UK News

The EAT issues guidance on the transfer of employment under a service provision change

May 2012

Is an employee who spends all of his time doing work for one client automatically an organised grouping of employees as required to establish a service provision change for the purposes of TUPE?

Not according to the Employment Appeal Tribunal which held that for an individual to be assigned to an organised grouping of employees the assignation must have been deliberate and not just happenstance.

Background

The claimant, Mr Moffat, was employed by CEVA. He spent all his time working for a single client of CEVA's, Seawell. Seawell decided to bring the work formerly carried out by CEVA in-house. When Seawell refused to accept him into their employment Mr Moffat complained that he had been unfairly dismissed and also alleged that both companies had failed to consult with him, the process being covered by the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE").

TUPE applies to 'relevant transfers'. A relevant transfer may occur either on a transfer of a business or undertaking or on a service provision change. This case concerned a service provision change.

If there is an organised grouping of employees whose work is transferred to another organisation, then those employees would automatically cease being employed by their current employer and their employment would pass to the new employer.

In this case, while the claimant spent 100% of his working time working in respect of Seawell, the claimant did not do all of the work CEVA did for Seawell. Neither was there any evidence that CEVA had specifically put together a grouping of employees to do the Seawell work.

The Employment Appeal Tribunal found that the simple fact that Mr Moffat spent all his time working on the contract with Seawell did not mean that there was the organised grouping of employees necessary for TUPE to apply. It would be necessary to show that CEVA had specifically formed a grouping consisting of Mr Moffat and others to carry out the Seawell work. On these facts they had not.

Commentary

This case highlights a growing trend for Tribunals to require evidence of some degree of formality over arrangements to satisfy the definition of there being an "organised grouping of employees". Although it cannot be said that a single employee cannot fall within this, for there to be a TUPE transfer under the service provision change criterion, it will be necessary to show that there was a specific group of employees assigned to provide the entirety of the service in question.

From a service provider’s point of view this suggests that care should be taken to have clear assignment of duties in respect of contracts which it has so that, if these are lost, the employees concerned will transfer out of its employment.

Resources

Seawell Ltd v Ceva Freight (UK) Ltd and another

For further information or to discuss the issues raised, please contact David Widdowson or Stephen Wright on +44 (0)20 3051 5711.