|
EXTRA DIVISION,
INNER HOUSE, COURT OF SESSION
|
Lord Eassie
Lord Brodie
Lord Wheatley
|
[2013]
CSIH 59
XA118/12
OPINION OF
THE COURT
delivered by
LORD EASSIE
in the
Appeal
by
CEVA FREIGHT
(UK) LIMITED
Appellants;
against
SEAWELL
LIMITED
Respondents:
_______________
|
Act: Truscott QC;
MacRoberts LLP
Alt: Napier QC; Pinsent Masons
LLP
21 June 2013
Introductory
[1] The appellants
-"Ceva"- in this appeal under section 37(1) of the Employment Tribunals
Act 1996 against a decision of the Employment Appeal Tribunal carry on business
as freight forwarders and management logistics co-ordinators. The claimant
before the Employment Tribunal, Mr Craig Moffat, who has not taken part in the
appeal to this court, was employed by them as a logistics co-ordinator until
his employment came to an end on 31 December 2009.
[2] The
background to the ending of Mr Moffat's employment with Ceva and the
involvement of the present respondents - "Seawell"- in his claim for
compensation arising out of the ending of his employment may be summarised as
follows.
[3] In about
April 2008 Seawell became a customer of the appellants, Ceva. Seawell operated
various North Sea oil drilling or well platforms including the Noble Platform.
In broad terms the work thereafter done by Ceva for Seawell consisted of
arranging for the movement of goods and materials to their offshore platforms.
Ceva would first receive and store goods and materials needed for the platforms
and which had been purchased by Seawell (which Ceva described as the "inbound"
part of their operation); thereafter Ceva arranged for the goods and materials
required by a platform to be taken from the warehouse for shipping to the
platform in question (the "outbound" operation). The provision of such services
to Seawell was not peculiar to Ceva's contract with Seawell; Ceva supplied
similar services to a number of other customers.
[4] Mr
Moffat's working time in his employment with Ceva was wholly, or almost wholly,
devoted to looking after the customer needs of Seawell, particularly as
respects the supply of outbound goods to the Noble Platform. However,
Mr Moffat was not the only employee engaged in providing the services
which Ceva furnished to Seawell. In addition to the work done by
Mr Moffat, his immediate line manager spent about 20% of his time working
on the Seawell account and Ceva's general manager spent somewhere less than
10%. Moreover, two warehousemen were also engaged in the provision of services
to Seawell and they spent between 20% and 30% of their time on Seawell's
business.
[5] In the
latter part of 2009, Seawell indicated that they intended to take the business
carried out for them by Ceva back into their own management. At that point CEVA
claimed that under the Transfer of Undertakings (Protection of Employment) Regulations
2006 (S.I. 2006/246) -"the TUPE Regulations"-, Mr Moffat's employment
would, as a result, be transferred to Seawell because a "service provision
change" in terms of the regulations had occurred. That was refuted by Seawell.
In the event, Seawell carried out their intention and the customer
relationship ceased on 31 December 2009. Following that cessation
Mr Moffat lost his employment with Ceva; and he was not taken on by
Seawell. He therefore presented a claim to the Employment Tribunal against
both Ceva and Seawell claiming that one or other of them had dismissed him
unfairly. One of the central issues before the Employment Tribunal, before the
Employment Appeal Tribunal, and subsequently before this court, was whether or
not a "relevant transfer" in the form of a "service provision change "had taken
place. The answer to that question determines which of Ceva and Seawell should
meet Mr Moffat's claim for unfair dismissal. It is the question with which
this appeal is concerned.
The legislative texts
[6] It is
convenient at this stage to note the relevant provisions of the TUPE Regulations.
"Interpretation
2.-(1) In
these Regulations -
'assigned'
means assigned other than on a temporary basis;
.......
references
to 'organised grouping of employees' shall include a single employee;
'relevant
transfer' means a transfer or a service provision change to which these Regulations
apply in accordance with regulation 3 and 'transferor' and 'transferee'
shall be construed accordingly and in the case of a service provision change
falling within regulation 3(1)(b), 'the transferor' means the person who
carried out the activities prior to the service provision change and 'the transferee'
means the person who carries out the activities as a result of the service
provision change;
.......
