Seawell Ltd v Ceva Freight (UK) Ltd & another
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.
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.
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
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.
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
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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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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