Following the case of Eddie Stobart Ltd v Moreman, we have received further guidance from the Employment Appeal Tribunal (EAT), in the case of Seawell Ltd v Ceva Freight (UK) Ltd, on the meaning of “an organised grouping of employees” when determining whether a service provision change under TUPE has occurred.
Ceva are a freight forwarding and management logistics company. Its workforce is divided into two: one group dealing with “inbound” goods, and the other group dealing with “outbound” goods. One employee in the inbound group, Mr Moffatt, spent 100% of his working time carrying out work for one client, Seawell. The other seven employees in the inbound group either carried out no work for Seawell, or just a limited amount. Seawell decided to terminate its contract with Ceva, and take the service in-house. Ceva argued that Mr Moffatt’s employment should transfer to Seawell under TUPE, but this was disputed by Seawell.
Ceva were initially successful in the Employment Tribunal, and Seawell were found to have unfairly dismissed Mr Moffatt, and both parties were jointly liable for a failure to inform and consult under TUPE. However, the decision that Mr Moffatt did transfer to Seawell under TUPE has been overturned by the EAT, which has substituted a finding that, as Mr Moffatt did not transfer, he had been unfairly dismissed by Ceva.
In giving its judgment, the EAT clarified that just because one person can constitute an organised grouping of employees, this does not mean they will automatically meet this definition when they spend 100% of their time working for one client. Drawing upon the Eddie Stobart judgment, the EAT confirmed that an organised grouping requires a deliberate “putting together” of a group of employees for a client’s purpose, and was not just a matter of “happenstance”. Whilst this existed in relation to the “inbound” and “outbound” groups, there were no findings in fact to support the position that Ceva had deliberately formed a group consisting of Mr Moffatt to service the Seawell contract. Further, under TUPE, an organised grouping must carry out “the activities concerned”, meaning all the activities under the contract. Just because Mr Moffatt spent all of his time working on this contract, did not mean he was carrying out all of the activities. Seawell took the whole contract back, not just the part carried out by Mr Moffatt.
Impact for employers
- This case is another example of the restrictive approach taken to the service provision change aspects of TUPE in recent months. Employers wishing to ensure employees do transfer when a contract is terminated must ensure the employees are organised specifically and intentionally with reference to the client’s needs. For those who wish to argue that TUPE does not apply, the recent run of cases gives much greater scope for a narrow interpretation of the relevant provisions.