A
relevant transfer
3.-(1) These
Regulations apply to -
(a) a
transfer of an undertaking, business, or part of an undertaking or business
situated immediately before the transfer in the United Kingdom to another
person where there is a transfer of an economic entity which retains its
identity;
(b) a
service provision change, that is a situation in which -
....
(iii) activities
cease to be carried out by a contractor or a subsequent contractor on a
client's behalf (whether or not those activities had previously been carried
out by the client on his own behalf) and are carried out instead by the client
on his own behalf,
and
in which the conditions set out in paragraph (3) are satisfied.
...
(3) The
conditions referred to in paragraph (1)(b) are that -
(a) immediately
before the service provision change -
(i) there
is an organised grouping of employees situated in Great Britain which has as
its principal purpose the carrying out of the activities concerned on behalf of
the client;
(ii) the
client intends that the activities will, following the service provision
change, be carried out by the transferee other than in connection with a single
specific event or task of short-term duration; and
(b) the
activities concerned do not consist wholly or mainly of the supply of goods for
the client's use.
Effect
of relevant transfer on contracts of employment
4.-(1) Except
where objection is made under paragraph (7), a relevant transfer shall not
operate so as to terminate the contract of employment of any person employed by
the transferor and assigned to the organised grouping of resources or employees
that is subject to the relevant transfer, which would otherwise be terminated
by the transfer, but any such contract shall have effect after the transfer as
if originally made between the person so employed and the transferee."
The Employment
Tribunal's decision
[7] So far as
relevant to this appeal, the Employment Tribunal found that Mr Moffat's
employment was transferred from Ceva to Seawell by virtue of the TUPE Regulations
on 31 December 2009 and made orders for him to receive compensation from
Seawell accordingly.
[8] Before
the Tribunal Ceva argued that Mr Moffat had devoted his entire time and
energies to the Seawell account, and the management fee charged by Ceva
included his salary and a percentage of the salaries of the other members of Ceva's
workforce who spent some of their time assisting him. This was in the event
not disputed by Seawell, and the fact that all of the work formerly done by
Mr Moffat was now done by Seawell was similarly accepted by Seawell. Ceva
maintained that because the claimant was employed by Ceva wholly on the Seawell
account, and that account had now transferred to Seawell, it followed that in
terms of regulation 3(1) of the TUPE Regulations there had been a service
provision change and that Mr Moffat's employment thus transferred to Seawell
in terms of regulation 4. In support of that contention, which involved the
proposition that Mr Moffat was assigned to "an organised grouping of employees"
which had "as its principal purpose" the carrying out of the activities
concerned on behalf of the client, Ceva invoked the terms of regulation 2(1),
which provides that references to an organised grouping of employees shall
include a single person; that, it was argued, fitted the circumstances of the
present case.
[9] In
response Seawell argued that there was no effective service provision change in
terms of regulation 3(1)(b)(iii) and therefore no transfer of employment. An
essential condition for the occurrence of any service provision change under regulation 3(1)(b)(iii)
was the existence - stipulated by regulation 3 (3)(a)(i) - of an organised
grouping of employees which had as its principal purpose the carrying out of
the activities concerned on behalf of the client. While in terms of regulation 2
an organised grouping of employees could include a single person, it did not
follow in the circumstances of the present case that, because Mr Moffat
spent all of his time on the Seawell account, he, by virtue of that
circumstance, constituted such a grouping. In this case, the employees performing
the duties necessary to provide the service to Seawell included workers other
than Mr Moffat; he might be an important cog in the wheel, but he was
not the wheel itself.
[10] In reaching
its decision the Employment Tribunal first decided that the activities which
had been carried out by Ceva were the same as those carried out by Seawell
after the transfer. The work done by Ceva was to provide a continuous and on-going
service and accordingly there was no doubt that regulation 3(1)(a)(iii) was
satisfied in that following the transfer the activities would be carried out by
the transferee. The real issue in the case was whether Mr Moffat could
constitute, in terms of regulation 3(3)(a)(i), an organised grouping of
employees whose principal purpose was the carrying out of the relevant activities.
