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CEVA Freight (UK) Ltd v Seawell Ltd Ct of Sess – 21 June 2013

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This cases raises the same issue that arose in Eddie Stobart Ltd v Moreman and in Argyll Coastal Services v Sterling, namely that there has to be some conscious organisation of a group or team in order to fulfil the requirement of Reg 3(3)(a)(i) that there be an ‘organised grouping’ of employees which has as its principal purpose the carrying out of the activities concerned on behalf of the client.

The Facts

Seawell were a customer of Ceva. Seawell operated various North Sea oil drilling platforms. Ceva arranged for the movement of materials to Seawell’s offshore platforms. Ceva supplied similar services to a number of other customers.

M was employed by Ceva and spent his time almost wholly devoted to looking after the customer needs of Seawell, particularly as respects the supply of outbound goods to a particular offshore platform. Other employees spent varying, but more limited time, on the Seawell contract.

Seawell indicated that they intended to take the business carried out for them by Ceva back into their own management. Ceva informed Seawell that they considered that this was a service provision change (SPC). That was denied by Seawell. The work was taken back in house by Seawell on 31st December 2009. M lost his job with Ceva and was not taken on by Seawell. He brought claims against both Seawell and Ceva for unfair dismissal.

The ET

The ET held that M was assigned to the organised grouping and his employment therefore transferred to Seawell.

The EAT Decision

The EAT allowed the appeal of Seawell ([2012] IRLR 802).  The grouping within which M 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 M 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 Reg 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 Reg 3(3)(a)(i) that M spent all of his time on Seawell’s work; nor was there any finding that Ceva formed a grouping consisting of M alone to carry out the Seawell work.

The Court of Session Decision

The Ct of Sess dismissed the appeal from the EAT, M’s employment had not transferred to Seawell.  It held that the  approach in Eddie Stobart was correct.   Paragraph 33 contains the essential reasoning:

“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. …While the job description … indicates that [M] 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.”

It was further observed that the definition of an organised grouping in Reg 2 as including a single employee is directed at those cases where the activities are carried out by a single individual. For example, the needs of a client of a cleaning firm for a single cleaner; or a firm of solicitors to provide a single qualified solicitor to advise full time a client such as an insurance claims handler.  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 did not warrant disaggregation of that group of employees.

Comment

This is perhaps another case which demonstrates that the increased certainty intended by the introduction of SPCs in 2006 has not been achieved and gives support for the Government’s view, expressed in the current consultation, that they have simply introduced another layer of uncertainty.

It also raises again the question of what happens if, learning of the client’s intention to take the activity back in house, the transferee introduces the necessary degree of organisation so that that by the date of the SPC there is an organised grouping of employees within Reg 3(3).

Link to Ct of Sess judgment

Link to EAT judgment

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