TUPE transfer definition explained
The question of whether or not there has been a TUPE transfer is the subject of a large number of the employment advice calls at Quest. The legal framework that forms the basis of advice on this issue incorporates the Transfer of Undertakings (Protection of Employment) Regulations 2006. Also known as TUPE for short. The correct application of the law in this area is regularly addressed by Employment Tribunals and higher courts. They pass judgment on the many different scenarios that ultimately do and do not involve a “relevant transfer” under the regulations.
Eddie Stobart Ltd v Moreman & others
The decision in Eddie Stobart Ltd v Moreman & others was one such case where the Employment Appeal Tribunal (EAT) set down some important guidance. It was for employers to consider if they were entering into the potential transfer of all or part of their business.
In this case, Eddie Stobart Ltd lost its appeal against the original Employment Tribunal’s decision. This was that the employment contracts of Mr Moreman and his colleagues had not transferred under the TUPE regulations. The EAT held that the employees involved had not met the conditions for a TUPE transfer to exist. That is, they had not been part of an “organised grouping of employees … which has as its principal purpose the carrying out of the activities concerned on behalf of the client.”
35 employees joined to bring the Tribunal claim
The facts were that the 35 employees who joined together to bring the Tribunal claim had all been employees of Eddie Stobart Ltd. This was until one of its sites was closed. At that time, the particular site in question serviced the needs of just two major clients. These two clients (A and B) in turn supplied products to major retailers who placed their orders for deliveries at different times. Client A had only one customer, namely ASDA. They had always timed their orders so that the work fell within the hours of Stobart’s night shift. As a result, the night shift workers had always carried out work for Company A. With the Stobart day shift doing the work on the contract for Company B.
During the Tribunal proceedings, a central point of the argument that there had been a “relevant transfer” in this situation was as follows. Company B had arranged for the work that had previously been done by Eddie Stobart Ltd to be taken over by another company, known as FJG. Therefore, Eddie Stobart Ltd wrote to all of their employees who had worked either wholly or mainly on the day shift on work for Company B. They informed them that their employment had been transferred to FJG. Their clear view was that those workers had constituted an “organised grouping of employees … which has as its principal purpose the carrying out of the activities concerned on behalf of the client, i.e. Company B.”
In summary
In summary, Eddie Stobart believed that there had been a service provision change. Thus there had been a relevant TUPE transfer. They argued that they had no responsibility after this date of the transfer for the employment of the workers affected and their employment rights under their contracts of employment. However, FJG did not accept that such a service provision change had taken place. This left Mr Moreman and his colleagues without employment and compensation. They therefore asked the Employment Tribunal to decide on the matter.
In consideration of the evidence, it was not disputed that the employees had spent all, or most of their employment working on the contract for Company B. However, the Employment Tribunal ruled that, where there was a 24 hour operation on an employer’s site, some kind of shift system was inevitable. This in turn would lead to the division of workers between the shifts.
Importantly in this situation, it concluded that this was the determining factor in the organisation of the work. It was not any reference to a particular client (Company A or Company B). Thus, it held that the employees had not been allocated by Eddie Stobart Ltd to work on a specific contract. They had simply carried out the work that fell within their particular shift. The actuality was that the work fell in a particular way because of the ordering patterns of Eddie Stobart Ltd’s client. Rather than being specifically organised in that way by Eddie Stobart Ltd.
EAT judge dismissed Stobart’s appeal
The EAT judge therefore dismissed Stobart’s appeal against the original findings of the Employment Tribunal. Consequently they were left with a hefty bill in settling the severance costs of the 35 workers. This case therefore illustrates the need for a group of workers to be organised. Their employer should organise them to carry out specific work for a particular client. It should have a particular contract before a service provision change and a relevant TUPE transfer can exist.
The facts also demonstrate once again the complexity of employers’ decisions in situations involving TUPE transfers. Contact Qdos HR if you have any similar situations that have arisen as a result of tendering for and winning or losing contracts to provide services.
Qdos HR offers expert advice and guidance. Our insurance products can also offer protection against any claims at the time of any service provision change or transfer.
