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Organised grouping of employees
[ch 12: pages 378-379]There can only be a service provision change if employees are deliberately grouped together in a team organised for the purpose of providing the contracted activities.
Identifying the contracted activities — i.e. working out what activities are to be performed for the commissioning client by the new provider that were previously performed by the old provider — is usually the first step. For example:
Edinburgh Council contracted out its homeless support services to a voluntary organisation. When it later took the contract back in house, all the employees who provided front-line service delivery under the service contract transferred to work for the council. By contrast, the contracts of the charity’s two directors did not transfer. This was because they were not engaged in delivering the activities under the service contract. Instead, they worked on strategic tasks for the benefit of the charity as a whole, not for the benefit of the commissioning client.
Edinburgh Home-Link Partnership v City of Edinburgh Council [2012] UKEATS/0061/11/B1
“Activities” are not restricted to services that are guaranteed under the written service agreement. Work that is anticipated and regularly provided can also be included in a service provision change, even though it is not contractually guaranteed (Lorne Stewart v Hyde [2013] UKEAT 0408/12/0100).
Nevertheless, the written service agreement is likely to be important evidence of the service delivery obligations that are transferring from one service provider to another. Here is an interesting example:
A cardboard manufacturer decided to end its haulage contract with its existing transport company and to switch to a new provider known as Qlog. Qlog signed a service agreement that accepted responsibility for transporting all the manufacturer’s goods but without specifying how this would be achieved.
Whereas the old haulage company used its own drivers and vehicles, Qlog had no vehicles or employees. Instead, it intended to fulfil the contract by using a computer system that matched the client’s delivery requirements to available self-employed drivers who used their own vehicles to provide the services. Even so, there was still a service provision change, said the tribunal. Qlog’s contractual obligation under the service agreement was to transport the goods. This was the same as the contractual obligation owed by the outgoing contractor. As a result, all the HGV drivers employed by the outgoing contractor transferred to Qlog under TUPE.
In practice this meant that Qlog would have to assume the cost of making the drivers redundant, since under its business model, there were no directly employed drivers.
Qlog v O’Brien [2014] UKEAT/0301/13/2103
There will not be a service provision change were workers are grouped together for reasons unrelated to the demands of the service contract, such as the service provider’s own shift schedule. For example:
Eddie Stobart ran a warehousing and logistics business, distributing meat between suppliers and supermarkets. Stobart lost the distribution contract for one supplier — Vion. As a result of the timing of Vion’s supermarket orders, picking and packing on its contract was mainly carried out by the day shift, whereas the night shift worked mainly on a different contract. In practice warehouse pickers had no idea which supplier’s goods they were packing.
Work was organised in this way because of a combination of the time of day when Vion’s own customers tended to place their orders, shift patterns and working practices at the warehouse. There was no “dedicated Vion team” at Stobarts. This was not enough to create a service provision change, said the EAT. A valid service provision change requires a group of employees to have been deliberately organised into a team to work for a particular client.
Eddie Stobart Limited v Moreman & Others [2012] UKEAT/0223/11
The activities must be the main task of the group, although they need not be their only task.
There will be no service provision change if the activities are not the main task of the group, even if they are the only task of a few members of the group. For example:
One team member in a group of employees at a freight forwarding company spent 100% of his time fulfilling the service contract of a single client, Seawell. However, servicing the Seawell contract was not the main task of the group because it looked after a number of different clients. When Seawell took its contract back in-house, the employee’s contract did not transfer under TUPE, even though he spent 100% of his time on the Seawell contract.
CEVA v Seawell Limited [2013] CSIH 59
If, before the transfer, employees are contracted to work in a variable pattern across the business, there is much less likelihood of TUPE being triggered.
An organised grouping of employees can include just one person (regulation 2(1) of TUPE), as long as he or she is the only person employed to provide the activities. Someone can be “assigned” to an organised grouping even if they are the only person in the “grouping” (Rynda (UK) Limited v Rhijnsburger [2015] EWCA Civ 75).