In this case, the Court of Appeal held that NHS Clinical Commissioning Groups (CCGs) were not carrying out an "economic activity" for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The merger of several CCGs into a single new body therefore did not amount to a TUPE transfer.
Facts
Dr Bicknell, represented by the British Medical Association (BMA), had been employed as a GP clinical lead by Nottingham City Clinical Commissioning Group (NC CCG). When NC CCG merged with five other local CCGs to form NHS Nottingham and Nottinghamshire Clinical Commissioning Group (NN CCG) in 2019, Dr Bicknell was made redundant as part of the reorganisation. Dr Bicknell challenged this decision, arguing that the merger amounted to a transfer of an undertaking under TUPE, such that his employment should have transferred to NN CCG and his dismissal was therefore automatically unfair. The BMA also brought a claim for a failure to inform and consult under TUPE.
NN CCG was replaced by NHS Nottingham and Nottinghamshire Integrated Commissioning Board (NN ICB) in 2022, and NN ICB became the respondent to the claims.
An employment tribunal (ET) concluded that TUPE did not apply as NC CCG was not engaged in "economic activities" as it was commissioning services under a statutory duty, rather than delivering them.
The EAT rejected Dr Bicknell and the BMA's appeal, relying on an earlier EAT decision in Nicholls v London Borough of Croydon that commissioning by a CCG does not qualify as an economic activity for the purposes of TUPE unless the CCG is also directly providing goods or services on the market. That was not the case here, so the transfer of the CCG's commissioning functions did not amount to a transfer of an undertaking, and TUPE did not apply. Dr Bicknell and the BMA appealed.
The Court of Appeal (the Court) dismissed the appeal, agreeing with the analysis of the ET and EAT. The Court noted that TUPE derives from EU law. The term 'undertaking' that appears in the Acquired Rights Directive (ARD) that underpins TUPE is also used in the EC Treaty dealing with competition law. In competition cases, the European Court of Justice (ECJ) has held that an undertaking can be any entity 'engaged in economic activity', and that the characteristic feature of economic activity is 'offering goods and services on a given market'. The ECJ has also applied that approach in cases considering the ARD, and the Court considered that it would be incoherent for different principles to apply as between competition and employment cases.
Although the ARD and TUPE are intended to protect employees' rights, the Court could not treat something which did not meet the criteria to be an economic activity as an economic activity simply because the rights of employees were affected.
While the legislation under which the TUPE Regulations were made gave the government power to provide increased protection for employees, there was nothing in the provisions of TUPE to suggest that the government intended to do so by relaxing the meaning of 'economic activity' in some hidden way. The wording of TUPE reflects the wording of the ARD and had to be interpreted in accordance with the relevant ECJ case law. The Court noted that it was bound by that case law because the events in this case took place before the end of the Brexit implementation period. However, the Court considered that case law to be correct in any event.
What does this mean for employers?
This case is relevant to bodies in the NHS (and other public services) which commission services but do not directly provide them.
Where NHS bodies are providing services directly, this is likely to be an 'economic activity' for the purposes of TUPE. By contrast, where NHS bodies are only commissioning services and are not also supplying those services themselves, there is no 'economic activity' so TUPE would not apply to transfers of services between these NHS bodies, or to transfers of services between these NHS bodies and other organisations.
However, employers in the public sector should bear in mind the Cabinet Office Statement of Practice (COSOP), which states that in most transfers between public sector bodies, or from public to private sector, the government expects organisations to follow the principles of TUPE where possible, even if TUPE does not apply in strict legal terms.
Bicknell and another v NHS Nottingham and Nottinghamshire Integrated Commissioning Board
