We look at two cases showing that a TUPE transfer requires intention rather than coincidence.
Eddie Stobart Ltd v Moreman
In the case of Eddie Stobart Ltd v Moreman, Eddie Stobart Ltd lost its appeal against the Employment Tribunal’s decision that the claimant’s contracts had not transferred under TUPE, as they had not been part of an “organised grouping of employees…which has as its principal purpose the carrying out of the activities concerned on behalf of the client.”
Did a service provision change take place?
The 35 claimants had been Eddie Stobart employees until the closure of its Manton Wood site. At that time, the site served only two major clients, Forza and Vion, who in turn supplied retailers. The retailers placed their orders at different times. Forza’s only customer, ASDA, timed their orders such that the work fell to the night shift workers. The result was that the night shift carried out work on the Forza contract, and the day shift did the remainder of the work, being the Vion contracts.
Eddie Stobart believed that Vion had arranged for the work from Manton Wood to be taken over by FJG. They wrote to employees who had worked either wholly or mainly on the day shift to notify them that their employment had been transferred to FJG, believing that those workers had constituted an ‘organised grouping’ for their client, Vion. Eddie Stobart believed that a service provision change had occurred, so there had been a relevant transfer under TUPE. FJG did not accept that a service provision change had taken place.
What is an organised grouping?
In order to decide whether a relevant transfer had taken place, the question of an ‘organised grouping’ under TUPE needed to be answered.
It had never been disputed that the claimants spent all, or most of their time working on Vion contracts.
The Employment Tribunal had decided that where there was 24 hour operation of a site, a shift system was inevitable; and it was inevitable that there was a division of labour between shifts. The organisation of work was therefore not by reference to the clients, and employees were not dedicated to specific contracts, they simply did the work that fell into their shift. The work fell in such a way because of the ordering patterns of their clients’ customers, rather than being organised in that way by their employers. There was therefore no ‘Vion’ team, and the claimants could not and did not identify themselves as being in such a team.
The Judge held that there had not been a relevant transfer, as the claimants had not been an organised grouping.
The EAT dismissed Eddie Stobart’s appeal and endorsed the findings of the Employment Tribunal. It was not a question of whether the employees were principally carrying out the activities in question, but a higher threshold was in place; the activities should be the principal purpose of that group, and in place by reference to the requirements of the client.
The importance of planning and intent
Both the Employment Tribunal and EAT noted that the organisation of work at Manton Wood fell to coincidence. The key issue was whether the employees were organised by reference to the clients’ requirements. It would seem therefore that in order to satisfy the ‘organised grouping’ question, there must be a certain degree of planning and intent on the part of the employer, in essence, they must create the distinct groups, or ‘teams’ specifically assigned to clients.
Seawell Ltd v Ceva Freight (UK) Ltd
The EAT applied the judgment in Eddie Stobart v Moreman to another transport and logistics TUPE situation to find that the Employment Tribunal had made an error in finding that the claimant, Mr Moffat had TUPE transferred from Ceva to Seawell.
Ceva are a freight-forwarding and logistics management business in which Mr Moffat was a logistics co-ordinator. They had two groups of employees: ‘inbound’ and ‘outbound’ in which Mr Moffat worked. He spent 100% of his time on Seawell work, whereas his other ‘outbound’ colleagues spent varying degrees of their time on Seawell work. Seawell subsequently took all of the work in-house.
The EAT found that the two groups of employees were ‘organised groupings of employees’, but were not organised for the purpose of Seawell. Neither did the fact that the claimant happened to spend all of his time on one contract mean that he was an organised grouping for the purpose of that contract; it was not sufficient that he spent all of his time on the Seawell contract. Another factor which worked against the Tribunal’s finding of a TUPE transfer was that the claimant’s colleagues were also carrying out Seawell work, albeit to lesser degrees, but when Seawell took the work in-house they took all the work Ceva had been undertaking, not just that carried out by the claimant.
The bottom line therefore is that an employee happening to do a particular type of work does not automatically equate to assignment to a group organised for the purpose of carrying that work out: a TUPE transfer requires intention rather than coincidence.
Eddie Stobart v Moreman UKEAT/0223/11/ZT
Seawell Ltd v Ceva Freight (UK) Ltd and Craig Moffat UKEATS/0034/11/BI