When will a single employee transfer under TUPE?
Despite earlier indications that it was minded to remove 'service provision change' from what amounts to a TUPE transfer, the government has decided to retain service provision change (broadly, any of the following – a contracting out of services, or a change of contractor, or a contracting in).
The government’s change of mind about removing service provision changes from TUPE will mean that organisations will have to continue to grapple with what has proved to be a complex issue requiring a detailed analysis of the facts and circumstances.
In the next case, the employment tribunal had to decide whether an employee who devoted all of his time to working for a single client represented an "organised grouping of employees" on a service provision change for TUPE purposes.
The Claimant was employed by a freight-forwarding and management-logistics company called Ceva. Its workforce was organised into two groups, dealing respectively with "inbound" goods and "outbound" goods. The Claimant, together with seven other employees, worked in the outbound group. Of those working in that group, five employees, including the Claimant, worked on the ‘Seawell contract’. The Claimant spent 100% of his time working on the Seawell contract, but the time spent by other members of the outbound team on the same contract varied from just 10% to 30%.
Seawell decided to terminate its contract with Ceva and to bring the work back in-house. Ceva argued that the Claimant transferred to Seawell by operation of TUPE. This was disputed by Seawell. The Claimant claimed unfair dismissal against both Ceva and Seawell.
The question for the employment tribunal was whether or not a relevant transfer in the form of a "service provision change "had taken place. The answer to that question determined which of Ceva and Seawell should meet the Claimant’s claim for unfair dismissal.
It was accepted that the activities carried out by Seawell were the same as those carried out by Ceva prior to the end of the contract; and that accordingly a service provision change had occurred if there was an organised grouping of employees that had as its principle purpose the carrying out of the activities concerned on behalf of Seawell.
The employment tribunal decided that, as the definition of an "organised grouping of employees" in TUPE includes a single employee and the Claimant’s role had the principle purpose of carrying out the relevant activities, he had transferred pursuant to TUPE. Seawell was therefore liable for unfair dismissal.
Seawell appealed to the Employment Appeal Tribunal (EAT). The EAT overturned the tribunal's decision as the tribunal had applied the wrong test when deciding whether or not there had been an organised grouping of employees. It decided that, although TUPE states that a single employee can be an organised grouping, this does not mean that an employee who spends 100% of their time on work for a particular client automatically constitutes an organised grouping. It concluded that, as arrangements were not deliberately made for the Claimant to work on the Seawell contract and he did not perform the entirety of the Seawell activities on his own, there was no organised grouping. As a result, he had not transferred to Seawell.
Ceva’s appeal to the Scottish Court of Session was dismissed.
The Court of Session confirmed that the Claimant was not an organised grouping of employees. As a result, there was no TUPE transfer.
The Court of Session ruled that the notion of an "organised grouping" requires that there is an element of deliberate organisation by the employer of employees into a team that has as its principal purpose the carrying out of the relevant activities. In this case, the activities were organised according to the type of service Ceva provided (e.g. inbound and outbound service) and not by the identity of the client. The outbound team in which the Claimant worked did not amount to an organised grouping that had as its principal purpose the carrying out of activities for Seawell because it was not organised as a "Seawell team" doing wholly or mainly Seawell work. The fact that the Claimant committed 100% of his time to working on the Seawell contract was irrelevant.
Two important points arise from this ruling.
First, in deciding whether or not employees transfer under TUPE, it is not enough just to consider the activities employees carry out. It is also imperative to consider whether or not the employees have been deliberately organised according to the requirements of the client.
Secondly, it should not be assumed that if an individual spends all of their time working for a particular client that s/he will transfer to that client on a service provision change. Although an organised grouping can include a single employee, the Court of Session ruled that this would only apply to cases where the activities in question are carried out by a single individual, such as a cleaner working for one client or a firm of solicitors providing an individual solicitor to advise a client full time. Where the activities are carried out by a several employees, the reference in the definition to a single employee does justify disaggregation of that group of employees.
If you would like advice about how the issues in this note apply to your situation, please contact Tony Brown on 01225 740097 or by e mail to email@example.com
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