[11] The Employment
Tribunal concluded that its preference lay with Ceva's submission. It held
that Mr Moffat was in charge of the activities required for the Seawell
account and thus responsible for making those activities happen. It was not
necessary to include within the organised grouping of employees every person
who had anything to do with the activities and then analyse what proportion of
their time was spent on those activities to decide whether the group as a whole
had as its principal purpose the carrying out of the activities. The
Employment Tribunal considered that there may be many members of a workforce
who assist in the activities of an organised grouping and thereby allow those
activities to happen; but to include all of these in defining the organised
grouping would be erroneous. The Employment Tribunal preferred the simpler
approach contended for by Ceva, namely, that given that the definition of an
organised grouping of employees included a single employee (regulation 2(1)), it
was only necessary to identify whether there was such an organised grouping of
employees or an employee whose principal purpose was to carry out the
activities. On that assumption, the Tribunal found that Mr Moffat, albeit
a single person, constituted an organised grouping which had as its principal
purpose the carrying out of the activities.
[12] The Employment
Tribunal also reasoned alternatively that, if the managers and the warehousemen
were also included in the organised grouping whose principal purpose was in
carrying out those activities, since Mr Moffat was the only person who
gave 100% of his time to the activities, he was the person who could properly
be regarded as being "assigned" to the organised grouping in terms of the regulations.
The Employment Tribunal considered that approach to be supported by the terms
of regulation 4.
[13] The
Employment Tribunal therefore concluded that a service provision change in
terms of regulation 3(1)(b)(iii) had taken place; that regulation 3(1)(a)
was satisfied and that, by virtue of regulation 4, Mr Moffat's
contract of employment had transferred to Seawell.
The Employment Appeal
Tribunal's decision
[14] Before the Employment
Appeal Tribunal Seawell argued that the Employment Tribunal had erred in two
respects. First, when considering whether or not there was an organised
grouping of employees, it was wrong to approach matters on the basis that it
was only necessary to identify a single employee whose principal purpose was to
carry out the activities in question. The fact that in terms of regulation 2(1)
an organised grouping of employees could be a single person did not mean that
if a single employee spent all of his time on the work of a particular client
he constituted an organised grouping. Mr Moffat did not carry out the
activities concerned; they were carried out by a group of employees which
included him. The Employment Tribunal should have first decided whether it was
possible to identify an organised grouping of employees and if they could
identify such a grouping, then consider the scope of the activities carried out
by that grouping. Instead the Employment Tribunal had looked at what one
employee did; this was an incorrect application of the regulations. Secondly,
the Employment Tribunal had failed to apply that part of the regulations which
required that the activities in question be the principal purpose of the
identified organised grouping of employees. The Employment Tribunal had found
that the grouping of Ceva employees, including Mr Moffat, saw to it that
the service provided to Seawell was effective. But that did not entail a finding
that those activities were the principal purpose of the grouping. Further, the
Employment Tribunal had made no specific findings on whether any of Ceva's
employees had been assigned to the Seawell contract.
[15] On behalf
of Ceva it was argued that the Employment Tribunal had made broad findings in
fact and had applied them sensibly. It was accepted that not everyone who
played a part in providing the service may be part of the grouping; some
employees would play a minor rôle. The Employment Tribunal had, correctly,
considered the question of who was essential to the activity and had found that
the organised grouping was Mr Moffat, assisted by the warehousemen and a
couple of others, but he was the person who provided the Seawell services. The
Seawell contract was Mr Moffat's job and that was the essence of the
service provided. In respect of the second part of Seawell's argument, the
Employment Tribunal had looked at the provisions in the regulations that required
that the activities be the principal purpose of the grouping; since
Mr Moffat was the grouping and spent 100% of his time working on the
Seawell contract it followed that the principal purpose of the grouping was
those activities.
[16] The Employment
Appeal Tribunal upheld the appeal. It considered that on the Employment
Tribunal's findings the only deliberately organised grouping within Ceva before
the transfer were groupings into the "inbound" and "outbound" parts of the
company's operation. The grouping within which Mr Moffat found himself,
namely, the outbound operation, could not be said to have as its principal
purpose the carrying out of activities on behalf of Seawell. Only
Mr Moffat spent 100% of his time on that work. Other members of the
grouping spent only limited parts of their time on work for Seawell. So the
outbound grouping could not satisfy the requirements of regulation 3(3)(a)(i);
the grouping was not organised for the purposes of the Seawell contract, nor
was the Seawell work its principal purpose.
