Eddie Stobart Ltd v Moreman

For a service provision change under Transfer of Undertakings (Protection of Employment) Regulations 2006, it is insufficient that employees happen in practice to spend most of their time performing work for a particular client. Regulation 3(3)(a)(i) requires an organised grouping whose principal purpose is carrying out the relevant activities for that client. The employees must be organised by reference to the client’s requirements, ordinarily as a recognisable client team, although the organisation need not be explicit in every case. A grouping created only by shift patterns, working practices or the timing of customer orders does not satisfy the condition. The requirement is not to be expanded merely to secure transfers in more cases.

Thirty-five employees worked for Eddie Stobart Ltd at its Manton Wood logistics site. After the site closed, Eddie Stobart contended that their employment contracts had transferred to FJG Logistics Ltd under the service provision change provisions of TUPE, because the employees had principally worked on tasks required by the Vion contract.

The Employment Judge, following a pre-hearing review, struck out the claims against FJG on the basis that there was no reasonable prospect of establishing an organised grouping of employees within regulation 3(3)(a)(i). The appeal concerned whether factual predominance of work for one client was sufficient, or whether the employees had to be organised as a client-focused grouping.

1. Appeal dismissed. The Employment Judge reached the correct conclusion that the evidence disclosed no reasonable prospect of establishing the necessary organised grouping.
2. Whether an organised grouping existed and whether particular employees were assigned to it were analytically distinct questions, although they substantially overlapped. An issue of law was suitable for determination on a strike-out application.
3. Regulation 3(3)(a)(i) requires more than employees principally performing activities which benefit a particular client. The wording requires an organised grouping whose principal purpose is carrying out the relevant activities on behalf of that client. This necessarily involves organisation by reference to the client’s requirements.
4. A group arising inadvertently from shift patterns, job functions or the timing of customer orders is not necessarily an organised grouping. The paradigm is a recognisable client team, though the statutory condition may be satisfied where the identification is less explicit.
5. The policy of employee protection does not justify stretching the natural language of TUPE. Requiring a recognisable organisational unit also promotes certainty by making it easier to identify which employees are affected by a transfer.
6. Fairhurst Ward Abbotts Ltd v Botes Building Ltd concerned a different TUPE provision and did not support the appeal. The possibility that a part of an undertaking may come into existence at the moment of transfer did not alter the requirement that an organised grouping for a service provision change must exist before the contract is lost. Kimberley Group Housing Ltd v Hamley and Clearsprings Management Ltd v Ankers concerned different issues and had no bearing on the question.

• Employment Appeal Tribunal: The appeal from the Employment Tribunal’s decision was dismissed.