TUPE, or not TUPE? That is the Question

The Facts:

A courier company won a tender to provide delivery services to a new client. In doing so the previous service provider (PS) lost the contract. PS engaged in courier services for the client both in the UK and in mainland Europe. PS lost the entire contract. The courier company that had won the contract was only engaged by the client to provide courier services in the UK. What happened to the work in Europe remains a mystery to this day.

During the handover period PS told staff (that worked on the lost contract) that they would no longer be employed by them and that they would be transferring over to the courier company that had won the contract. The courier company that had won the contract had sufficient staff to manage the new contract and did not require the staff from PS. The staff that had been told they would transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) all devoted 100% of their time to the lost contract.

The Claim:

The individuals argued that they should have transferred to the new courier company under the Service Provision Change (SPC) element of the TUPE legislation. They argued that the service that they had spent 100% of their time on had been transferred to another entity and that therefore their employment should also have transferred. They claimed compensation for failure to inform and consult as well as automatic unfair dismissal.

The Law:

In order for there to be an SPC (and therefore a TUPE transfer) the following features must be found:

• An organised grouping of employees situated in Great Britain
• which had as its principal purpose
• the carrying out of the activities concerned
• on behalf of the client and
• the client intends that the activities will
• be carried out by the transferee.

The Defence:

The courier company argued that the facts of this particular case did not fall within a service provision change and that therefore there was no TUPE transfer. This being the case any liability for unfair dismissal rested with the original service provider because they had unfairly dismissed the individuals.

The courier company argued that the activities had fundamentally changed and that therefore there was no longer an organised grouping of employees which had as its principal purpose the carrying out of the activities concerned. The argument put forward was that because PS was providing courier services in the UK and Europe but that the new service provider was only providing services in the UK the activities had changed to such a degree that they could no longer be reasonably seen as the activities concerned and therefore there was no TUPE transfer.

The courier company also argued that there was not an organised grouping for the purposes of an SPC. They argued this on the basis that even though the Claimants all devoted 100% of their time to the particular contract there were other staff (who remained with the original courier) who work on the lost contract but also on other contracts. With this in mind it was argued that there could not be an organised grouping dedicated to particular activities when some of the staff remained with the original service provider because they only spent 5-10% of their time on the lost contract.

The Result:

The Tribunal found that there was not a TUPE transfer and the claims against the courier company were dismissed. The Tribunal concurred with the argument that the activities were different to a sufficient degree to mean that the original activities concerned did not transfer. The Tribunal also added that there was not an organised grouping in this instance because other members of staff were involved in the contract (that had been lost) but this was on a random and ad-hoc basis meaning that there was not a dedicated grouping involved in the activities concerned.

The moral of this story is that the devil is always in the detail. Just because at first glance it looks like a TUPE transfer it does not always transpire that there is one.