Jeffrey Jupp's TUPE resource

Costain Ltd v Armitage EAT – 2 July 2014


This another case emphasising the need in a Reg 3(1)(b) Service Provision Change (SPC) case for the ET to clearly define the ‘organised grouping’ of employees required by Reg 3(3) and to determine whether the Claimant has been assigned to that organised grouping for the purposes of Reg 4.

The Facts

ERH had a contract for provision of services for the Welsh Assembly relating to highway maintenance known as AWRMC.  This provided a guaranteed income stream.   It also had an ancillary contract which, unlike the maintenance contract, was a framework agreement that guaranteed no work.   Costain won the AWRMC contract with effect from 1 February 2013. The ancillary contract did not transfer.  Costain accepted there was an SPC; the issue was whether there was an organised grouping of employees and whether Claimant, a project manager, was assigned to the organised grouping.

The ET held that there was an organised grouping by reference to the requirements of the AWRMC contract.   He held that the Claimant was assigned to that organised grouping as he spent approximately 67% of his time on AWMRC (although that also included holiday and sickness absence).

The EAT Judgment

Costain appealed , principally on the ground that the Judge had concentrated too much on percentages and had not applied the correct legal test. This was because he had not defined the organised grouping of employees and had not therefore determined whether the Claimant was assigned to that organised grouping.

The EAT agreed and was critical of the ET’s reasoning.  HHJ Eady QC restated the fundamental principles relating to assignment:

(1)           The tribunal is required to define the organised grouping (Reg 3(3)(a)(i)) and then, in light of that finding, determine whether the claimant is assigned to it (Reg 4) (Eddie Stobart v Moreman).

(2)           The concept of an organised grouping implies an element of conscious organisation by the employer of his employees in the nature of a team which has as its principal purpose the carrying out of the activities in question.  This must be deliberate and not happenstance (Seawell Ltd v Ceva Freight (UK) Ltd and Eddie Stobart).

(3)           Assignment is a question of fact.  Not every employee carrying out work for the relevant client will be assigned to the organised grouping. (Edinburgh Home-Link Partnership v The City of Edinburgh Council).  Whether there was an assignment required a proper examination of the facts.  Being involved in the activities immediately before the transfer does not necessarily mean there has been an assignment (Argyll Coastal Services Ltd v Stirling).

Link to judgment

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