The Law
Under Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), a service provision change will occur when, immediately prior to the change, there is an organised grouping of employees whose principal purpose is to carry out activities on behalf of the client. (regulation 3(3)(a)(i))
The Facts
Mrs Oliveira was originally engaged by G-Staff Ltd as an agency worker. However, because G-Staff chose to apply the Swedish derogation (an exemption from the requirement to treat agency workers like direct employees of the end-user in certain respects), Mrs Oliveira was employed under a contract of employment. This means that Mrs Oliveira was protected under TUPE Regulations.
G-Staff Ltd supplied agency workers to Butcher’s Pet Care Ltd (Butcher’s). Mrs Oliveira worked at Butcher’s as an Alutray (aluminium tray) Operative.
Mrs Oliveira was then engaged with a different temporary work agency, Mach Recruitment Limited (Mach) on 18 July 2018. Following the start of the Mrs Oliveira’s employment, Mach began supplying agency workers to Butcher’s under a Service Level Agreement that commenced later in 2018.
The Employment Tribunal determined that the change constituted a service provision change under TUPE. The Judge found that the G-Staff employees formed an organised grouping whose principal purpose was to carry out activities on behalf of Butcher’s. The subsequent assumption of these activities by Mach therefore triggered a service provision change within the meaning of the Regulations.
Mach Recruitment Limited appealed this decision.
The Appeal
The Mach’s representative argued that, according to established case law, an organised grouping of employees must result from the transferor’s deliberate planning or intention. In this case, however, they argued that no such planning occurred. Instead, a group of employees happened to be working predominantly on tasks for a particular client due to a combination of circumstances, rather than any intentional structuring by G-Staff.
Mach’s representative also argued that the Judge erred in law by basing the conclusion solely Mrs Oliveira’s evidence, without properly considering their evidence. Specifically, March contended that the Judge relied only on the following points, which were insufficient:
(1) Mrs Oliveira’s work was always with Butcher’s;
(2) It was always as an Alutray Operative;
(3) Mrs Oliveira’s worked with and alongside the same people throughout, except when someone would leave and be replaced by a new person.
Additionally, the Mach’s representative submitted that the Judge failed to consider whether the increase in, and final number of, workers supplied by Mach simply reflected the fluctuating demand previously met by G-Staff. The Judge also did not assess whether Alutray work formed just one part of a broader set of activities being transferred, and therefore neglected to evaluate the wider group and its principal purpose as highlighted in previous case law.
Mrs Oliveira responded by asserting that the Judge had properly evaluated the evidence, which showed she consistently worked with the same group of employees. This supported the conclusion that an organised grouping existed.
The Decision
The EAT dismissed the appeal.
The EAT concluded that the Employment Judge was entitled to find that there was an organised grouping of employees within G-Staff whose principal purpose was to carry out activities for Butcher’s. These activities were later undertaken by Mach Recruitment, satisfying the criteria for a service provision change under TUPE. Both parties accepted that the relevant time to assess the grouping was immediately before the transfer, and that the organiser of the group was the transferor.
The EAT did not accept Mach’s argument that the Employment Judge merely confined his judgement to the activities that the Claimant and her team were doing. The Employment Judge found that “she worked with and alongside the same people throughout, except when someone would leave and be replaced by a new person”. The EAT determined that this is typical of agency work to which service provision change applies as it does to other work.
Mach’s submissions were based on the assumption that an organised grouping requires a deliberate and conscious decision to segregate employees. However, the EAT disagreed, finding it sufficient that the Claimant consistently worked with the same group of employees. No formal structure was necessary beyond what was evident from the working arrangements.
EAT highlighted that the Employment Judge could only decide based on the evidence presented. That Mrs Oliveira was considered a credible witness, and her account supported the existence of a settled group of employees. However, Mach Recruitment, failed to provide evidence that might have shown there was no organised grouping. Therefore the EAT found that the Employment Tribunal properly directed itself and reached a conclusion it was entitled to make, even if another judge may have decided differently.
