TUPE only applies to service provision changes where employees form an ‘organised grouping’ which has as its main purpose the carrying out of activities on behalf of a particular client (Reg 3(3)).
In Eddie Stobart Ltd v Mr Moreman and Others, the EAT held that TUPE did not apply where a contract for warehousing and delivering meat was transferred because there was no organised grouping of employees whose principal purpose was to carry out the activities involved in that contract.
The claimants worked for Eddie Stobart Ltd at a site which serviced two clients. Employees on the night shift worked mainly for one client, Forza, whereas employees on the day shift worked mainly for the other client, Vion. When the Vion contract was awarded to FJG Logistics Ltd in 2009, Eddie Stobart took the view that all employees on the day-shift should transfer to FJG under TUPE, together with other employees who had spent more than 50% of their time on the Vion contract in the past 90 days. However, FJG refused to accept that there had been a service provision change, and the employees brought claims for unfair dismissal.
The EAT held that in order for there to be an ‘organised grouping’ for the purposes of TUPE, the employees must be organised in some sense by reference to the requirements of the client in question, for example, as a ‘Vion team’. Eddie Stobart Ltd did not organise its work to create a group of employees whose principal purpose was to carry out work for any particular customer. Rather than being in teams assigned to a particular contract, the employees were organised by shift system and job function. They did whatever work was in front of them. There was also no evidence that employees considered themselves to be part of a team dedicated to Vion. Taking all these factors into account, the EAT held that there was no organised grouping of employees whose principal purpose was to carry out the Vion contract, and therefore no service provision change under TUPE.
This case emphasises that it is not enough to look at how much time employees spend on a particular contract. There needs to be a detailed assessment of the principal purpose of a grouping of employees by reference to the requirements of a particular client.