ALHCO Group Ltd v Griffin & Ors (Transfer of Undertakings : Service Provision Change)

For a service provision change under Transfer of Undertakings (Protection of Employment) Regulations 2006, the relevant activities are assessed at the transfer date. The contractual documents are relevant but are not conclusive. Where the documents do not show an intended change, the tribunal may consider what occurred before and after the transfer to determine the client’s intention and whether the activities remained fundamentally or essentially the same.

An employment tribunal must also give adequate reasons for finding an organised grouping of employees. It must identify the grouping, explain how it was organised and separately address whether each claimant was assigned to it. A finding that employees spent most of their time on the client’s work does not, without adequate reasoning on those matters, suffice.

Taunton Deane Borough Council replaced its long-standing gas servicing contractor, MJT Mechanical Services Ltd, with ALHCO Group Ltd from 1 April 2012. ALHCO accepted the transfer of some employees but denied that eight former MJT employees transferred.

At a pre-hearing review, Employment Judge Roper held that a service provision change had occurred and that the claimants became ALHCO employees. He found that repeat servicing and repair-installation work, but not new-installation work, had transferred. He also found that the claimants were assigned to an organised grouping of employees.

ALHCO appealed, contending that the Judge had erred in identifying the transferred activities and had given inadequate reasons on the organised-grouping requirement.

1. The appeal was allowed in part. Ground 1, concerning the relevant activities, was dismissed. Ground 2, concerning an organised grouping, was allowed. The organised-grouping issue was remitted to the same Employment Judge.

2. On activities, Regulation 3 did not require the tribunal to determine the issue solely from contractual documents or to disregard evidence of how the arrangements operated after the transfer. The statutory question concerned the client’s intended arrangements at the relevant time. Where the old and new contracts created materially the same call-off facility, there was no direct evidence of an intended change, and the new contractor in fact performed the repair-installation work as the old contractor had done, the Judge was entitled to treat that evidence as confirming that the activities had transferred.

3. The Judge was entitled to find that repeat servicing and repair-installation work were fundamentally or essentially the same activities before and after the change. The fact that the Council was not obliged to offer repair-installation work did not prevent it being an activity carried out by the contractor under the relevant arrangements.

4. On organised grouping, the Employment Judge’s reasons were inadequate. He did not identify whether the grouping comprised all MJT staff or only some, define its membership, explain how it was organised or separately identifiable, or explain how each of the eight claimants was assigned to it. The finding could not stand merely because the claimants spent most of their time on the Council work.

5. The Appeal Tribunal declined to decide the issue itself. The material suggested that the alleged grouping might have been a sub-group or team, making it unsafe to make the necessary factual findings on appeal. The issue was remitted to Employment Judge Roper for determination after hearing the relevant evidence and submissions.

• Employment Appeal Tribunal: allowed the appeal on the organised-grouping issue, dismissed it on the activities issue, and remitted the former issue to the same Employment Judge.
• Employment Tribunal: Employment Judge Roper held at a pre-hearing review on 28 August 2013 that there had been a service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 and that the claimants had transferred to ALHCO on 1 April 2012.