When a client takes a contract in-house, TUPE may apply if there is an ‘organised grouping of employees’ whose principal purpose is carrying out the relevant activities on behalf of that client.

The transferring employees will be those who are ‘assigned’ to the organised grouping. In Edinburgh Home-Link Partnership v City of Edinburgh Council, the EAT considered whether two directors of Home-Link were sufficiently assigned to an organised grouping of employees for them to transfer under TUPE in a service provision change.

Home-Link assisted with housing matters for vulnerable people, largely for one client, Edinburgh Council. When the Council took the activities in-house, it was not disputed that TUPE applied to an organised grouping of about 40 employees who were directly engaged on those activities. However, there was disagreement about whether the two directors were assigned to that organised grouping.

The directors argued that in a case where an organisation was providing only one service, everyone employed by that organisation should be regarded as being assigned to the organised grouping. The EAT disagreed, holding that there was a distinction between the provision of the services and the maintenance of the corporate entity. It was clear that the directors’ role was largely strategic, involving, for example, preparing tenders, liaising with the Care Commission and dealing with the trustees. They had no direct involvement with delivery of the services to the Council. In these circumstances, the EAT held that they were therefore not assigned to the transferring group of employees.

This case highlights the risk of assuming that every employee who can be linked in some way to the relevant client work will transfer under TUPE. Employees whose role is largely strategic, with responsibility for the survival and maintenance of the business, may not be sufficiently assigned to the organised grouping and could be excluded from the transfer.