Amaryllis Ltd v McLeod & Ors (Transfer of Undertakings: Entity)

For a service provision change, an organised grouping must have the principal purpose, immediately before the transfer, of carrying out the relevant activities for the particular client. It is insufficient that employees in fact spend most of their time on that client’s work or that the department performs that type of work generally.

The tribunal must identify the employer’s purpose in organising the grouping at the relevant time. That finding may be inferred from the facts, but it cannot rest on historic arrangements or on work performed for a different client. The statutory conditions in Transfer of Undertakings (Protection of Employment) Regulations 2006 must be addressed distinctly and at the prescribed time.

Millbrook Furnishings Ltd had undertaken furniture-renovation work connected with Ministry of Defence contracts. After Amaryllis Ltd was awarded the renovation contract, an Employment Judge held that a service provision change had transferred the contracts of all but one of fourteen claimants from Millbrook to Amaryllis.

Amaryllis appealed. It contended that the Employment Judge had not determined whether, immediately before the alleged transfer, Millbrook had an organised grouping whose principal purpose was to perform the relevant activities for the Ministry of Defence, as required by Transfer of Undertakings (Protection of Employment) Regulations 2006. A further ground concerned employees undertaking on-site renovation work.

1. Appeal allowed. The Employment Judge’s finding of a relevant transfer by service provision change was set aside.

2. Regulation 3(3)(a)(i) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 requires an employer-organised grouping of employees. A group may comprise one person, but a grouping is not established merely because employees happen in practice to spend most of their time on one client’s work. The court applied the approach in Eddie Stobart Ltd v Moreman, [2012] ICR 919.

3. The grouping’s principal purpose must be to carry out the relevant activities for the particular client, rather than to undertake that kind of activity generally. The Employment Tribunal must make a finding on that purpose. It may draw an inference from proved facts, but must decide whether every statutory condition existed immediately before the transfer.

4. The Employment Judge had relied on the department’s supposed original purpose and its work over a lengthy period. That reasoning did not adequately address Millbrook’s purpose at the relevant time. It also failed to account for the period when Millbrook performed the work for Amaryllis rather than for the Ministry of Defence. The findings therefore could not support the conclusion that the grouping’s principal purpose immediately before the transfer was to undertake renovation work for the Ministry of Defence.

5. The Employment Judge did not err in treating the on-site renovation activities as fundamentally the same as the factory activities for the purposes of regulation 3(2A). Nevertheless, the finding concerning those employees also had to be set aside because the essential service-provision-change finding could not stand.

• Employment Appeal Tribunal: Appeal allowed. The finding that a relevant transfer occurred under Transfer of Undertakings (Protection of Employment) Regulations 2006 was set aside.
• Employment Tribunal: Employment Judge Coles, sitting alone, held in a judgment and reasons sent on 13 February 2015 that there had been a service provision change and that all but one claimant transferred to Amaryllis.