Single minded

Jane Johnson looks at a recent Employment Appeal Tribunal case on organised groupings of employees and TUPE.

Can we say that an employee who works 100% of his time for a single client is assigned to an organised grouping of employees so that, when the contract is terminated, he transfers his employment under TUPE?

No, says the Employment Appeal Tribunal in Seawell v Ceva & Mr C Moffat. The claimant (Mr Moffat) was employed by Ceva. Ceva provided logistics and freight forwarding arrangements for clients including Seawell, who owned offshore drilling platforms. Seawell took the services in house and terminated the contract with Ceva. A number of Ceva’s employees worked on the Seawell contract as well as contracts for other clients but Mr Moffat was the only one who spent 100% of his working time on the Seawell contract.

With “service provision change” transfers, TUPE applies when there is “an organised grouping of employees (…in Great Britain) which has as its principal purpose the carrying out of the activities concerned on behalf of the client”. An organised grouping can be just one employee.

In this case, an employment tribunal found that Mr Moffat should have transferred to Seawell, either because Mr Moffat alone could be the organised grouping of employees to which he was assigned, or alternatively, the organised grouping of employees included Mr Moffat (and his colleagues who spent less time on the contract) and, as he spent all his working time on the Seawell contract, he was assigned to that organised grouping of employees.

The EAT disagreed with this. There was no basis for finding in this case that there was a group of employees specifically organised for the Seawell contract. An organised grouping of employees denotes a deliberate putting together of a group of employees for the purpose of the relevant client work. To quote the EAT: "it is not a matter of happenstance".

On the facts of this case the workforce was organised to work on a number of contracts. There was no grouping of employees organised with a principal purpose of carrying out the work on Seawell’s contract. Therefore, the EAT found that there was no service provision change when Seawell took the work in house. TUPE did not apply in this case as there was no relevant transfer.

The moral of the story is that when we are looking at outsourcing, retendering or bringing services in-house, we need to look more closely at the organisational arrangements of the staff.

Only once we have established whether there is an organised grouping with a principal purpose of carrying out the services, should we identify who is assigned and who, therefore, should transfer.

Jane Johnson is a Locum Solicitor specialising in employment at Essex Legal Services.