It was not
sufficient to satisfy regulation 3(3)(a)(i) that Mr Moffat spent all of
his time on Seawell's work; nor was there any finding that Ceva formed a grouping
consisting of Mr Moffat alone to carry out the Seawell work.
[17] Secondly,
the Employment Appeal Tribunal disagreed with the Employment Tribunal's finding
that because Mr Moffat did nothing other than Seawell's work, that was his
principal purpose and that he could, by virtue of the interpretation provisions
of regulation 2 constitute an organised grouping. Regulation 3(3)(a)(i)
required that the organised grouping of employees carry out "the activities
concerned", - a reference to regulation 3(1)(b)(iii). Those activities
were whatever was done after the change effected by the client (Seawell) on its
own behalf instead of by the contractor (Ceva). Clearly Seawell took over, as
the activities concerned, all of the work that was done by Mr Moffat, the
two managers and the two warehousemen, not just what was done by
Mr Moffat. The Employment Appeal Tribunal accordingly found that
Mr Moffat was not carrying out "the activities concerned", albeit he was
part of them. The Employment Appeal Tribunal further criticised the Employment
Tribunal's reasoning at paragraph 115 of its decision; the Employment
Tribunal's reference to a test of "effectively ensuring that the service was
provided" was wrong, because no such test was to be found in the regulations.
The Employment Tribunal had no basis in fact for finding that Mr Moffat
and the other members of the workforce were an organised grouping of employees
within the meaning of regulation 3(3)(a)(ii). Moreover, the basis on which the
Employment Tribunal had concluded that Mr Moffat was assigned to the grouping
was wrong; such assignation was a question of fact, but there was no specific
finding on that matter; and the fact that a particular employee happened to be
doing particular work did not of itself mean that that employee was assigned to
the group carrying out the work.
[18] The Employment
Appeal Tribunal therefore found that the Employment Tribunal had no basis for
concluding that Mr Moffat's employment had transferred to Seawell and they
accordingly upheld Seawell's appeal. Against that decision Ceva have now
appealed, seeking restoration of the Employment Tribunal's original decision.
Submissions
[19] For
Ceva Mr Truscott submitted, in summary, that it was not in dispute that
the activities carried out by Seawell after 1 January 2010 were the same
as those carried out by Ceva prior to that date; and that accordingly a
service provision change had occurred if the conditions stipulated in
regulation 3 (3) were satisfied. The question which arose before the Employment
Tribunal was whether those conditions were satisfied. The Employment Tribunal
had rightly found that those conditions were satisfied in respect that Mr
Moffat was singularly responsible within Ceva for ensuring the performance of
the Seawell account and since he spent all of his time on the Seawell contract
the Employment Tribunal was entitled to find that, albeit a single individual,
he constituted an organised grouping.
[20] Counsel
submitted that in reversing that finding the Employment Appeal Tribunal had
fallen into error. Counsel maintained that central to any fact finding
exercise was an examination of a document (production no 14) headed "Role
and Person Profile" which had been before the Employment Tribunal; which
provided a complete job description of the work done by Mr Moffat for Ceva;
and which vouched both that Mr Moffat bore full responsibility for ensuring
the contractual performance of his employer's engagements to Seawell and that
those were his only responsibilities, excluding any involvement in services to
other customers of Ceva. The Employment Appeal Tribunal had not considered
this document. The description of the work done by Mr Moffat for Ceva on
the Seawell contract which was detailed in that production was in effect a
description of the activities transferred to Seawell; in other words it was
the description of the activities required by the particular client contract
and the principal purpose of the organised grouping of employees. Had the Employment
Appeal Tribunal considered production 14, Mr Trustcott maintained, it
would have realised that what was contained there was a description of the
activities required of Ceva by Seawell, and which was what was subsequently
transferred to Seawell. Reference was made to Argyll Coastal Services
v Stirling & Others UKEATS/0012/11/B1 at paragraph 18.
