Thursday 5 April 2012


[Thanks to Ed McFarlane of Deminos HR for preparing this case summary]

What is the right approach to Regulations 3 and 4 of TUPE 2006 when considering if there has been a service provision change?

TUPE enthusiasts should look to Argyll Coastal Services Ltd v Stirling & others where the EAT (Lady Smith) sets out useful guidance, and makes observations on the interpretation of key terms in regulations 3 & 4.

The case arose from a complicated scenario involving two sets of Claimants who were, respectively, from the crew of a vessel - the St Brandan - chartered by the MoD for cargo services in the Falkland Islands, and two employees of another company, based in Scotland, providing support services for that vessel. After re-tendering by the MoD of the cargo services to a Dutch company with its own boat, the Employment Tribunal found that there had been a service provision change under TUPE in respect of the vessel's crew and the support staff, the transferee appealed.

The EAT upheld the appeal, noting that the Tribunal had failed to consider the impact of Regulation 4 (1) - the question of the assignment of employees to a transferring grouping of employees - and remitted the case for reconsideration, making obiter observations on the facts in the case, which provide useful general guidance, as well as considering the definitions of key terms, practitioners may note:

  • 'An organised grouping of employees' connotes fewer employees than the transferor's entire workforce, deliberately organised for the purpose of carrying out the activities required by the particular client contract and who work as a team;
  • 'Situated in Great Britain' is, naturally enough, just that, albeit that part of the organised grouping may work outside Great Britain;
  • 'Principal purpose' should bear its ordinary meaning; it need not be 'sole purpose';
  • In considering the 'activities' carried out, consider what was it that the client required of the transferor, rather than simply characterising the activities. The EAT noted that there was a distinction between 'activities' and ancillary matters which may facilitate those activities, but are not the activity itself (e.g. providing support services for a vessel);
The EAT also rejected a submission that an 'organised grouping of employees' could be made up of employees transferring from different employers, but two sets of employees could transfer to one transferee.

No comments: