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TUPE - Eddie Stobart Ltd v Moreman

In the recent Tupe case of Eddie Stobart Ltd v Moreman, Eddie Stobart Ltd lost its appeal against the Employment Tribunal’s decision that the Claimant’s contracts had not transferred under TUPE, as 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.”

Facts

The thirty five Claimants had been Eddie Stobart employees until the closure of its Manton Wood site. At that time, the site served only two major clients, Forza and Vion, who in turn supplied retailers. The retailers placed their orders at different times. Forza’s only customer, ASDA, timed their orders such that the work fell to the night shift workers. The result was that the night shift carried out work on the Forza contract, and the day shift did the remainder of the work, being the Vion contracts.

Eddie Stobart believed that Vion had arranged for the work from Manton Wood to be taken over by FJG. They wrote to employees who had worked either wholly or mainly on the day shift to notify them that their employment had been transferred to FJG, believing that those workers had constituted an “organised grouping” for their client, Vion. Eddie Stobart believed that a service provision change had occurred, so there had been a relevant transfer under TUPE.  FJG did not accept that a service provision change had taken place.

Judgment

In order to decide whether a relevant transfer had taken place, the “question of an organised grouping” under TUPE needed to be answered.

It had never been disputed that the Claimants spent all, or most of their time working on Vion contracts.

The Employment Tribunal had decided that where there was 24 hour operation of a site, a shift system was inevitable; and it was inevitable that there was a division of labour between shifts. The organisation of work was therefore not by reference to the clients, and employees were not dedicated to specific contracts, they simply did the work that fell into their shift. The work fell in such a way because of the ordering patterns of their clients’ customers, rather than being organised in that way by their employers. There was therefore no ‘Vion’ team, and the Claimants could not and did not identify themselves as being in such a team.

The Judge held that there had not been a relevant transfer, as the Claimants had not been an organised grouping.

The EAT dismissed Eddie Stobart’s appeal and endorsed the findings of the Employment Tribunal. It was not a question of whether the employees were principally carrying out the activities in question, but a higher threshold was in place; the activities should be the principal purpose of that group, and in place by reference to the requirements of the client.

Comment

Both the Employment Tribunal and EAT noted that the organisation of work at Manton Wood fell to coincidence. The key issue was whether the employees were organised by reference to the clients’ requirements. It would seem therefore that in order to satisfy the “organised grouping” question, there must be a certain degree of planning and intent on the part of the employer, in essence, they must create the distinct groups, or “teams” specifically assigned to clients.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.