Are there any special considerations regarding TUPE in the field of social care?
Contracting and Commissioning officers, in conjunction with in-house legal teams, may often be asked to consider the extent to which TUPE would apply to various proposals to re-organise the provision of social care in line with Best Value. This task is a tricky one because the principles which have arisen out of the European and UK judgments are not easy to apply to the world of social care commissioning.
What follows is a generalised attempt to apply some of the principles to the practicalities. It is emphasised that this is not legal advice, which can only be given in the light of specific factual circumstances!
We think that before trying to predict whether TUPE would apply to re-organisations of services in the social care field, it is worth identifying some of the special features which commonly arise in this area.
First of all, the means of provision of residential and domiciliary care in most authorities is already a mixed system of in-house hours-based homecare provision through a Direct Service Organisation, or placements in LA owned Part III homes, on the one hand, and commissioning of private sector services or places under contract from residential and nursing homes on the other. In addition, and increasingly, low-level but 24 hour domiciliary support is often provided to those with learning disabilities who live in their own tenanted or licensed accommodation.
Many DSOs have been externalised already by way of contracts with one or more local agencies, the staff having been transferred because the expertise was just too specialised to do without. But we think that it is unlikely that every move from public to private sector provision in this field amounts to a TUPE transfer.
Within any LA’s DSO, no member of staff is likely to be wholly dedicated to the care of any one client. A few may be wholly dedicated to one specialist aspect of care of a large number of clients, such as supplying or fitting aids and adaptations, cleaning, night sitting, or providing welfare benefits advice, or advocacy, and these are legitimate functions of the authority, but most workers work with whoever needs the service, on a rota basis. Likewise, in an LA owned home, the staff will be attached to the property and probably engaged for their expertise with meeting the needs of the particular client group, but no one individual client. In the ‘supported living’ model (the last mentioned above) the domiciliary care will tend to be specially recruited for one or two learning disabled clients who are sharing a house together, or supplied by a Supporting People funded provider, employing a rota of staff, to provide the personal care, on top of the support services.
From the outset therefore, when one considers the relevance of the ultimate customer for the question of whether TUPE applies or not, there can be no general rules as to whether there is an undertaking capable of being transferred. No-one, to our knowledge, has ever suggested that when a person needs to move from one care home to another, or to a care home with nursing, that the transfer of the job of meeting their needs, amounts to a TUPE transfer of the staff who have been previously engaged. Even where the setting is simply a different example of the same level of registration (care home to a cheaper care home for instance), we do not hear of TUPE disputes between the care home providers about the staff transferring. Neither do we hear of LA staff being asked about transferring to domiciliary care agencies whenever the client is given a direct payment for the first time and intends to use it to engage a worker from a particular agency. (If we did, the recruitment crisis would get even more interesting!)
When authorities do look to the private sector, they use two main mechanisms for getting money to the provider: contracts and grants. Some social care functions are statutory duties, triggered by people’s physical and mental conditions, when measured against criteria. These duties are either ‘provision’ duties (which implicitly allow for contracting with external bodies as well, to do the operational side of the job) or express ‘arranging services’ duties – which obviously allow for contracts, because these are the typical ‘arrangement’ envisaged. Others are mere powers to meet needs, which do not have to discharged, and hence certain functions might be able to be ‘closed down’ and the private sector simply encouraged to fill the gap by way of help through grants, independently of any guarantee of an available service being required by the authority. Alternatively, these powers may just be exercised in a different manner to in-house discharge ie. by contract with the private sector, either under express or implied powers to contract for the performance of the function.
Taking contracts first, these are either block or spot, but even within block contracts (for x hours a year of laundry services, shopping or cleaning, for instance, or for x placements a year) actual call-off has to be done for clients in an individual way if the client’s needs are anything other than ‘standard’, which is the usual situation in social care. So the relationship with the provider who is contracted to the authority will inevitably be tied to identifiable individuals, even if there is an umbrella contract in force. These contracts could be looked at as single works contracts, which do not automatically transfer the application of TUPE. At second generation stage (where one agency may lose the contract and another agency wins it, the outgoing entity is not likely to cease to function when responsibility for one or a few clients cease. . .
