Published on 6 July 2015
In the recent decision of Eddie Stobart Ltd v Morman the EAT decided that for there to be a service provision change under Reg 3 (1) (b) of TUPE 2006, it is not enough to say that employees will transfer if they simply “go with the work”.
Stobart is a warehousing and logistics service provider. It took over a site in 2008 at which it serviced at least 5 clients. Over time, 3 contracts were lost. Of the two remaining contracts (being for meat storage and delivery) one client’s work was done mainly at night (by the night shift workers) and the other’s work mainly during the day, by different day shift workers. The main contract (for the work during the night) was with a client called Vion. Stobart closed the site, and FJG Logistics Ltd picked up the Vion work. Stobart took the view that the 35 employees who were engaged wholly (or for 50%+) of their time on Vion work on the night shift should transfer to FJG pursuant to TUPE. FJG disagreed and refused to treat any of the employees as transferring to it. The EAT agreed with FJG that there was no service provision change and therefore no employees transferred. The consequence of this decision is that the employees had been dismissed by Stobart unfairly and with no notice.
The EAT said that there needs to be analytical distinction between an organised grouping of employees (TUPE, Reg 3 ((3) (a)), on the one hand and, on the other, whether employees are assigned to that organised grouping (Reg (4 (1)).
The EAT held that it is first necessary to identify whether there is an organised grouping of employees before asking the question of which employees are assigned to it. The essential point in this case was that the employees were “organised” as to their shifts, not as to a particular customer, so there was not an organised grouping of employees which had as its principal purpose the carrying out of activities on behalf of a particular customer. The EAT said that a paradigm example of an organised grouping of employees would be where there was a particular client “team” dedicated to the client. Such was not the case here.
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