The EAT has held in Seawell Ltd v Ceva Freight (UK) Ltd and
another UKEATS/0034/11 that an employee who spent all of his
working time on a single client account was not an organised
grouping of employees for the purposes of the service provision
change test under TUPE.
Ceva provided logistics and freight forwarding arrangements for
clients. Employees were arranged into handling either
"inbound" or "outbound" goods. Mr Moffet
was part of the outbound grouping and spent all of his time working
on the Seawell client account. Although other employees
worked on the Seawell account, they spent far less time on the
contract and worked on other client accounts. Seawell decided
to take the work back in-house and Mr Moffet was dismissed.
The employment tribunal held that Mr Moffet's employment had
transferred to Seawell under TUPE. The service provision
change provisions of TUPE applied because Mr Moffet himself
constituted an organised grouping of employees which had as its
principal purpose the carrying out of the activities concerned on
behalf of Seawell.
The EAT upheld Seawell's appeal against the employment
tribunal's decision. An employee who spent the entire
time working on a particular client account would not always be an
organised grouping of employees. The EAT held that for there
to be an organised grouping of employees, there needed to be some
deliberate putting together of a group of employees for the purpose
of a client's work. Ceva had only organised its employees
into handling "inbound" or "outbound"
goods. There was nothing to suggest that Ceva had
deliberately put together or organised a team to perform the
Seawell contract. This meant that there was no service
provision change pursuant to TUPE and Mr Moffet's employment
had not transferred to Seawell.
Comment: This case follows recent cases which
state that the service provision change provisions under TUPE will
only apply if there is a deliberate organisation of employees with
respect to a client account. It is not enough for employees
to just happen to spend their time working on a client
account. The case is also part of a wider body of recent case
law which seems to adopt quite a narrow view of when there will be
a TUPE transfer pursuant to the service provision change
test. Unfortunately, this is creating precisely the lack of
certainty and clarity which the service provision change rules were
designed to avoid.
In October 2012, the Court of Appeal confirmed that a Service Provision Change ("SPC") TUPE transfer can only occur where the client who receives the service, before and after the change, remains the same (Hunter v McCarrick  EWCA Civ 1399).
Following much debate, on 24 April 2013 the House of Lords finally gave its approval to employee shareholder status which will now take effect from Autumn 2013.
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