Case law on whether a service provision change has taken place

Several key EAT cases have now settled some relatively clear principles as to when a service provision change is likely to take place:

• There will only be a service provision change if employees are grouped in a team deliberately organised by the service provider to carry out the activities for the client:

This was decided in an important case, Eddie Stobart Limited v Moreman [2012] UKEAT/0223/11. The case involved a group of warehouse pickers employed by Eddie Stobart to work on the day shift. They worked on one particular contract, picking the goods of a client called Vion. However, Vion had never asked for a particular grouping of pickers to service its contract. These employees worked on the Vion contract because of shift patterns and the timing of the Vion orders, which mainly arrived during the day as opposed to the night. The workers themselves had no idea as to the identity of the client, since the goods were identified by barcode.

Stobart claimed that the day shift was an “organised grouping” of employees dedicated to the Vion contract, with the result that when Vion appointed a new supplier to replace Stobart, their employment contracts transferred automatically to that new supplier. The EAT disagreed. They said there was no deliberate organising of a team by reference to Vion’s requirements. The purpose of the Acquired Rights Directive is to protect employees’ interests on a transfer, and it cannot be in employees’ interests to discover that the identity of their employer has changed automatically due to a random combination of events.

• The first step in establishing whether there has been a service provision change is usually to work out what “activities” are being transferred.

These will normally be the services being provided by the out-going contractor under the service agreement. For an example of the importance of identifying the transferring activities, see Edinburgh Home-Link Partnership v City of Edinburgh Council [2012] UKEATS/0061/11/B1.

Activities will not necessarily be 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. What matters is what service is actually being provided on the ground. See, for example, Lorne Stewart v Hyde [2013] UKEAT 0408/12/0100, discussed on page 28.

• The activities must be the main task of the organised grouping of employees:

The activities should 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 task, or even the only task, of a few members of the team. For example, in CEVA v Seawell Limited [2013] CSIH 59, one member of a team who spent 100% of his time servicing a single client, Seawell, 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.

• An organised grouping of employees can be made up of just one person:

Regulation 2(1) of TUPE says that an organised grouping of employees can be made up of just one person. 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] UKEAT0570/12/0909).

• Even if a business looks after just one client, not all the employees are necessarily part of the organised grouping:

For example, in Edinburgh Home-Link Partnership v City of Edinburgh Council [2012] UKEATS/0061/11/B1, a voluntary organisation had a contract to supply front-line services supporting homeless people on behalf of the Council. It was their only contract. When the Council took the contract back in-house, all the employees engaged in carrying out front-line service delivery under contract transferred to the Council. However, the organisation also employed two directors who carried out other tasks — maintaining the organisation, tendering for contracts and making strategic decisions. Their employment did not transfer because they were not engaged in delivering the services under the outsourced contract. They were not performing activities that transferred. As a result, they were outside the organised grouping and were left behind as employees of the transferor.