[21] Counsel for
the appellant further submitted that it was not correct to say, as the
Employment Appeal Tribunal did at paragraph 17 of its judgment, that the
appointment of Mr Moffat to the Seawell contract was a matter of
"happenstance"; nor that there was no indication that Ceva formed a grouping
consisting of Mr Moffat to carry out the Seawell work (paragraph 43 and also
paragraph 47). The circumstances found by the Employment Tribunal and
particularly production 14 made it abundantly clear that such was not the
case. Mr Moffat was plainly and deliberately assigned to be engaged
solely on the Seawell work. That there were others also working on the Seawell
account did not mean that an organised grouping consisting of Mr Moffat could
not exist.
[22] Counsel for
the appellant advanced further criticisms of the reasoning of the Employment
Appeal Tribunal. In paragraph 41 of its judgment the conclusion was
reached that the grouping of employees involved in the outbound element of the
Seawell contract could not satisfy the requirements of regulation 3(3)(i)
because, although it was deliberately organised as a grouping, there was no
finding by the Employment Tribunal that it was organised for the purposes of
the Seawell contract, or that the Seawell work was its principal purpose.
Counsel argued that this approach was wrong. Paragraph 30 of the
Employment Tribunal's findings clearly established that Mr Moffat's work
was organised for the purposes of the Seawell contract and it was indeed his
exclusive role. So it was also wrong for the Employment Appeal Tribunal to
conclude in paragraph 41 that it was not sufficient for the purposes of regulation
3(3)(a)(i) that Mr Moffat spent all of his time on the Seawell contract.
That conclusion ignored the allocation of work described in production 14
and paragraph 30 of the Employment Tribunal's judgment. It was also wrong
for the Employment Appeal Tribunal to conclude that the activities taken over
by Seawell were not the activities carried out by Mr Moffat on the ground
that Mr Moffat's contribution comprised only part of those activities. It
was clear that Mr Moffat was in effect responsible for the activities. His
role was pivotal, as the Employment Tribunal had found. The principal purpose
of the organised grouping was defined by the nature of the activities, the grouping
of employees who provided a service for the client and what they do. So, submitted
counsel, Mr Moffat was the organised grouping, and if it was necessary to
define the purpose of the grouping, that was simply done by reference to what
he did for the client, as the Employment Tribunal found. Because the Employment
Appeal Tribunal had not considered important factual material such as production 14
and the clear findings by the Employment Tribunal, its conclusions could not be
justified. In the course of his submissions counsel for the appellant sought
to vouch his general argument by reference also to Hunter v McCarrick
[2013] IRLR 26; Eddie Stobbart Ltd v Moreman & Others
[2012] ICR 919; Mowlem Technical Services (Scotland) Ltd v King
2005 1 SC 514 and Edinburgh Home-Link Partnership & Others v The
City of Edinburgh Council & Others [2012] UKEATS/0061/11/BI.
[23] For the
respondents, Mr Napier did not disagree that production 14 was
Mr Moffat's job description, but that did not affect his argument. The appeal
was concerned with matters of statutory construction. While a purposive
construction of the TUPE regulations as having the protection of the employee
in focus might be appropriate in some cases, that approach to interpretation of
the regulations did not apply in the present appeal, the issue in the appeal
being which of the original employer or the potential transferee employer was
responsible. A straightforward, commonsense interpretation of the regulations
was clearly appropriate. The first question which had to be addressed was the
requirement for an "organised grouping" of employees. A service provision
change would normally involve several employees who had been selected to work
on the contract in question. So an organised grouping consisting of a single
employee would be the exception, rather than the rule. While the existence of
an organised grouping was ultimately a question of fact, the ascertainment of
such a factual finding required to be informed by a proper understanding of the
relevant law (the TUPE Regulations).
