In this case, the Employment Appeal Tribunal (EAT) held that there was an organised grouping of employees carrying out work for a client where work previously carried out by one temporary work agency was taken over by another, giving rise to a service provision change (SPC) under TUPE.
Background
Under TUPE, a SPC may occur where a client engages a contractor to perform a service on its behalf (outsourcing), a new contractor takes over a service from a previous contractor (second generation outsourcing), or the client brings the provision of a service back in-house (insourcing).
In order for there to be a SPC, there must be an organised group of employees before the change whose principal purpose is to carry out the relevant activities on behalf of the client.
Facts
Mrs Oliveira was originally employed by G-Staff Ltd (GSL), a temporary work agency. GSL supplied Mrs Oliveira to its client, Butcher's Pet Care Ltd (Butcher's) to work as an Alutray Operative.
On 13 July 2018, another temporary work agency, Mach Recruitment Ltd (Mach), took over from GSL and began providing services to Butcher's under a service level agreement. On 18 July 2018, O commenced employment with Mach.
An employment tribunal found that:
- Mrs Oliveira had been part of an organised grouping of employees of GSL whose principal purpose was carrying out the activities on behalf of Butcher's
- GSL ceasing to provide the services and Mach's subsequent assumption of those services amounted to a SPC for the purposes of TUPE
Mach appealed to the Employment Appeal Tribunal, arguing that there had been no organised grouping of employees, and there was therefore no SPC.
The EAT dismissed the appeal, holding that the tribunal had been entitled to reach the conclusion that it did. Although another tribunal might have reached a different decision, the high threshold for perversity was not met.
The tribunal had accepted Mrs Oliveira's evidence that her work was always with Butcher's, she always worked as an Alutray Operative, and she worked with and alongside the same people throughout, except when someone would leave and be replaced by a new person. Mach's evidence on how its staff were organised was minimal. It could have called evidence from which the tribunal could infer that there was no organised grouping, but it did not.
The fact that the group's makeup changed when someone left and was replaced by a new person was inherent in the precarious nature of agency work. If the allocation of staff to clients was random, as in the case of couriers, this would be unlikely to amount to an organised grouping. However, in this case there was a generally settled group of employees whose principal purpose was the servicing of Butcher's by Alutray Operatives. The EAT accepted that there must have been a conscious decision of some sort that the group should be organised in this way.
What does this mean for employers?
The EAT commented that dealing with a SPC "should be a straightforward process of reasoning". If there is a dedicated team of employees tasked specifically with servicing one particular client, those employees would clearly be an organised grouping whose principal purpose is to carry out the relevant activities. In practice, however, identifying whether there is an organised grouping of employees whose principal purpose is carrying out activities for a client is often complex. The decision in this case indicates that specific evidence of a conscious decision by the transferor to organise its employees in a particular way will not always be required. It therefore serves as a reminder to employers to document any decisions about how their staff are organised, so that they can produce relevant evidence in the event of a dispute about the application of TUPE.
