For a service provision change to apply, the legal test is
that there must have been, prior to the change, a so-called
'organised grouping of workers' whose principal purpose was
to carry out relevant activities for a relevant client.
Last week the EAT handed down a judgment in Amaryllis Ltd v McLeod, confirming that the
principal purpose of any organised grouping of workers must be
considered at the point immediately before the change.
Background and Employment Tribunal Decision
Millbrook Furnishings Ltd had previously carried out work for
the MoD, renovating wood and metal furniture. However, from
2003-2008 this work had been carried out by Millbrook, as a
sub-contractor of Amaryllis. The MoD awarded new contracts, and in
2014 the contract was retendered amongst four contractors.
Millbrook was then unsuccessful but Amaryllis won the contract.
Even though it was accepted that Millbrook's employees spent
just short of 70% of their time on the MoD renovations contract,
the Employment Judge considered evidence of what had happened
before in deciding (a) that TUPE applied and (b) that the employees
had transferred to Amaryllis. The Judge was persuaded that the
Millbrook department had initially been set up to service the MoD
contracts, even though the employees later serviced other
customers. The Employment Judge was also persuaded that the MoD was
still the largest customer.
The EAT overturned that decision on the basis that the
Employment Judge had erred in looking back to 2003-2008. It said
that the relevant time to assess the principal purpose of any
organised group of employees is the point immediately
before the transfer.
The EAT also said that even if there had been an organised group
of employees, the group was not designated to carry out activities
for the MoD, because Millbrook's client at that point was
actually Amaryllis and not the MoD.
Moral of the tale
Be careful in these situations and get some decent advice. A bad
guess can be very expensive.
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