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5th October, 2012

TUPE: Clarification of “organised grouping of employees”

Under Regulation 3(1)(b) of TUPE, a service provision change occurs when immediately before the transfer there is an “organised grouping of employees” which has as its principal purpose the carrying out of the relevant activities on behalf of the client. Recent decisions of the Employment Appeal Tribunal have illustrated that a restrictive interpretation is being applied to this phrase. In Argyll Coastal Services v Sterling and others UKEATS/0012/11/BI, the Honourable Lady Smith interpreted an “organised grouping of employees” as meaning “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”. In Eddie Stobart Ltd v Moreman and others UKEAT/0223/11/ZT, the Employment Appeal Tribunal held that an organised grouping will only exist where the employees in question are organised by reference to the provision of services to the relevant client.

In the recent case of Seawell Ltd. v Ceva Freight (UK) and another UKEATS/0034/11/BI, the Employment Appeal Tribunal ruled that although a single employee can be an organised grouping of employees for the purposes of a service provision change under TUPE, the fact that an employee works solely on a contract for a client is not sufficient in itself to qualify. Mr Moffat worked for Ceva, a freight forwarding and management logistics company. Seawell, a specialist oil platform drilling business, became a client of Ceva in April 2008. Ceva’s workforce was organised into two separate groups; one dealing with ‘inbound’ goods and one with ‘outbound’ goods. Mr Moffat was included in the outbound group and spent 100% of his time on the Seawell account. However he was not the only person who worked on the provision of services to Seawell; other employees also worked on the account as there were paperwork and organisational functions as well as the physical receipt, storage and delivery aspects of the work. Seawell had always made it clear that it eventually intended to take the work in-house and ceased being a client of Ceva in January 2010. Ceva asserted that Mr Moffat’s employment had therefore transferred to Seawell under TUPE, but Seawell disputed this. The Employment Tribunal agreed with Ceva, ruling that Mr Moffat had transferred under TUPE and had been unfairly dismissed by Seawell. It held that Mr Moffat was either an organised grouping whose principal purpose was carrying out the activity, or he was part of an organised group of people who together ensured that the service for Seawell was effective. Seawelll appealed this decision, stating the tribunal had applied the wrong test because although Mr Moffat had carried out 100% of his work for them, he had not actually carried out 100% of the activities.

The Employment Appeal Tribunal upheld Seawell’s appeal, finding that Mr Moffat had indeed been unfairly dismissed by Ceva. The Honourable Lady Smith commented, “it remains my view that the description ‘organised grouping of employees’ connotes a deliberate putting together of a group of employees for the purpose of the relevant client work – it is not a matter of happenstance”. This case demonstrates that the fact that an employee doing particular work does not, of itself, show that the employer assigned them to a grouping established for the purpose of carrying out that work. Employers should therefore be mindful of the position of a sole employee who spends 100% of their time working for one client in a similar manner to how a group would.

For further advice or information relating to the effect of TUPE on your business, please contact Helen Kidd on 01244 405537 or send an e-mail to [email protected].


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