In Eddie Stobart v Moreman the Employment Appeal Tribunal (EAT) decided that, for there to be a TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) “service provision change” the group of employees had to be deliberately organised to service the particular client. The EAT decided that, in the Stobart case, the fact all the employees happened to work on a shift that provided services to that client was not enough. The TUPE regulations define a service provision change transfer as applying when there is an:
“organised grouping of employees”, which has
“as its principal purpose the carrying out of the activities … on behalf of the client.”
The EAT decided where a combination of circumstances (largely shift patterns and working practices) meant that a group of employees were as a matter of simple fact working mostly on tasks which benefitted a particular client did not meet this test.
The EAT pointed out that TUPE does not say merely that employees should in their day-to-day work in fact principally carry out activities for the client in question – TUPE requires that the activities are the principal purpose of the organised grouping of employees to which the individual belongs.
Whether an individual employee works 50% or more for a particular client is not any part of the test under TUPE 2006. It was part of the test under the 1981 version of TUPE, but that wording did not continue into the current 2006 version of the Regulations.
There are still a number of grey areas left in TUPE – as it seems there have always been. For example – could an “organised grouping” have more than one “principal purpose”? It might be that the “time proportion” test is relevant here – applying to the whole grouping. Or perhaps “principal purpose” is to be judged by the priority of the work?
The world of work streams and dotted line reports has yet to be fully explored in the context of TUPE. Does work streaming mean no group has a principal purpose? Or should we be tempted to say that work streaming means no-one is part of an organised grouping of employees?
What difference does it make in real terms if a transfer is, or is not, covered by TUPE?
A) If there is no TUPE transfer, then any workers who were working on the project/task/service will not go through to the new contractor as the new contractor’s employees.
- It is the current employer’s job to find them alternative work, reassign them, or if necessary make them redundant.
- Any liability for back pay or benefits remains with the current employer.
- All unfair dismissal, discrimination, equal pay risks remain with current employer.
- All contractual liabilities remain with current employer.
B) If there is a TUPE transfer, then the same workers will (as a matter of law) become the new contractor’s employees (with their full service and contractual entitlements – save for pensions – intact).
- It is the new employer’s job to find alternative work, reassign or if necessary make them redundant.
- All the other liabilities under A) transfer to the new employer
Where an argument breaks out between the employers about whether TUPE applies, individual employees may feel lost in the no-man’s land of litigation between two employers who are having some kind of custody battle where no-one wants the kids.
HR on both sides can do a lot to make sure that the original tender documents (where they exist), pitches for business, take on board the statutory TUPE obligations. HR can go beyond that, if allowed into the negotiating process early enough, and can help shape a contract for services that incorporates thinking about employees and service levels from the start.
Don’t forget the TUPE regulations are a set of minimums not a set of maximums.
Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
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