Argyll Coastal Services Ltd v Stirling & Ors (Transfer of Undertakings : Transfer)

Under Transfer of Undertakings (Protection of Employment) Regulations 2006, proof of a service provision change does not itself establish that an individual employee’s contract transferred. The tribunal must separately determine under regulation 4(1) whether the employee was assigned to the organised grouping affected by the transfer, after examining all the circumstances. Participation in the relevant work immediately before transfer is insufficient by itself.

Obiter, the relevant activities are those contracted for by the client. Ancillary administrative work may facilitate those activities without constituting them. An organised grouping is ordinarily a team deliberately organised by one employer to perform the client contract, and must be based in Great Britain.

J & A Gardner & Co Ltd had provided a vessel and crew to the Ministry of Defence for cargo work around the Falkland Islands. Following re-tendering, another contractor supplied the replacement vessel. The crew and the two office employees claimed that their contracts transferred under the service-provision-change provisions of Transfer of Undertakings (Protection of Employment) Regulations 2006.

The Glasgow Employment Tribunal, in a judgment registered on 29 October 2010, held that all contracts transferred to Argyll Coastal Services Ltd. It found that the two office employees formed an organised grouping in Milngavie, but made no findings on assignment under regulation 4(1). The employer appealed. The central issue was whether the tribunal could decide that individual contracts transferred without determining assignment to the relevant organised grouping.

1. Appeal allowed. The Employment Tribunal erred by holding that the claimants’ contracts had transferred without deciding whether each claimant satisfied regulation 4(1) of Transfer of Undertakings (Protection of Employment) Regulations 2006.

2. A service provision change under regulation 3 and the transfer of an individual contract under regulation 4 are separate questions. Regulation 4(1) requires a finding that the particular employee was assigned to the organised grouping affected by the transfer. That inquiry requires examination of all the facts and circumstances. An employee’s involvement in the relevant activities immediately before transfer does not necessarily establish assignment, for example where the work was temporary cover.

3. The omission was fundamental. The tribunal’s decision therefore fell in its entirety and the claims were remitted for rehearing before a freshly constituted tribunal.

4. Obiter, for the rehearing, the relevant activities are identified by asking what service the client contracted for. Work which merely facilitates that service, including administrative work, may not itself be the relevant activity. An organised grouping ordinarily comprises employees deliberately organised by their employer to carry out a particular client contract as a team. It must be situated in Great Britain, although members may work outside the United Kingdom. A single grouping cannot ordinarily combine employees of different employers, and overseas crew cannot piggyback on an office grouping merely through regulation 3(4)(c).

• Employment Appeal Tribunal: Appeal allowed. The Glasgow Employment Tribunal’s judgment registered on 29 October 2010 was set aside and the claims were remitted to a freshly constituted tribunal.
• Employment Tribunal, Glasgow: Held that, from 19 May 2009, the claimants’ contracts transferred to the first respondent under Transfer of Undertakings (Protection of Employment) Regulations 2006, and dismissed the claims against the third respondent.