Seawell Ltd v CEVA Freight (Uk) Ltd & Anor (Transfer of Undertakings : Transfer)

For a service provision change under Transfer of Undertakings (Protection of Employment) Regulations 2006, an organised grouping must have been deliberately organised to perform the relevant client work. A worker who happens to spend all of their time on one client’s work is not, without more, such a grouping.

The relevant activities are the whole activities taken over by the client, not merely the part performed by the claimant. The existence of a qualifying grouping must be decided before considering whether an employee was assigned to it. Assignment is a factual question and cannot be inferred solely from the employee’s work allocation.

Ceva provided logistics, storage and freight-forwarding services for Seawell’s offshore operations. Mr Moffat worked entirely on the Seawell account, although managers and warehouse employees also performed parts of the service. Seawell progressively brought the work in house.

The Employment Tribunal held that Mr Moffat’s employment transferred to Seawell under Transfer of Undertakings (Protection of Employment) Regulations 2006, and that Seawell had unfairly dismissed him. It also made Seawell and Ceva jointly liable for compensation for a failure to inform and consult.

Seawell appealed against the transfer finding. Ceva cross-appealed on the information and consultation issue. The central question was whether there was, immediately before the service provision change, an organised grouping of employees whose principal purpose was the Seawell activities.

1. Appeal allowed; cross-appeal dismissed. The Tribunal erred in holding that Mr Moffat’s employment transferred to Seawell. Its findings did not establish an organised grouping satisfying regulation 3(3)(a)(i) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

2. The only deliberately organised grouping found by the Tribunal was the outbound operation. It included employees working wholly for another client, and there were no findings that it had been organised for Seawell’s work or that Seawell work was its principal purpose. It could therefore not be the requisite grouping.

3. The fact that regulation 2 permits a grouping to consist of one employee did not make Mr Moffat such a grouping. There was no finding that Ceva had deliberately formed a one-person grouping for the Seawell contract. Further, the relevant activities were all of the receipt, storage and supply work subsequently taken in house, which had been carried out by Mr Moffat together with managers and warehouse staff. Mr Moffat performed only part of those activities.

4. The Tribunal’s alternative test of whether employees effectively ensured the provision of the service had no basis in TUPE. It also wrongly treated Mr Moffat’s exclusive work on the account as proving assignment under regulation 4(1). The existence of a qualifying grouping and assignment to it are analytically distinct, and assignment requires findings of fact.

5. Ceva owed the regulation 13(2) duties to employee representatives, not directly to Mr Moffat. No failure to facilitate the election of representatives had been alleged. The Tribunal could not therefore find a breach. Although unnecessary to the result, regulation 15(5) required prior notice to the transferee before a transferor could rely on the reasonable-practicability defence, even if the transferee was already a party.

6. The case was remitted to the same Tribunal to determine the monetary award payable by Ceva for Mr Moffat’s unfair dismissal.

• Employment Appeal Tribunal: Allowed Seawell’s appeal, held that Mr Moffat’s employment had not transferred, allowed Ceva’s cross-appeal against the regulation 13 finding, and remitted remedy against Ceva.
• Employment Tribunal, Aberdeen: By a judgment registered on 17 May 2011, held that the employment transferred to Seawell under Transfer of Undertakings (Protection of Employment) Regulations 2006, found Seawell liable for unfair dismissal, and awarded information-and-consultation compensation.