TUPE – What is an ‘Organised Grouping of Employees’?

A service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) takes place when, immediately before the change, there is an ‘organised grouping’ of employees that has as its principal purpose the carrying out of the relevant activities on behalf of the client – TUPE Regulation 3(3)(a)(i).



In Eddie Stobart Ltd. v Foerman and others, the Employment Appeal Tribunal (EAT) held that an organised grouping will only exist where the employees in question are organised by reference to the provision of services to the relevant client.



In April 2009, Eddie Stobart Ltd. (ES) decided to close its meat warehouse at Manton Wood in Nottinghamshire. Originally, the warehouse had made supplies to five major clients, but by the time it closed there were only two – Forza, which supplied meat only to ASDA, and Vion, which had a number of customers. The warehouse employees worked a shift system and, because of the way clients placed orders, the night shift employees worked principally on the Forza contract, whereas the day shift employees worked principally on fulfilling the Vion contract.



ES believed that the work done for Vion was being taken over by FJG Logistics Ltd. (FJG) and claimed that because this work had previously been carried out by an organised grouping of its employees, this constituted a service provision change for the purposes of TUPE. ES notified the employees concerned that their employment had transferred to FJG. However, FJG denied that there had been a service provision change under TUPE. The employees brought a claim for unfair dismissal.



At a pre-hearing review, the Employment Judge (EJ) found that the case for the existence of an organised grouping of employees working primarily on the Vion contract prior to the closure of the warehouse amounted to no more than the fact that the employees concerned spent all or most of their time on tasks necessitated by that contract. In his view, this was insufficient evidence that there was an organised grouping. When the company had lost the earlier three contracts, none of the employees at Manton Wood had transferred, which suggested that ES had not at that time identified an organised grouping of staff dedicated to those clients. In the EJ’s view, the organisation of the work at Manton Wood was in no way by reference to the customers but was by a shift system and job function within that shift. Employees found themselves working on the Vion contract because of the time of day Vion’s own customers chose to place their orders, and the majority of the claimants did not see themselves as assigned to one contract or another.



ES appealed against the EJ’s decision on the ground that it was sufficient to show that there was a group of employees who did, as a matter of fact, mostly work on tasks required by the Vion contract for there to be a relevant transfer of a service provision under TUPE. The EAT disagreed, finding that the EJ had come to the right decision for the right reasons.



In the EAT’s view, the language of TUPE Regulation 3(3)(a)(i) does not say merely that the employees should, in their day-to-day work, in fact (principally) carry out the activities in question. It says that doing so should be the principal purpose of an organised grouping to which the employees belong. This necessarily connotes that the employees be organised in some sense by reference to the requirements of the particular client and does not apply where, as was the case here, a group of employees found themselves working on tasks for that client because of shift patterns and working practices, but without any deliberate planning or intent.



Furthermore, when a transfer takes place, it is important for employees to know, as far as possible, where they stand. If a putative ‘grouping’ does not reflect any existing organisational unit, there are likely to be practical difficulties identifying which employees belong to it.



This decision suggests that if you anticipate employees working on a particular contract transferring with the contract in the event that it transfers elsewhere, it is advisable that they are seen as a designated team.