Q&As

A local authority employs 20 people with disabilities through a scheme to help them work in various 'host' organisations, paying a salary to the employees and receiving a small contribution from the host organisations. The substantial cost to the local authority is no longer affordable. What is the best way to resolve this situation?

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Published on LexisPSL on 25/11/2016

The following Employment Q&A provides comprehensive and up to date legal information covering:

  • A local authority employs 20 people with disabilities through a scheme to help them work in various 'host' organisations, paying a salary to the employees and receiving a small contribution from the host organisations. The substantial cost to the local authority is no longer affordable. What is the best way to resolve this situation?
  • TUPE transfer
  • Reason for dismissal
  • Redundancy
  • Some other substantial reason (SOSR)

This enquiry comprises two questions:

  1. whether, if the host organisations were to decide to employee the employees directly, this would be a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE 2006)

  2. whether, if the local authority were to decide to terminate the employment of the employees, the dismissals would be for redundancy or 'some other substantial reason' (SOSR) justifying the decision to dismiss

These issues are considered below.

TUPE transfer

TUPE 2006 applies when there is a 'relevant transfer'. This covers:

  1. a business transfer: a transfer of an undertaking, business or part of an undertaking or business, situated immediately before the transfer in the UK to another person where there is a transfer of an economic entity which retains its identity

  2. a service provision change: involving a change in the provider of a service, ie a client 'outsourcing' work to a contractor (first generation outsourcing), bringing that work back in-house ('insourcing') or re-assigning that work to another contractor (second generation outsourcing), where certain conditions are satisfied

For further information, see TUPE and asset purchases—overview and Practice Notes:

  1. TUPE—business transfers

  2. TUPE—service provision changes

The correct approach to decide whether there has been a service provision change is to consider matters in this order:

  1. firstly, what the relevant activities are (for consideration under TUPE 20

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