TUPE Service Provision Change and Orthodontic Tendering – Ben Williams

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  Posted by: Dental Design      8th September 2018

Over the next 12 to 18 months, NHS Orthodontic contractors will be discovering their fate as to whether they will be awarded with a new PDS Agreement and the number of UOAs which they will provide going forward.

What is clear is that very little consideration has been given by NHS England or employers (the latter more understandably) in regards to the employees, who currently provide these services for existing contractors. Moreover, not much thought has been given to what will happen if their current employer loses the tender and, instead, is awarded to a practice in the nearby town.

What principals may not have been aware of is that the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) may well apply.

The first point to note is that there is no one-size-fits-all answer that can be provided. The fact of the matter is that the process and legal position is fraught with complications and, often, employment tribunals have been found to be erroneous in their assessment of the facts and consideration of the relevant factors.  

Some practice owners will be familiar with TUPE in the context of having previously bought or sold a dental or orthodontic practice. This is usually a business transfer with employees transferring from seller to buyer on completion of the transaction. The primary principle of TUPE is the preservation of employment and therefore, it stands to protect the employee, rather than penalise them on the transfer of a business.

However, there is an additional strand to TUPE which originates from previous governments amending the legislation to allow for the transfer of employees, where public services are outsourced to the private sector. This is known as the Service Provision Change (SPC). A simple example of this is where Contractor A loses a contract to provide a service and the client (NHS England, in the case of orthodontics) puts the service contract out to tender, and Contractor B wins the contract.


In this scenario, there is potential for all of the employees employed by Contractor A to transfer to Contractor B. Whether or not this is the case depends on a number of factors under the TUPE Regulations, namely:

  • That the activities being carried on by Contractor B are fundamentally the same as those carried on by Contractor A; and
  • There is an organised grouping of employees whose principle purpose is to carry out the activities; and
  • The client (NHS England) intends that the activities will be carried out by Contractor B following the SPC.

A recent case involving the outsourcing of residential care (London Care – Employment Appeal Tribunal) highlights the importance of a thorough assessment of the activities which are being carried out before and after the transfer, as well as whether there is an organised grouping of employees – both of which require the following questions to be asked:

  • Which employees are delivering the service;
  • Where they are delivering the service; and
  • How they are delivering the service.

It is worth emphasising here that the assessment of the above factors involves assessing the position immediately prior to the transfer (the commencement of the new contract).


In beginning to answer these questions above, it becomes apparent that a detailed analysis of who the organised grouping of employees are, is central to determining which staff the outgoing contractor will lose. This is in respect of employers (as the employees transfer with the contract) and whether they will lose any employees at all, and for the new contractor, whether they will inherit employees transferring with the contract, and who those employees will be.

The above is a simple example and the complexities of the scenarios are exacerbated by situations whereby the contract held by Contractor A is split up and awarded to Contractor B, C and D. Another scenario could be where contracts for Contractor A, B and C are merged and contracts awarded to Contractor D and Contractor E.

There is also the potential for an SPC to be prevented. In other words, there is no SPC where the issue of ‘fragmentation’ arises. This is where there is a change in the contractor (or the original contract being split and awarded to multiple contractors), and it is not possible to identify which parts of the contract have gone to whom and thus, not possible to identify where the employees should go. It has been held by the courts on previous occasions that a 71:29 split in the contract constituted fragmentation.

An example of this is in the case of Clearsprings Managementwhere the tribunal held that it was not possible to say which contractor had taken over which activities and, therefore, TUPE did not apply. There was no clear arrangement division of how the client’s customers (in the case of orthodontics, it will be NHS orthodontic patients) were allocated to the incoming new contractors. If it is possible to ascertain where the patients move with the contract, it may still be possible that there is an SPC under TUPE.

This also confirms a previous decision known as Kimberley, whereby the tribunal held that where a contract goes from one contractor to several contractors, TUPE could apply. However, there may be circumstances where the delivery of the service becomes so fragmented that TUPE would not apply and is, therefore, avoided.

It is worth noting that where – in the case of the new orthodontic contract – a number of contractors lose the contract and, instead, a larger single contract is awarded to the new contractor, fragmentation is unlikely to be applicable.

The financial implications for outgoing contractors and those who are awarded contracts – not to mention continuing or new employees – are considerable. The potential for redundancies should not be taken lightly and certainly not overlooked. The solution is to begin assessing your potential scenarios now, the possible costs of those scenarios, and where your business goes next – whether you lose the contract or win it.


Ben Williams of Goodman Grant Solicitors – contact on bw@goodmangrant.co.uk


For more information visit www.goodmangrant.co.ukor contact your nearest office:

London: 0203 114 3133

Leeds: 0113 834 3705

Liverpool: 0151 707 0090




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