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Employees coming from two different companies cannot receive TUPE protection, rules EAT

Out-Law News | 13 Apr 2012 | 4:35 pm | 1 min. read

TUPE law should not apply when employees are moved to a new employer from two different original employers and should only apply to employees working on the specific tasks that are transferred, an Employment Appeals Tribunal (EAT) ruling has said. 

Lady Smith's ruling in relation to a Scottish company providing shipping services in the Falkland Islands contained her views on when Transfer of Undertakings (Protection of Employment) Regulations (TUPE) apply.

TUPE law transfers employees from one company to another when an organisation outsources services or changes outsourcing provider. The ruling dealt with a Ministry of Defence (MOD) contract previously held by shipping company J&A Gardner and subsequently won by Dutch firm Van Winjgaarden Marine Services.

A series of complicated company structures meant that the crew of the boat and two officers workers who were based in Scotland were employed by different companies. The TUPE regulations say that an "organised grouping of employees" must be "situated in Great Britain" for the law to apply.

Lady Smith said that the decision of an Employment Tribunal that the employees had transferred from the original companies should not stand and the case should be re-heard by a new Tribunal.

She said that this was the case partly because the Tribunal had not considered one part of the regulations, part 4, and so could not be sure that the kind of employee transfer that is covered by TUPE had actually taken place.

"If a claimant can show that a relevant service provision change occurred, he then requires to satisfy the requirements of regulation 4(1)," said the ruling. "That involves considering whether or not the claimant was assigned to the organised grouping of resources referred to in regulation 3(3)(a)(i)."

Lady Smith also gave guidance on other aspects of the application of TUPE. "It seems to me that the phrase 'organised grouping of employees' connotes 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," she said. "The reference to 'situated in Great Britain' clearly requires that group to be based in Great Britain."

Lady Smith did say, though, that not som people in that group could work outside of Great Brtain and still qualify for TUPE protection.

"Turning to 'principal purpose' there seems to be no reason why the words should not bear their ordinary meaning," she said. "Thus, the organised grouping of employees need not have as its sole purpose the carrying out of the relevant client activities, that must be its principal purpose.