UK: TUPE: Employee Who Spent 100% Of His Time Working For A Particular Client Held Not To Transfer To Client When It Took Activities "In House"

Seawell Ltd v Ceva Freight (UK) Ltd & another UKEATS/0034/11/BI

In this case the Employment Appeal Tribunal held that Mr Moffat's employment had not transferred from Ceva to Seawell by way of a service provision change under the TUPE regulations.

Although he spent 100% of his time doing work for Seawell, the EAT held that TUPE did not apply to transfer Mr Moffat's employment because he was not part of an "organised grouping of employees" whose "principal purpose" was the carrying out of the activities which transferred.

Facts

Ceva provides freight forwarding and logistics solutions. Mr Moffat worked for Ceva in the "outbound" half of its workforce located in Dyce. There were eight employees in total in the "outbound" operation. However, it was found that Mr Moffat spent 100% of his time doing work for one client, Seawell. His line manager spent about 20% of his time on the Seawell account, the General Manager spent around 10% of his time on it, and two warehousemen spent about 20-30% of their time on it.

Seawell decided to take the work in house and, on 1st January 2010, Seawell ceased being a client of Ceva. Ceva took the stance that TUPE applied to transfer Mr Moffat's employment to Seawell and told Mr Moffat that he should report to Seawell for work on 5 January. Seawell disagreed.

Decision

The EAT accepted that it was correct that a single employee could amount to an "organised grouping" so as to bring them within the scope of a TUPE service provision change. However, relying on the earlier decision of the EAT in Eddie Stobart Ltd v Moreman, it held that there must be some deliberate putting together of a group of employees in order for there to be an "organised grouping". Simply being part of a group was not enough.

According to the EAT, the only deliberately organised group of employees in the Ceva work force was the "outbound" operation and "inbound" operation teams. Mr Moffat formed part of the "outbound" team. However, the "outbound" team did not have as its principal purpose the carrying out of the activities for Seawell (it carried out work for several different clients), meaning that Mr Moffat did not transfer to Seawell under TUPE.

Implications

This decision represents a further example of a clear trend in a line of cases, including the Eddie Stobart case and Argyll Coastal Service v Stirling, in which the EAT has taken a restrictive approach to the interpretation of "organised grouping" in the TUPE regulations so as to find that a TUPE service provision change has not occurred.

The reasoning of the EAT suggests that it would have held TUPE to apply had there been any evidence of an intention on the part of Ceva to have Mr Moffat spend all his time working on the Seawell account. Such evidence may be readily available in other cases, and would presumably rule out the "happenstance" argument that ultimately resulted in the finding that TUPE did not apply.

This trend is open to criticism: the TUPE regulations exist to protect employees. However, what this (and previous) decisions do is make that protection dependant on whether the employer took steps to create a grouping that related to a particular client's work or, at the very least, intended to treat an employee as part of such a grouping.

From the employer's perspective, where similar services are being provided to a number of clients it will not always be realistic or practical to organise staff in to client related teams. Although, it might be possible to take some steps which point to organisation along client lines.

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