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TUPE: What is an Organised Grouping?

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

A service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) takes place when, immediately before the transfer, there is an ‘organised grouping of employees’ situated in Great Britain which has as its principal purpose the carrying out of the relevant activities on behalf of the client. Recent decisions of the Employment Appeal Tribunal (EAT) illustrate that a somewhat restrictive interpretation is being applied to this term.

In Argyll Coastal Services v Sterling and others, the Honourable Lady Smith interpreted the phrase ‘organised grouping of employees’ as connoting ‘a number of employees which is less than the whole of the transferor’s entire workforce, deliberately organised for the purpose of carrying out the activities required by the particular client contract and who work together as a team’. In Eddie Stobart Ltd. v Moreman and others, the EAT held that an organised grouping will only exist where the employees in question are organised by reference to the provision of services to the relevant client. Now, in Seawell Ltd. v Ceva Freight (UK) and another, the EAT has ruled that although a single employee can be an organised grouping of employees for the purposes of a service provision change under TUPE, the fact that an employee works solely on a contract for a client is not sufficient in itself to qualify.

Mr Moffat worked for Ceva, a freight forwarding and management logistics company. Seawell, a specialist oil platform drilling business, became a client of Ceva in April 2008. Ceva’s workforce was organised into two separate groups – one dealing with ‘inbound’ goods and one with ‘outbound’ goods. Mr Moffat was included in the outbound group and spent 100 per cent of his time on the Seawell account. He was not the only person who worked on the provision of services to Seawell, however. Some contribution from other employees was required because there were paperwork and organisational functions as well as the physical receipt, storage and delivery aspects of the work. Seawell had always made it clear that it eventually intended to take the work in house and ceased being a client of Ceva in January 2010. Ceva asserted that Mr Moffat’s employment had transferred to Seawell under TUPE. Seawell disputed this.

The Employment Tribunal (ET) found that Mr Moffat had transferred under TUPE and had been unfairly dismissed by Seawell. Its reasoning was that either he himself was an organised grouping whose principal purpose was carrying out the activity or that he was part of an organised group of people who together ensured that the service for Seawell was effective. As he was the only person who spent 100 per cent of his time on the client’s activities, he was the only employee assigned to the group.

The EAT disagreed. The Honourable Lady Smith said, “It remains my view that the description ‘organised grouping of employees’ connotes a deliberate putting together of a group of employees for the purpose of the relevant client work – it is not a matter of happenstance.”

The fact that an employee happens to have been doing particular work does not, of itself, show that the employer assigned him to a grouping established for the purpose of carrying it out. In this case, there was no evidence that Ceva had specifically formed a grouping consisting of Mr Moffat to carry out the Seawell work. The only deliberately organised grouping of employees was the separation of the workforce into ‘inbound’ and ‘outbound’ operations.

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