TUPE

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Rynda (UK) Ltd v Rhijnsburger Court of Appeal – 12 February 2015

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Was a single employee an organised grouping within Reg 3(3)(a)(i)?

The Facts
From May to October 2009 the employee was employed by DJ under a 6 month fixed term contract to manage premises in the Netherlands for one of DJ’s clients. From October 2009 she took on an associate role for DJ solely managing a portfolio of Dutch properties and also took on responsibility for the management of the office dealing with German properties for H2O which she did with others.  From March 2010 after a period illness and when the employee returned to work it was decided she would be confined to the managing the Dutch portfolio. She was the only employee doing so. On 1 April 2010 her employment transferred to DJD. At the end of 2010 the Respondent assumed responsibility for managing the Dutch portfolio.  The employee’s employment ended with DJD on 31 December 2010 and began employment with the Respondent on 1 January 2011.  She was dismissed in September 2011 and the Respondent sought to argue that she had insufficient continuity of service as there has been no TUPE transfer to it in January 2011 because at that time she was not part of an organised grouping that had as its principal purpose the carrying out of activities on behalf of the client, H20.
The ET held that the employee, albeit on her own, was an organised grouping that carried out the activity of property management services of the H20 properties in the Netherlands. This was not the product of accident or happenstance but was the product of a deliberate decision taken by DJD before the transfer there was therefore a service provision change with Reg 3(1)(b).  This was upheld by the EAT (see commentary here)

The Court of Appeal Judgment

The Court of Appeal upheld the decisions of the ET and EAT.  At para 44, Jackson LJ stated:

I would summarise the principles which emerge from the authorities as follows. If company A takes over from company B the provision of services to a client, it is necessary to consider whether there has been a service provision change within regulation 3 of TUPE. The first stage of this exercise is to identify the service which company B was providing to the client. The next step is to list the activities which the staff of company B performed in order to provide that service. The third step is to identify the employee or employees of company B who ordinarily carried out those activities. The fourth step is to consider whether company B organised that employee or those employees into a “grouping” for the principal purpose of carrying out the listed activities.

Comment

With respect to the Court of Appeal whilst this guidance may be useful for answering the question of whether there is an organised grouping and principal purpose (the point in issue in the case) it is inadequate for determining whether there is an SPC.  It does not address  the other issues that commonly arise in an SPC case such as; whether the activities are fundamentally the same before and after transfer; whether the client intends that the transferee, post-SPC, will not carry out the activities in connection with a single event of short-term duration; whether the activities are wholly or mainly the supply of goods (rather than services) for the client’s use; and (although this is touched on) the complexities that arise in determining whether the employee concerned is assigned to the organised grouping.   The guidance is also unhelpful because the first stage must be to determine whether or not the activities carried out before the transfer are fundamentally the same as that after the transfer.  (It should be noted that ‘the service’ may not be the same as ‘the activities’. ) Only once this is done is it necessary to consider whether there is an organised grouping  The more comprehensive guidance of HHJ Clark in Enterprise Management Ltd v Connect-Up Ltd is likely to prove more useful in practice.

Link to Judgment

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