To complicate things further, there is now scope for direct payments for clients in lieu of a need to arrange or provide the service. These clients are still receiving care management from the authority but they become, in law, the employers of the staff whom they select. (Unless it turns out that the client had such low mental capacity that s/he was unable to conduct herself as an employer, in which case the authority and voluntary body which had engaged the worker may be found to have been the legal employer instead – see South Lanarkshire v Smith). Where one employer employs a single worker, and then changes that contract, European Law tends against finding the recipient of the service to be the employer, which is some comfort here. But if the client chooses to spend their money on an agency’s worker, contracting with the agency, and then gets fed up with that agency, is it possible that the moving of the contract to another agency attracts TUPE, thus enabling the care worker to insist on a job move?
When contracts are used by authorities for the discharge of their functions, they are made either with proprietors of homes, or with agencies who tend to employ, rather than engage, staff, so as to be able to offer a sufficiently secure and vetted service to authorities. There are, however, agencies which advertise for, and find and recruit staff on behalf of authorities for specialist personal care services, and those staff may be engaged by the authority, rather than be employed. Those individual contractors still count as agents of the authority, under s30 NAA, if the services are non-residential. But wherever either agencies or authorities are engaging independent contractors, as opposed to employing people on schedule E, TUPE cannot protect those contractors, if the contract is transferred to someone else, because they are not employees.
As for the other mechanism of grant funding, much provision through in-house or contracted services has already been cut back because authorities have chosen instead of providing services themselves, directly to the public, to grant-fund voluntary organisations, who have then provided their own service directly to the public, either for free or at a subsidised price. When this is done there is no contract for services between the authority and the provider, even if the grant was given upon conditions as to the standard, price and level of services the authority would want to see the organisation providing to the public. In this situation there is no arrangement for a service under a specific contract for any client of the authority; merely a signposting of that client towards the organisation, in the confident expectation that the need will be met by those means, and thus not necessitate intervention by the authority. Despite the Sophie Redmond case, which involved grant subsidies, we do not think it can be said that the decision to terminate a discretionary grant and give it to someone else should properly be seen to constitute a transfer of an undertaking. . .
This system must be compared with the situation where an authority grant-funds the administration of an organisation, but then contracts with it directly for a service for specific clients, or a block service. In those cases, the authority is still providing a service through the organisation, as its agent, to the client.
A final special consideration to bear in mind for TUPE application is that under the Health Act, local authorities and health authorities are allowed formally to delegate service provision functions to each other, so that one agency can purchase something which was not open to be purchased by its officer before, whilst the previous purchaser will have given up the commissioning role. Each agency remains liable in law for the quality and delivery of the function delegated however, so again, we are not sure that one can say that the undertaking transfers.
It is also possible under the Health Act for these two agencies to pool budgets from which an officer from one agency or the other can take money to commission what would most logically be a service made up of both health and social care (the paradigm service being one which spans the continuum from social care and accommodation, through to free nursing care (RNCC) in a nursing home).
The application of TUPE
It needs to be emphasised from the outset that the caselaw has established that a transfer is not the same as a closure. We think that shutting down all direct Part III provision in one go, is the end of an undertaking, and not necessarily a transfer. The function continues, because the authority has to go on providing for those who can’t make their own arrangements, but we think that what is continued is something altogether different – it is the discharge of the function in an altogether different way, via contract, under s26 of the National Assistance Act, via arrangements with the private sector. Closing one Part III home and placing the clients in different homes need not involve any transfer of land or assets or staff. We think that such closure in either situation could only become a transfer if there was something exceptional about it such as the wholesale handing over of residents to another existing home (unlikely since occupancy levels in existing homes will tend against the possibility) or the sale or gift of land on which to rebuild a new home for the same residents, or the transfer of the operation of something else (eg the day care service that was operated from the home previously). Given that the clients depend, in economic terms, on the authority for funding, and are not actually buying care from the authority, in legal terms, we think that it is hard to spell any ‘goodwill’ out of the situation which could be transferred (although in the Oy Liikenne case, the customers were the captive clients for the relevant bus routes). And it must not be forgotten that the residents can always choose where to be transferred to under the Choice of Accommodation Directions – this might make it harder even to assure the transferee of the customer base.
