Posted by Richard Woodman, Partner
When is an organised grouping of workers assessed for a service provision change?
In Amaryllis Limited v McLeod it fell to the EAT to look at the point at which an assessment was made as to whether there was an organised grouping of employees whose principle purpose was to carry out the transferring activities, where a service provision change potentially existed under TUPE. It held that this point must be immediately before the change of provider and not historical.
Millbrook Furnishings Limited carried out work for the Ministry of Defence for many years, but between 2003 and 2008 it did so as a sub-contractor to Amaryllis. From December 2012 the MOD awarded new contracts under a framework agreement; in 2014 the furnishing renovations contract was re-tendered amongst four contractors on the framework agreement. Millbrook was unsuccessful and the contract was awarded to Amaryllis. The question then arose as to whether there was an organised grouping of employees prior to the transfer carrying out the activities concerned on behalf of the MOD. It was accepted that Millbrook’s employees were spending just about 70% of their time on the MOD contract. Nonetheless the Employment Judge considered it was appropriate to consider evidence relating to the past, and found himself satisfied that the Department had originally been set up with the specific purpose of servicing the MOD contract, albeit that grouping now serviced other customers. Nonetheless the MOD was still the largest customer and so he found that TUPE applied.
Amaryllis appealed to the EAT which upheld the appeal. It considered that it was insufficient that a Department carried out significant work for a client; the employees had to be organised for the principle purpose of carrying out that work. The relevant time to review this is immediately before the transfer. It held that the Employment Judge was wrong to look at the historical situation and take into account work done by Millbrook between 2003 and 2008 when Millbrook was a sub-contractor of Amaryllis. During this period the MOD was not a client of Millbrook; it was a client of Amaryllis. Therefore the EAT found that this period could not be taken into account because even if, during that period, there was an organised grouping of employees, this grouping was not dedicated to carrying out the activities for the relevant client.
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