Groups of employees must act on behalf of a particular client to be protected by TUPE, tribunal rules

Out-Law News | 27 Feb 2012 | 1:32 pm | 2 min. read

A group of employees working on behalf of a particular client must be organised principally to carry out that client's requirements in order to be protected by TUPE, a tribunal has ruled.

The Employment Appeals Tribunal (EAT) held that in order to be considered an "organised grouping of employees" under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), workers with the Eddie Stobart haulage company had to be organised according to the requirements of the client. It was not enough that, although the workers principally carried out activities on behalf of that client, they were organised according to their shifts.

TUPE protects the rights of employees whose companies are taken over by new owners. It was expanded in 2006 to govern situations where work is outsourced, brought back in-house or the service provider is changed. The employees in this case had argued that they had been part of a service provision change (SPC) when their contract was outsourced from one contractor to another.

Guidance (35-page /  from the Department of Business, Innovation and Skills makes it clear that TUPE will only apply where the outgoing service provider has a team of employees which is "essentially dedicated" to carrying out the activities that are to transfer. It excludes cases where there is no identifiable grouping of employees because "it would be unclear which employees should transfer, in the event of a change of contractor, if there was no such grouping".

In his decision, Mr Justice Underhill said that TUPE could not apply where a group of employees mostly worked on tasks that benefitted a particular client "without any deliberate planning or intent".

"Taking it first and foremost by reference to the statutory language, [TUPE] does not merely say that the employees should in their day-to-day work in fact (principally) carry out the activities in question; it says that carrying out those activities should be the (principal) purpose of an 'organised grouping' to which they belong. In my view that necessarily connotes that the employees be organised in some sense by reference to the requirements of the client in question," he said.

The 35 workers had been day-shift employees with Eddie Stobart at its depot in Nottinghamshire. The company had been providing warehousing and distribution services to two clients when the depot closed in April 2009. Because of the way shift patterns were worked out the day-shift employees worked primarily on the contract for a company called Vion while night shift employees worked on the contract for the other client.

When the depot closed, the Vion contract was awarded to FJG Logistics Ltd. Eddie Stobart said that this amounted to a service provision change and the workers' employment would transfer to FJG under TUPE. However FJG did not accept that TUPE applied so the employees were dismissed.

At a pre-hearing review the employment tribunal agreed to strike out the workers' claim against FJG because they had not made a case that they were "assigned" to a particular client under another TUPE provision. However the original tribunal did so with reference to the different "organised grouping" test, under which it would not have been necessary to show the workers had been "assigned" to Vion.

However, on appeal Mr Justice Underhill said that the original judge had reached "the right decision for the right reasons".

"I accept that the issues... are analytically distinct, and that the evidence before the Judge was addressed only to the latter issue. But the two points nevertheless self-evidently overlap to a very considerable extent," he said.

"I do not regard that conclusion as objectionable on policy grounds. No doubt the broad purpose of TUPE is to protect the interests of employees by ensuring that in the specified circumstances they 'go with the work'... [but] there is no rule that the natural meaning of the language of the Regulations must be stretched in order to achieve transfer in as many situations as possible," he said.