operator to the new one. Similarity of activities alone is insufficient.

The transfer of a regulatory complaints function from a profession-linked body to an independent statutory ombudsman body did not retain the former entity’s identity. The Regulation 3(5) exception applied where administrative functions were transferred between public administrative authorities. A Cabinet Office policy statement was not legally binding and could not be authoritatively applied through a premature declaration concerning a future ministerial decision.

The Law Society sought declarations concerning the proposed cessation of its Legal Complaints Service and the establishment of the Office for Legal Complaints under the Legal Services Act 2007. It argued that the transfer engaged the TUPE Regulations, that the Regulation 3(5) exception did not apply, and that the Cabinet Office Statement of Practice on staff transfers applied.

The defendants contended that no relevant transfer would occur because the economic entity would not retain its identity. Alternatively, they relied on the transfer of administrative functions between public administrative authorities. The central issues were whether the LCS undertaking constituted an economic entity retaining its identity, whether Regulation 3(5) applied, and whether any declaration concerning the policy statement should be made.

1. No relevant transfer under Regulation 3. LCS was an undertaking and, in the broad sense required by Regulation 3(2), pursued an ancillary economic activity. Its central function was regulatory, but it provided an ancillary service connected with the economic activity of solicitors. The question whether there was a transfer required a multifactorial factual appraisal, including the undertaking’s organisation, workforce, assets, customers, activities and the degree of continuity.
2. The identity of LCS would not be retained by OLC. OLC was established as an independent statutory ombudsman body, structurally and functionally distinct from the Law Society’s self-regulatory complaints service. LCS assets, premises and existing complaints would not pass to OLC. Although the organisations would process similar complaints, OLC had materially different jurisdiction, standards, enforcement powers, procedures and institutional independence. Similarity of activity and the possible recruitment of LCS staff were insufficient.
3. Regulation 3(5) applied in any event. LCS was a public administrative body because it exercised statutory, quasi-judicial and reviewable regulatory functions. Its complaints-redress function was administrative rather than economic. OLC was statutorily assuming those administrative functions. The transfer therefore fell within the Henke exception.
4. COSOP. The Cabinet Office Statement of Practice was a non-binding statement of Government policy. It did not create enforceable rights and could not fetter a minister’s future discretion. The court declined to determine definitively whether it applied to the LCS/OLC arrangements. The issue was premature, no unlawful decision had yet been made, and any future decision could be reviewed in its factual and statutory context.
5. The claims were dismissed. The parties agreed that costs should follow the event, with interim payments on account. Declarations were issued only as a helpful summary of the judgment for affected employees.

First-instance decision. No prior appellate decision was stated in the judgment.