[24] The
identification of the relevant activities was the first step (Kimberley Group
Housing v Hambley & Others (UK) Ltd [2008] 1 CR 1030). At
paragraph 103 of its judgment he Employment Tribunal correctly identified those
as being the activities taken over by Seawell from Ceva. Having identified the
relevant activities, one next required to consider whether there was an
organised grouping of employees and, importantly, which employees were
comprised in the grouping. The notion of "principal purpose" was tied to the
organised group of employees (see regulation 3(3)(a)(i)). It was of note
that in the regulations the principal purpose was related not to the activities
but to the carrying out of those activities. The activities required by the
contract with Seawell were carried out not just by Mr Moffat but also by
others; he was one of a number of employees who together fulfilled the purpose
of carrying out the transferred activities, the contribution of the others
being material and necessary. While a team might incidentally draw upon the resources
and assistance of others in the undertaking, splitting up the constituents of a
section of a workforce which collectively carried out the transferred
activities was not consistent with an ordinary reading of the regulations. It
was essential to know who constituted the organised grouping, firstly, in order
to ascertain whether its principal purpose was the carrying out of the
activities being transferred and secondly because, in terms of regulation 4,
an employee's contract of employment was transferred only if he was assigned to
the organised grouping. It was not enough to find that a number of individuals
worked together in providing the service in question. There required to be an
element of organisation or putting together as a team. This could be express or
implicit (Eddie Stobbart Ltd v Moreman & Others at paragraph 18).
[25] The real
dispute between the parties was whether the group providing the services to
Seawell was wider than Mr Moffat. Seawell submitted that those providing
the services included the other identified members of the workforce who helped
to deliver the service. Mr Moffat may have been a lynchpin but he was not
the whole story. This was borne out by the Employment Tribunal's findings at
paragraph 33 of its judgment - the fee for the service provided include
not just Mr Moffat's salary but a proportion of other costs and salaries
as well. There was no finding that the employees who together provided the
services to Seawell were organised as a grouping or team whose principal purpose
was the provision of services to that customer.
[26] The
provision in regulation 2(1) to the effect that an organised grouping might
include a single employee was, submitted counsel, intended to cover the
situation in which the whole service to the customer was provided by a single
employee whose principal purpose was to provide that service to that customer.
But it certainly did not follow that because one could point to a single
employee working full time on a project to which other employees also
contributed their efforts, the single employee could be isolated from the rest
and said to constitute an organised grouping.
[27] It was
clear from the regulations that it was not enough that there be identified a
grouping which provided the activities in question. The provision of those
activities had to be the principal purpose of the grouping. The approach of the
Employment Tribunal (at paragraph 113) of viewing what Mr Moffat did, and his
primary purpose, was erroneous. The primary purpose of Mr Moffat's work was no
doubt to contribute to the provision of the services to Seawell, but it was
only a contribution towards the provision of the activity - not the provision
itself of the activity. It was not possible to maintain that all of the
employees who contributed to make the service effective had their employment
transferred to Seawell. As respects the Employment Tribunal's alternative
approach, the finding in paragraph 27 of the Employment Tribunal's
judgment respecting the internal division into inbound and outbound operation
was not found by the tribunal to be an organised grouping; nor such a grouping
which had as its primary purpose the provision of the Seawell activities. Moreover,
it was wrong to say that because Mr Moffat spent 100% of his time on the
Seawell contract it followed that he - and he alone- had been assigned to that
contract (cf Edinburgh Home-Link Partnership & Others v The City
of Edinburgh Council and Others at paragraph 19 and the cases therein
cited). Accordingly the Employment Appeal Tribunal correctly addressed the
proper tests as to whether 3(3) should apply and the present appeal should be
refused.
Discussion
[28] In the
present case it is not in dispute that in December 2009 a "service provision
change" of the variety described in subparagraph (iii) of paragraph (1) of
regulation 3 of the TUPE regulations occurred when the contractual arrangement
between Ceva and Seawell came to an end and the logistics activities provided
by Ceva were taken on by Seawell itself. However, by reason of the concluding
words of paragraph (1) of regulation 3, a service provision change may only
constitute a "relevant transfer" if the conditions set out in paragraph (3) of
that regulation are satisfied. The condition of materiality in this appeal is,
of course, that set out in paragraph (3) (a) (i), the terms of which, for
convenience, we repeat:
"(a) immediately
before the service provision change-
(i)
there is an organised grouping of employees situated in Great Britain which has
as its principal purpose the carrying out of the activities concerned on behalf
of the client;"
[29] In our
opinion, and echoing views expressed in some of the tribunal decisions to which
we were referred, in considering whether this condition may be satisfied in a
particular case an appropriate starting point will be the "activities". The
term "activities" is, of course, also used in paragraph (1) of regulation 3 as
a central element in defining a service provision change. In that context it is
in our view evident that it refers to the prestations by way of service or
services which (in the variety of service provision change in the present case)
required to be provided by the contractor in terms of his contractual
arrangements with the client and which, following the cessation of those
arrangements, are then performed by the client himself on his own behalf. In
the present case the extent of those service prestations are not controversial.
