The Employment Appeal Tribunal has confirmed in Bicknell and the BMA v NHS Nottingham and Nottinghamshire ICB that the TUPE Regulations (Transfer of Undertakings (Protection of Employment) Regulations 2006) do not apply to the reorganisation of purely commissioning organisations/services. The case involved a Clinical Commissioning Group (CCG) remit of which was the commissioning of services, not the ultimate delivery of services and therefore TUPE does not apply as commissioning is not an “economic activity”.

Background

Dr Bicknell presented a claim against his employer Nottingham City CCG (City CCG) and Nottingham and Nottinghamshire CCG (which was formed as part of a merger between various Nottinghamshire based CCGs, including City CCG, in April 2020). Dr Bicknell had been employed as a Clinical Advisor by City CCG and as part of the move towards Integrated Care Systems (ICS) the decision had been taken that the roles of Clinical Advisors should be undertaken by a broader range of self-employed advisors, rather than employed advisors. Dr Bicknell was made redundant coinciding with the creation of the Nottingham and Nottinghamshire CCG.

Dr Bicknell argued that his employment should have transferred under TUPE to the newly formed (merged) CCG and that his dismissal was automatically unfair because it was connected to a TUPE transfer. The BMA (British Medical Association) also included a claim for a failure to inform and consult on the transfer.

TUPE – the transfer of an economic entity

The Tribunal concluded that the CCG was not an economic entity under TUPE because it was not carrying out “economic activities”. In coming to this conclusion it looked at the core work undertaken (that of commissioning services) and concluded that as the CCG was not delivering the services, merely commissioning them, it was not engaging in an “economic activity” and that TUPE did not apply. Dr Bicknell’s employment had not therefore been subject to a relevant transfer, and the BMA’s claim for failure to inform and consult also failed. 

Dr Bicknell and the BMA appealed on the grounds, that the Tribunal:

• had misunderstood the test of “economic activity” set out in the leading case of Nicholls v London Borough of Croydon which related to the transfer of a Public Health team commissioning services from a PCT to a local authority, arguing that if the commissioning and delivery of public health services on an open market by the commissioned organisation(s) could be an “economic activity” (as was the case in Nicholls) it could by extension make the commissioning only of medical services by a CCG an “economic activity”
• would need to both look at the test of “economic activity” and then whether it amounted to a “public administrative function” as a check and balance before determining if TUPE did / did not apply
• had failed to consider the full range of activities delivered by the CCG (e.g. training, signposting etc) meaning that there was more than purely commissioning undertaken and this amounted to an economic activity.

Current decision / issue

The Employment Appeal Tribunal (EAT) concluded that the Tribunal had appropriately interpreted the case law in respect of what constituted an “economic activity” for the purposes of TUPE in line with the decision in Nicholls. That the commissioned services, delivered by a separate third party might be an economic activity, was not sufficient to say that City CCG had been engaged in an economic activity when commissioning those services.

The EAT had some reluctance in agreeing that position, but were required to do so by virtue of not being able to overturn Nicholls unless the decision was manifestly wrong which, the EAT concluded, it was not, that argument not being advanced by the Appellants. 

Consequently the EAT did not need to consider the second ground (the improper interpretation of whether the CCG was delivering public administrative functions) because Nicholls had been correctly applied. However, the EAT was critical of the lack of analysis and decided that it would have sent the matter back to the Tribunal had it found differently on the first Ground. 

The Tribunal was, however, found to have correctly identified the primary and ancillary activities of the CCG and that these did not affect whether there was an economic activity.

What to take away

The protection of TUPE is only afforded to transfers where the transferor is engaged in an “economic activity” (i.e. delivering services on a market) and commissioning of services does not amount to an economic activity. Commissioning organisations / teams / services within organisations are unlikely to be caught by the protection of TUPE.

That said, all public sector organisations should be alive of the principles of the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector, which apply similar principles to those of TUPE to any public sector transfers, albeit without the individual having a right to bring a claim under TUPE in the event of a failure.

How Capsticks can help

TUPE in relation to commissioning organisations (and the public sector generally) can be a minefield. We have specialists in TUPE who can help you identify the activities being delivered by an organisation or team who are potentially subject to a TUPE transfer and ensure that you are compliant with your obligations under the relevant legislation or guidance. 

For further information on how we might assist your organisation, please contact Raj Basi, Sian Bond or Sean Hick.