Directors not part of “organised grouping of employees” for TUPE transfer
In the recent case of Edinburgh Home-Link Partnership and others v The City of Edinburgh Council, the Employment Appeal Tribunal (“EAT”) has considered whether two directors of a charity providing services to the City of Edinburgh Council (the "Council") were assigned to the "organised grouping of employees" for the purposes of a service provision change under the TUPE Regulations, and were therefore in scope to transfer to the Council upon cessation of the services.
Home-Link provided services on behalf of the Council. It employed about 35 staff, and the Council was its only client. The Council decided to take the service in-house. It was not in dispute that TUPE applied to the cessation of the contract, and that there was an organised grouping of employees that was wholly assigned to the delivery of the contract and that would transfer to the Council. The question that came before the Employment Tribunal (the "Tribunal") was whether or not the two directors of Home-Link were part of this organised grouping, and were therefore also in scope to transfer to the Council.
The Tribunal held that neither of the two directors were part of the organised grouping of employees. The directors’ roles were mainly strategic, involving the running of the organisation itself and liaising with the board of trustees. Whilst the Tribunal was unable to reach a conclusion as to the precise amount of time spent by each of the directors in delivering the Council contract, it appeared to only be a small amount. The EAT upheld this finding, confirming that just because the Council was Home-Link’s only client, it did not necessarily follow that all employees of the transferor would be engaged in delivering the single contract and would therefore transfer. The strategic duties of directors in running the company were distinct from the actual provision of service to the Council. The test was whether the employee was assigned to the group which had, as its principal purpose, the carrying out of the activities for which the client contracted. In this case the directors’ duties were, in the main, for the benefit of Home-Link rather than the Council, and they were not sufficiently involved in the front-line delivery of the contract to be part of the organised grouping.
Impact for Employers
- This case provides useful clarification that TUPE does not necessarily apply to every single employee who is linked in some way to the relevant client activity that is transferring. Even in a single service organisation, it cannot be assumed that all employees will transfer where TUPE applies. If an employee's role is primarily strategic, directed to the maintenance and survival of the business, he/she may not be assigned to the organised grouping and thus be in scope to transfer.