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Organised grouping of employees
[ch 12: pages 360-362]There can only be a service provision change if employees are grouped together in a team deliberately organised by the service provider, for the purpose of carrying out the activities contracted for under the service contract. Each team member should share the same employer (Argyll Coastal Services Limited v Stirling [2012] UKEAT/0012/1). What matters are the client’s requirements for work to be organised in a particular way, rather than the employer’s initiative in organising and scheduling work into teams. For example:
Eddie Stobart ran a warehousing and logistics business, distributing meat between suppliers and supermarkets. Stobart lost the contract to work for a particular supplier — Vion. The timing of Vion’s supermarket orders meant that picking and packing on its contract was mainly carried out by the day shift, whereas the night shift worked mainly on a different contract. However in practice, warehouse pickers had no idea which supplier’s goods they were packing.
The only reason work was divided in this way was because of the time of day when Vion’s own customers tended to place their orders, combined with shift patterns and working practices at the warehouse. There was no “dedicated Vion team”. This was not enough to create a service provision change, which required a group of employees deliberately organised into a team to work for a particular client. Any other result would be unsatisfactory, as employees who were not even aware who they were packing for could find their employment transferred automatically to another employer as a result of a random series of events.
Eddie Stobart Limited v Moreman & Others [2012] UKEAT/0223/11
The first step in working out what, if anything, has transferred — and which employees transfer (see page 365) — is usually to identify the “activities” that the team was engaged to provide under the service contract before the transfer.
A good example of the importance of identifying the transferring activities is provided by Edinburgh Home-Link Partnership v City of Edinburgh Council [2012] UKEATS/0061/11/B1. In this case, a voluntary organisation held the service contract for the provision of support to homeless people on behalf of Edinburgh Council, the commissioning client. When the council decided to take the contract back in-house, the employment contracts of all the employees who were engaged in front-line service delivery transferred to work for the council, because these were the services covered by the contract. The contracts of the charity’s two directors did not transfer, because they were not engaged in delivering the contracted-for activities. Instead, they worked on broader, strategic tasks that were to do with the administration of the charity. The fact that the charity only had this one contract made no difference to this conclusion.
“Activities” are not necessarily restricted to just those activities described in the 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).
However, working out what activities have transferred is a question of fact for the tribunal, and the tribunal will not necessarily be wrong if it relies mainly on the signed service agreement between the client and the service provider to identify the transferring activities. For example, in Qlog v O’Brien [2014] UKEAT/0301/13/2103, the client, a cardboard manufacturer, decided to stop using its existing haulage company to transport its goods, and instead contracted with a new business, Qlog. Under the service agreement, Qlog took over all responsibility for transportation of the goods. However, whereas the old haulage company used its own drivers and vehicles to transport the goods, Qlog owned no vehicles and employed no drivers. Instead, it used a computerised logistics system to source self-employed drivers who used their own vehicles to transport the goods. Even so, said the tribunal, there was still a service provision change. 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 haulage contractor. As a result, the HGV drivers employed by the outgoing contractor transferred to Qlog under TUPE.
These cases provide a good illustration of the continuing difficulty in predicting whether or not TUPE applies.
The activities must be the main task of the group as a whole, although it need not be the only thing they do. It is not enough for the activities to be the main (or even the only) task of a few team members. For example, in CEVA v Seawell Limited [2013] CSIH 59, one team member spent 100% of his time servicing the needs of one single client, Seawell. Even so, his contract did not transfer when that client took the work back in-house because other members of the team serviced several other clients as well as Seawell.
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 be made up of just one person (regulation 2(1) of TUPE) and that one person can be “assigned” to an organised grouping even if they are the only person in that grouping (Rynda (UK) Limited v Rhijnsburger [2013] UKEAT 0570/12/0909).