A precondition of any service provision change (‘SPC’) is that there must be an organised grouping of employees whose principle purpose is carrying out activities on behalf of the client (the ‘organised grouping condition’). Ceva v Seawell Limited is a further example of how hard it can be to satisfy this condition.
We know from Eddie Stobart v Moreman that an organised grouping of employees requires deliberate planning and intent. In that particular case, a distribution centre had organised its workforce into day and night shifts in order to meet all of its operational needs, not those of any particular client. When the contract on which the night shift spent most of their time working was lost, there was no SPC. The night shift had not been organised to work on behalf of the client. It was just a by-product of the split between day and night working that the night shift spent most their time working for one client.
Ceva looked at an outbound logistics operations in which one employee, Mr Moffat, worked exclusively for one client (and this was deliberately so). As can be common in outsourced contracts, other team members worked for multiple clients. No-one else spent more than 30% of their time working for the same client as Mr Moffat.
The Court of Session has held that where a team of employees undertake activities on behalf of one client and all of those activities are to transfer, you have to assess the collective purpose of all team members. The collective purpose of the outbound logistics operation was to deal with multiple clients. Whilst Mr Moffat spent all of his time working for one client, it was inappropriate to look at his role in isolation in determining whether the organised grouping condition had been met.
This does not mean a single employee cannot constitute organised grouping in his or her own right. They can do, but only where activities are wholly carried out by a single employee on behalf of a client.
This case makes interesting reading for two reasons. Firstly it emphasises the need to consider the scope of the activities subject to the SPC and organisation of the entirety of the workforce delivering those activities prior to the transfer. Time spent working for a client will not on its own determine if the organised grouping condition is met.
Secondly, this once again shows the concept of SPCs has been given a literal and narrow meaning by employment tribunals. The net effect is that there is no certainty that TUPE will apply in an outsourcing scenario. This provides an interesting backdrop to the Government’s proposal to remove the concept of SPCs from TUPE.