Percentage test not right for TUPE's "organised grouping of employees"
For those of you struggling with whether TUPE applies and who transfers, a new EAT decision has shed some new light on
this difficult question. When considering the service provision change rules introduced in 2006, an organised grouping of
employees must be identified whose principal purpose is carrying out the activities transferring. The EAT has determined
that this is not a test of the proportion of the workload of the employees, but rather one of how their roles are defined.
The detail
Eddie Stobart v Moreman and others involved the closure of a logistics facility and an argument about whether staff
transferred to the company who took over the distribution contract for a major customer. The packers employed were not
assigned to any particular customer's products. However because of the equipment used, detailed analysis could clearly
identify those who had undertaken most of their tasks for the particular customer (such clarity being unusual in practice in
most potential TUPE situations). The packers themselves may not even have realised who they were packing for.
The question was whether these staff were an organised grouping of employees. If they were, they would transfer under
the service provision change rules in TUPE. The EAT have held they were not. The wording of the test did not
cover employees who may in practice be found to be taking on tasks for a particular client, possibly without deliberate
planning or intent. An organised grouping requires employees to be organised as "the client A team", although the
Judgment acknowledges that the test could still be satisfied where identification was less explicit.
What does this mean for me?
If you have a number of contracts for clients, with staff working across those contracts, this decision may reduce the
chances that TUPE will apply when one contract is lost. To fit staff squarely within the TUPE definition so that they will
transfer under the service provision change rules, they should be organised and identified as working as part of the
specific client team. Considering a percentage of staff time, which is a test standardly applied in practice to transfer
situations, cannot create an organised grouping of employees where one does not exist.
Comment
This decision does overturn the view that analysis of staff time is key to both: an organised grouping of employees; and
who is assigned to a transfer. However its implications only go so far. Due to the legal history of the case, the EAT was not
considering the traditional TUPE test at all (which always needs to be considered as a second question if the service
provision change rules may not result in TUPE applying). If TUPE applies under the traditional test, percentages may still be
a good guide as to who transfers. However we now know that having members of your workforce who predominantly
work for one client does not create a service provision change transfer, unless they are clearly organised as having their
principal purpose working for that client. If in doubt about how the test may apply to circumstances you are considering
please do take advice.
For further information about Weightmans or to discuss any of the issues in this update, please contact Phil Allen – Partner
at Weightmans on 0161 214 0504 or [email protected]
Weightmans LLP
February 2012
This update does not attempt to provide a full analysis of those matters with which it deals and is provided for general information purposes only
and is not intended to constitute legal advice and should not be treated as a substitute for legal advice. Weightmans accepts no responsibility for
any loss that may arise from reliance on the information in this update. The copyright in this update is owned by Weightmans LLP.
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