In contrast, it seems to us that on the closing down of a DSO, if there are identifiable DSO staff allocated to particular tasks or clients to the exclusion of all others, it becomes arguable that they are an economic entity in their own right. If so, and the task or the clients’ care packages are externalised en bloc, (there being no right to choose domiciliary care from particular providers) the spectre of TUPE arises and is more likely than not, to apply. Likewise with a change of contracts with, though not grants for, agencies for specific services which are going to be the same for all clients currently having them (eg cleaning etc.)
If a DSO has been doing shopping or cleaning, and that service is to be entirely externalised, that seems to us to be potentially a TUPE transfer. But if interchangeable staff in a DSO have been shopping or cleaning for many particular clients, and it is decided that this task would be better done for some or all by way of separate contracts with many private sector contractors (eg because the agency’s employee already visits an individual to do personal care), it does not strike us as possible to say that there has been a transfer of anything other than a series of single works contracts. Nowadays (Cabinet office exhortations to the local government sector apart) it takes more than the transfer of an activity to make a transfer. Whilst, in theory, an undertaking is capable of being carried on in relation to each client because one or a small number of staff will be assigned to that person’s care package, the European Court has said that the transfer has to relate to a stable economic entity whose activity is not limited to performing one specific works contract before a TUPE transfer occurs.
However, in the ADI case a group of 9 security officers working on one security contract were found to be an economic entity because they were geographically separate from the other security contracts which the clients had, by a difference of 40 miles or so. So it shows that the ‘single works contract’ argument is a factor, but not decisive. Thus if an LA had a specific contract with a domiciliary care agency for its employees to provide 24 hour support to someone living in a specific tenanted accommodation situation, or to work in a particular district, then TUPE application might be more likely than not, if the contract were transferred.
In sharp contrast yet again however, we think that terminating a specific in-house service, and grant funding new ones from the private sector, with a view to no longer providing the service as a local authority service at all, cannot be a TUPE transfer. If a pure grant is given, it is entirely discretionary and no ‘undertaking’ is being operated which could be seen as being transferred, if that grant were to be given to some other organisation, in our view. The Sophie Redmond case which is thought by many to apply TUPE to grant transfers, actually involved much more than that (such as a consensual transferring of clients, expertise and land from one grant recipient to another), and so does not decide the point for all time, in our view.
We do not want to be taken as asserting that changing contracts for services for one individual client cannot ever be a TUPE transfer. As the service becomes more specialist and geared to an individual’s needs, the client’s legitimate expectation in being consulted before the provider is changed, increases. Thus it seems arguable that in certain intimate areas of personal care, TUPE transfers are more likely to be asserted and made out by employees who spend the major part of each week with particular clients.
But generally speaking, short of something specialist about the nature of the care package, we think that the duty owed to each individual client will not be an undertaking, economic activity or part of a business with a recognisable identity. And likewise, we think, if the reason for the termination is that the prior contracted service for a particular client becomes inappropriate and the client needs a different type of service – ie needs to move from a care home to a care home with nursing. However specialist that contract is, what is being done after a transfer is something different in nature and will not be a TUPE transfer.
Our feeling is that when the change is because of the termination of the authority’s function (eg. when a move to direct payments is made with regard to an individual client, despite previous specialism in the service), there is no TUPE transfer. Again, it is the withdrawal from a field of endeavour by the local authority, not a transfer.
If under joint working an LA were to cross-delegate its equipment service function wholly to the Health Authority, the staff should transfer because another authority has become responsible for that identifiable part of the authority’s undertaking. We think that a TUPE transfer has occurred, so far as the employees are concerned.
On the other hand, if the two agencies merely appoint a lead commissioner for spending a pooled budget both agencies are still operating their functions and the arrangement merely allows for access to the monies which have been set aside by both bodies participating in the arrangement. It is unclear whether staff from commissioning units will attract TUPE transfers but “lead commissioning” arrangements would not usually comprise a wholesale handing over of a function to another – more often they would be based in a new commissioning unit doing things it had never been able to do before, but for a narrow range of clients. There is thus some doubt whether TUPE should apply in this situation.