No TUPE Transfer Where Employee Worked Solely for One Client

An employee who spent all of his time working for one client was not “an organised grouping of employees” and so his employment did not transfer under TUPE when the contract on which he worked was taken back in-house.

In Ceva Freight (uK) Ltdv Seawell Ltd, Ceva, a logistics business, organised its workforce into two sections – one dealing with “outbound goods” and one dealing with “inbound goods”.  M was part of the “outbound” team, comprising eight employees, and he spent all of his time working for Seawell. His job description referred to the fact that he had been employed to enable the Seawell contract to be performed. Other team members also worked on the Seawell contract but to a lesser extent, working also for other clients. When Seawell decided to terminate its contract with Ceva and do the work in-house, Ceva argued that M’s employment transferred to Seawell under TUPE.

Where there is a service provision change (SPC), an employee’s employment contract will transfer if, immediately before the SPC, there is “an organised grouping of employees” whose principal purpose is the carrying out of activities on the client’s behalf.

The Court of Session agreed with the EAT that M was not an organised grouping of employees and TUPE did not therefore operate to transfer his employment to Seawell.

The concept of an “organised grouping” implies that there has to be an element of conscious organisation by the employer of the employees into a grouping/team whose principal purpose is to carry out the relevant activities for the client. Here there was no such organised grouping of employees as it could not be said that any particular team was organised so that carrying out activities for Seawell was its principal purpose – the rest of the team carried out similar tasks for other clients as well as Seawall. It is necessary to look at the team as a whole and if the team is not an organised grouping whose principal purpose is to carry out activities for the client concerned, the fact that one employee spends all their time working for that client is irrelevant. It was wrong to say that M was an organised grouping because he spent all of his time working for Seawell and the fact that his job description referred to Seawell did not change this. This decision makes it clear that just because an employee spends all of their time working for one client does not mean that they will transfer to the client if the client takes the service back in house. It is always necessary to look at the activities being performed under the contract, who is performing them and whether they are organised by reference to the client’s requirements so that it can be said that their principal purpose is to carry out the activities on the client’s behalf. In this case, the activities comprised the inbound and outbound services which were carried out by teams of employees providing similar services to other clients. Their principal purpose was not to carry out activities for Seawell. In the circumstances, none of the employees transferred to Seawell when it took the contract back in-house.

That is not to say that an individual employee can never be an organised grouping of employees. Where activities are carried out by an individual employee working for one client, the employee is likely to constitute an organised grouping of employees whose principal purpose is to carry out activities for that client. If the client were to take the activities back in-house the employee would almost certainly transfer under TUPE.