11 July 2013

TUPE: An Organised Grouping of One?

Regular readers should now be armchair experts on the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). This month provides yet further discussion on the area of service provision changes.

Under Regulation 3(1)(b) a service provision change is where effectively service activities are either outsourced to a new provider, outsourced by the existing provider, or brought in house (insourcing). Regulation 3(3)(a)(i) provides that in order for a relevant transfer to take place there must be an "organised grouping of employees ...which has as its principal purpose the carrying out of the activities concerned".

A question recently arose in the case of Ceva Freight UK Limited v Seawell Limited as to whether an employee who spent all his time providing services to a single customer, transferred under Regulation 3(1)(b) when other employees also provided the same service, although not exclusively.

The simple background was that Mr Moffatt worked as a logistics co-ordinator for Ceva, working 100% of his time on its Seawell account. Other employees spent part of their time (between 10% and 30%) providing the same service to Seawell.

When Seawell took the decision to bring the work back in house, Mr Moffatt was not transferred, and was dismissed by Ceva. He claimed unfair dismissal on the basis that he represented an organised grouping which should have transferred to Seawell under TUPE

The matter went up to the Scottish equivalent of the Court of Appeal, which took a strong view on the word "organised". In this case, it found that there was no evidence of an intention by the employer for Mr Moffat to spend all his time on the Seawell contract, and it was a matter of "mere happenstance". Consequently there was no organised grouping and no obligations for Seawell to take on Mr Moffat. As a result, he had been unfairly dismissed by Ceva.

It should be stressed that this case is very fact-specific (as is usually the case with TUPE) In another case, evidence of the employer's intention to group employees may be readily available, in which case the courts will find an "organised grouping"

Confused? You are not the only one. The only comfort is that the Government has announced that service provision changes are to be repealed as part of its TUPE reforms. It remains to be seen what relief that brings from the sort of "angels on the head of a pin" calculations employers currently have to undertake.