Mansfield Care Ltd v Newman and others [2024] EAT 128 

Senior Solicitor in the employment team, Ranjit O’Mahony, reviews the differences in the decisions between the Employment Tribunal and the Employment Appeal Tribunal, as well as the takeaways from the case of Mansfield Care Ltd v Newman and others.

Brief facts  

Rollandene Ltd, owned by Mr and Mrs Wood, operated the Adamwood nursing home which provided residential nursing and care services for up to 13 residents. Some of these residents were privately funded and some were funded by the local authority.  

In early 2021, Mrs Wood, who managed the care home, entered into discussions for the sale of the business to Mansfield Care Ltd (Mansfield), which already owned and operated more than 10 care homes. In early June 2021, it was agreed that the Adamwood residents would move into two of Mansfield’s existing care homes.  

Mrs Wood emailed the Care Inspectorate and the local authorities funding the care of the socially funded residents and gave them notice that the care home would be closing. She advised that, subject to the agreement of families, the residents would be supported in moving from the home to Mansfield-operated homes from and the employment of staff would transfer to Mansfield.  

There were 29 members of staff working at Adamwood at that time, 17 were described as “employees” and 12 were described as “bank staff”.  

Mrs Wood spoke to the staff on duty and advised them that the home would be closing, and the residents would be moving to the homes run by Mansfield.  

Mrs Wood confirmed to the Unison representative that although she had not been informed of Mansfield’s precise intentions, she understood that all staff would be offered positions.  

Following this meeting, the union wrote to Mrs Wood advising that there was a redundancy situation involving at least 20 employees which triggered the consultation obligations pursuant to s.188 of Trade Union and Labour Relations (Consolidation) Act 1992. Mrs Wood did not respond to this letter.  

By late June 2021, all the Adamwood residents who wished to move into the Mansfield homes had done so. On that same date, the Mansfield Operations Manager emailed its Managing Director with a list of Adamwood staff, highlighting the names of 6 individuals who would be “transferring to Mansfield Care.”  

Mrs Smith, a nurse who had carried out two night shifts per week at Adamwood on a regular basis for over 20 years was included in the list but was described as “bank contract”. Mrs Smith had received payslips from Rollandene showing she was treated as an employee for tax and national insurance purposes and in respect of holiday entitlement and pension deductions. She also provided a copy of her P45 from Rollandene dated 9 July 2021.  

It was clear that the staff were not assigned to particular residents in Adamwood and were instead assigned to the care of those residents who transferred to Mansfield Care.   

The staff that transferred were not restricted to the care of the residents who were transferring and once they moved it was inevitable that they would be deployed to care for other residents.   

  

 The claims  

The Adamwood staff brought claims for unfair dismissal, redundancy pay, wrongful dismissal, unpaid holidays and wages and a failure to inform and consult in relation pursuant to s.188 Trade Union and Labour Relations (Consolidation) Act 1992.  

Rollandene defended the claims on the basis that there was a TUPE transfer to Mansfield and consequently there was no redundancy situation and therefore s.188 did not apply.  

In the alternative, Rollandene argued that there were less than 20 employees at the relevant time, as the bank staff should not be included in the employee headcount and therefore the collective consultation requirements were not triggered.  

 

Employment Tribunal (‘ET’) decision  

The ET found that there had been both a business transfer within the meaning of Regulation 3(1)(a) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 in respect of both the privately funded residents, and a service provision change, in accordance with Regulation 3(1)(b) in respect of the socially funded residents.   

The ET also held that there had been a failure to consult on the proposed redundancies, contrary to s.188 Trade Union and Labour Relations (Consolidation) Act 1992 on the basis that the proposal related to 20 or more employees. The ET found that using the term “bank staff” did not preclude a finding of a contract of service and so bank staff in this case were employees.  

Mansfield appealed the ET’s decision in respect of the TUPE, the failure to inform and consult pursuant to s.188 and the employment status of bank staff.  

Rollandene appealed the ET’s decision in respect of the failure to inform and consult pursuant to s.188 Trade Union and Labour Relations (Consolidation) Act 1992.  

 

Employment Appeal Tribunal (‘EAT’) decision   

The EAT found that the use of the term “bank staff” did not preclude a finding of a contract of service and in this case the bank staff were employees as there was a contract giving rise to an irreducible minimum of obligation on both sides, following Ready Mixed Concrete (South East Ltd) v Minister of Pensions and National Insurance [1968] 2QB 497, Nethermere (St Neots) Ltd v Taverna and another [1984] IRLR 240 and Cotswolds Developments Construction Ltd v Williams UKEAT/0457/05.  

The EAT also found that ET had made an error in finding that there had been a failure to consult for the purposes of s.188 Trade Union and Labour Relations (Consolidation) Act 1992. This was because the ETmhad made no finding that there was any proposal to make collective redundancies. In fact, the ET had found that the decisions relating to the future employment of the employees related to their future employment by Mansfield and not their redundancy. Therefore, the ET’s decision that there had been a failure to carry out consultation in relation to proposed redundancies could not stand.  

The ET had also made an error in finding that there had been both a business transfer of the privately funded care home residents and a service provision change in respect of the socially funded residents. The ET’s findings did not support the identification of an economic entity divided in this way and therefore the decision could not stand.   

With regards to the privately funded residents, there was no explanation as to why the ET considered there had been an economic entity or how such entity retained its identity after the transfer. Both the care home residents, and the contract that each resident had for nursing and care services were capable of amounting to a relevant transfer under regulation 3(1)(a). Each resident moved to one of the two homes operated by Mansfield and continued to receive nursing and care services from the staff who had previously cared for them. However, it was not clear how there had been a business transfer when the residents were split between the two care homes.  

With regards to the socially funded residents, the ET had not explained how it had identified an organised grouping of employees that had the principal purpose of carrying out nursing and care services to the socially funded residents or the scope or nature of those activities. The client would be either the socially funded resident or the local authority funding the care and therefore it was not possible to identify the specific client on whose behalf the activities were carried out and who had the relevant intent for the purposes of regulation 3(3)(a)(ii) of TUPE.  

The EAT remitted the question of whether a TUPE transfer had occurred back to the ET for consideration.  

 

Key takeaways  

  • An undertaking and a service provision change are not mutually exclusive, as recognised by the Court of Appeal in Hunter v McCarrick [2012] EWCA 1339 and therefore a transfer can constitute both a business transfer and a service provision change.  
  • In this case the ET had not explained its reasoning for concluding that there was a business transfer of privately funded residents and at the same time a service provision change of those who were socially funded.  
  • Employers should take care to properly determine employment status where bank staff are affected by a transfer so as to not deny them their rights under employment law.  
  • This case emphasizes the importance of clear evidence in relation to redundancy consultations and the classification of employment relationship within the context of TUPE Regulations.  

  Author: Ranjit O’Mahony, employment