They are set out by the Employment Tribunal and are summarised by us in paragraph
[3] supra. It is also not in dispute that after December 2009 those
activities were performed by Seawell on its own account.
[30] Having thus
identified the scope and nature of the activities, the focus must then pass to
the manner in which the contractor has arranged for the performance of the
service prestations, or, perhaps more technically, reflecting the wording of
the regulations, how the activities are "carried out". Plainly, in very many
cases the employees engaged in providing the services to the client who (in the
present variety of service provision change) takes the services "in house" will
also be providing services to other clients or customers. The extent to which
their working time is devoted to the client will vary greatly. Accordingly, for
obvious reasons, the notion that there be a transfer of their contracts of
employment would be vested with much uncertainty. Hence one finds the
requirement in paragraph (3)(a)(i) of regulation 3 that there be an "an
organised grouping of employees" having as its "principal purpose" the carrying
out of the activities in question. The requirement is necessary in order to
give practical definition - or to set discernible parameters - to the important
event, from the perspectives of each of the contractor, the client (the potential
transferee) and the employee, of a transfer of the contract of employment.
[31] Having
regard to that consideration we agree with the view expressed by the Employment
Appeal Tribunal at paragraph 18 of its judgment in Eddie Stobart Ltd v
Moreman that the concept of an organised grouping implies that there be an
element of conscious organisation by the employer of his employees into a
grouping - of the nature of a "team" - which has as its principal purpose the
carrying out de facto of the activities in issue.
[32] It is plain
from the factual findings of the Employment Tribunal in casu that the
carrying out of the activities provided to Seawell involved the participation
of a number employees other than Mr Moffat, in his co-ordinating or supervisory
role. Nor was the carrying out of those activities for Seawell confined to the
internal division of "outbound" operations since "inbound" operations were also
essential to the whole contractual performance. But it cannot be said - and indeed
it is not contended- that the employees engaged in the practical tasks involved
in both those operations were organised as a grouping having as its principal
purpose the carrying out of the activities to be performed for Seawell, since
they did similar tasks for other clients or customers and Seawell was but one
of them.
[33] It appears
to us to follow from the structure and wording of the regulations that where
the activities are carried out by the collaboration, to varying degrees, of a
number of employees who are not organised as a grouping having as their
principal purpose the carrying out of the activities for the client, it is not
legitimate to isolate one of that number on the basis that the employee in
question devoted all, or virtually all, of his or her working time to assisting
in the collaborative effort. Counsel for Ceva invoked the document describing
Mr Moffat's "Role and Personal Profile" as a matter to which the Employment
Appeal Tribunal had paid too little regard. While the job description contained
in that document indicates that Mr Moffat was employed for the purpose of
enabling the contract with Seawell to be performed, we do not consider that the
fact of his being so employed relevantly distinguishes him from an employee who,
as one of a number engaged in carrying out the activities, de facto devotes
all, or virtually all, of his or her working time to contributing to the
carrying out of the activities.
[34] The
Employment Tribunal, and counsel for Ceva, sought support for their approach of
treating Mr Moffat as an organised grouping in the fact that an organised
grouping is defined in regulation 2 as including a single employee. However, as
counsel for Seawell pointed out, it is not difficult to envisage cases in which
the activities in question can be, and are, carried out by a single individual.
For example, the needs of a client of a cleaning firm may be for a single
cleaner; or a firm of solicitors may undertake to provide a single qualified
solicitor to advise full time a client such as an insurance claims handler. In
our opinion counsel for Seawell was correct in his submission that the
inclusion of a single employee in the definition of an organised grouping was
directed to that sort of case. But where the activities are carried out by a
plurality of employees, the reference in the definition to a single employee
does not, in our view, warrant disaggregation of that group of employees.
[35] In these
circumstances we conclude that the decision of the Employment Tribunal proceeded
upon an error of law and that the Employment Appeal Tribunal was correct to
reverse that decision. We accordingly refuse this appeal and uphold the
decision of the Employment Appeal Tribunal.
