In Seawell Ltd v Ceva Freight (UK) Ltd the Employment Appeals Tribunal (EAT) 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.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply to two types of "relevant transfer" as follows:
- Transfer of an undertaking; such as a transfer of a business, undertaking or part of a business or undertaking where there is a transfer of an economic entity that retains its identity (regulation 3(1)(a)); and
- a service provision change; that is a situation where:
- Activities cease to be carried out in-house and are instead carried out by a contractor.
- Activities cease to be carried out by a contractor on a client’s behalf and are carried out instead by a subsequent contractor on the client’s behalf.
- Or activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf and thereafter are conducted in-house by the client.
A condition applying to service provision changes is that there must be an organised grouping of employees situated in Great Britain whose principal purpose is the carrying out of the activities concerned on behalf of the client (regulation 3(3)(a)(i)). An organised grouping of employees could be a single employee for the purpose of TUPE (regulation 2(1)).
Where TUPE applies, the employment contracts of those employees assigned to the organised grouping of resources pass from the existing provider of the services to the new provider (regulation 4).
Case facts - Seawell Ltd v Ceva Freight (UK) Ltd
- M was employed by Ceva as a logistics co-ordinator in its warehouse. Ceva's business involves freight forwarding and logistics management.
- M was based in Ceva’s “outbound goods” group with seven other employees. M spent all his time working on the Seawell customer account. The other seven employees either spent some (up to 30%) or none of their time on this customer account.
- Seawell decided to bring in-house the work previously carried out on its behalf by Ceva.
- Ceva asserted that TUPE applied so as to transfer M’s employment to Seawell, which Seawell disputed.
- M’s employment was terminated and he claimed unfair dismissal and breach of the TUPE information and consultation obligations against Ceva and Seawell.
At first instance the Employment Tribunal held that M had transferred from Ceva to Seawell and held Seawell liable for unfair dismissal. Seawell appealed to the EAT.
The EAT’s decision
- overturned the tribunal’s decision that there was a service provision change;
- found that M had been unfairly dismissed by Ceva; and
- concluded that the tribunal had applied the wrong test in concluding that M was an organised grouping of employees for the purposes of regulation 3(3)(a)(i).
The fact that TUPE expressly provides that a single employee can be an organised grouping does not mean that a single employee who spends all of their time on work for a particular client is necessarily an organised grouping for the purposes of the test.
On the facts, the EAT concluded that the employee was not deliberately organised for the purposes of the client's contract and did not carry out all the activities concerned on his own. He worked as part of a team whose principal purpose was other than that particular client contract.
Although TUPE provides that a single employee can be an organised grouping of employees this does not necessarily mean that they always will be; it will turn on the facts of each case.
The case also addressed the complex issue of when an affected employee is able to bring a claim for breach of the TUPE information and consultation obligations; although this aspect is outside the remit of this article.