Carewatch Care Services Ltd v Henry & Ors

For a service provision change, the tribunal must identify the pre-transfer activities with clarity and then decide whether the activities carried out afterwards are fundamentally the same. Fragmentation is part of that latter inquiry. A division of work between several incoming contractors may prevent a service provision change, depending on the facts and degree.

The tribunal must also find that, immediately before the change, employees were deliberately organised into a grouping whose principal purpose was to carry out the relevant activities for the client. It is insufficient merely to identify the purpose of an asserted grouping. Assignment can only be to a qualifying grouping which existed before the change.

Sevacare had provided adult home-care services to residents funded by the London Borough of Haringey. When it terminated its contract, the Council allocated care packages among several incoming providers, including Carewatch and London Care.

The Employment Tribunal held that there had been a service provision change under regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006. Carewatch and London Care appealed. They contended that the work had fragmented, that there was no qualifying organised grouping of employees, that the claimants were not assigned to such a grouping, and that the Tribunal's reasons were inadequate.

The central issue was whether the Tribunal had correctly applied the requirements for a service provision change where care work was redistributed between several providers.

1. Appeal allowed. The Employment Tribunal's conclusion that a service provision change had occurred could not stand. Its reasoning did not adequately address material requirements of regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

2. The relevant activity had to be identified clearly before deciding whether the post-transfer activities were fundamentally the same. The Tribunal's findings were ambiguous: they might have treated the activity as the whole service supplied for the Council, or as care packages for a group of service users. That uncertainty was unsatisfactory because the definition of the activity affected the analysis of continuity after the transfer.

3. Fragmentation had to be considered when deciding whether fundamentally the same activities were carried on after the transfer. It was not merely an aspect of the later organised-grouping inquiry. The Tribunal had not properly considered the division of Council-funded work by capacity and postcode among several providers, the absence of a provider taking most of the work, and the difficulty of identifying an employer for employees whose service users moved to different providers.

4. An organised grouping requires employees to have been deliberately organised to perform the activities required by the client contract. The Tribunal considered only the asserted grouping's purpose. It did not first decide whether a grouping existed or whether it had been consciously formed for Council work. Its conclusion was therefore inadequate.

5. Assignment must be to a qualifying organised grouping which existed before the change. Although the Tribunal was entitled to prefer Mr Fox's evidence on the allocation of work, that evidence could not resolve the prior defect in the organised-grouping analysis.

6. The case was remitted to a differently constituted Employment Tribunal.

• Employment Appeal Tribunal: allowed the conjoined appeals and remitted the case to a differently constituted Employment Tribunal.
• Employment Tribunal: held that there was a service provision change under regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.