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Service provision changes: guidance on the meaning of an "organised grouping of employees" (EAT)

01 March 2012 #Employment


The EAT has recently upheld an employment tribunal’s decision that a contract being outsourced from one contractor to another, did  not, in the facts of that case, constitute a service provision change. 

Guidance was given on what an “organised grouping of employees” means for the purposes of TUPE regulations.  An organised grouping cannot be evidenced by the fact that a group of employees worked mostly for a particular client.  However the amount of time that employees spend working for a particular client is relevant to whether they are assigned to the organised grouping that is transferring.  It is essential that it can be demonstrated that the employees are deliberately organised into an identifiable client grouping to satisfy the regulations.  Therefore employees must be organised by reference to the specific requirements of the client. 

In th case of  Eddie Stobart Ltd v Moreman and others UKEAT 0223/11 there were 35 claimants who were employed by Eddie Stobart Ltd (ES).  They were employed at the company’s depot in Nottinghamshire.  In April 2009, the depot closed, but a problem arose as the company had been providing warehousing and distribution services to 2 clients.  In terms of shifts, the day-shift employees worked mainly on the contract for Vion and night-shift employees worked mainly on the contract for remaining client.

The Vion contract was awarded to FJG Logistics Ltd (FJG).  ES decided that the day-shift employees and those employees who had spent more than 50% of their time on Vion-related work over the previous 90 days were "assigned" to the Vion contract.  The claimants were told there had been a service provision change and due to the fact they were assigned to the Vion contract, their employment had transferred to FJG under TUPE.  However, FJG did not accept that TUPE applied to the subsequent outsourcing of the contract and the claimants were dismissed by ES.

The claimants brought proceedings against both companies.  FJG argued the claim should have been struck out as the claimants had not verified that they were "assigned" to any particular client of ES and, therefore, could not rely on TUPE.  The tribunal agreed to strike out the claims against FJG.  It had reached this decision based on whether there was an "organised grouping of employees". However, the tribunal held that the claimants were not an organised grouping of employees.  They only spent most of their time working on the Vion contract, because of the way ES organised their shift patterns. They had not been specifically assigned to carry out work for Vion.  

ES appealed against the decision. It argued that FJG had based its strike-out application on the "assignment" test, but the tribunal had reached its decision on the "organised grouping" test. Further, to satisfy the "organised grouping" test, it was sufficient to show that the claimants worked mostly for Vion; it was not necessary for the employees to be organised as members of a "Vion team".  The tribunal`s decision was not acceptable, as a matter of public policy.  It was noted that it was rare to have identified teams in the logistics industry and the decision meant that employees in that industry would never be protected under TUPE where a client moved to a different supplier.

In this case the employee did not transfer with the work. The question of whether there is an organised grouping of employee must be considered before the question as to whether the employees are assigned to the undertaking or part of the undertaking being transferred under TUPE.

TUPE is a complex area and we suggest you take advice on whether TUPE applies, as can been seen getting it wrong can lead to expensive and lengthy employment tribunal claims over the application of TUPE. Remember there is also an obligation to inform and consult in TUPE situations and failure to do so can also result in costly claims from employees and their representatives.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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