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TUPE - Service Provision Change
The Court of Session in Ceva Freight UK Limited -v- Seawell Limited considered whether a single employee who spent all of his time working on a contract for a client was an "organised grouping of employees" for the purposes of a TUPE transfer and the service provision change test.
- An employee who spends all their time on work for a particular client is not necessarily an organised grouping.
- An organised grouping requires a deliberate act of putting together employees for the purpose of the relevant client work.
- The employee was not deliberately organised for the purposes of the client's contract and did not carry out the activities concerned on his own.
Ceva carried out “inbound” and “outbound” services for Seawell. Mr Moffat, worked in a team of eight dedicated to outbound goods and spent 100% of his time working on an account for Seawell. The other seven employees in the team spent 0-30% of their time working on the Seawell account. Seawell decided to take the service carried out by Ceva back into their own management, which resulted in Mr Moffat’s loss of employment and subsequent claim for unfair dismissal.
- Whether, immediately before the service provision change, there was an organised grouping of employees situated in Great Britain which had as its principal purpose the carrying out of activities concerned on behalf of the Seawell.
- Whether one employee can constitute an organised grouping of employees.
Organised Grouping of Employees
The Court, following the EAT’s decision in Eddie Stobart Ltd -v- Moreman, stated that the concept of an organised grouping “implies that there be an element of conscious organisation by the employer of his employees into a grouping - of the nature of a “team” - which has as its principal purpose the carrying out de facto of the activities in issue”.
The fact that an employee happens to have been doing particular work does not, of itself, show that the employer assigned him to a grouping established for the purpose of carrying it out. Accordingly, it was held that the team of eight was an organised grouping dedicated to “outbound” services but was not organised for the principal purpose of carrying out Seawell work, which includes “inbound” services.
Single Employee – Organised Grouping?
The Court found that a single individual can form an organised grouping in situations where the whole service to the customer was provided by a single employee whose principal purpose was to provide that service to that customer (for example, a client’s need for one cleaner from a cleaning firm).
However in the present case, the Court held that as the activities were carried out by the collaboration, to varying degrees, of a number of employees who were not organised as a grouping which had as their principal purpose the carrying out of the activities for the client, it was not legitimate to isolate one of that number on the basis that the employee in question had devoted all, or virtually all, of his working time to assisting in the collaborative effort.
It is clear from this case that an employee who works exclusively on one client’s contract will not necessarily “follow with the work” after the transfer. In order for service providers to ensure that employees do transfer when a contract is terminated, they must ensure that there is a deliberate organising of employees specific to the client’s needs.