In Amaryllis Limited v McCleod, the EAT has given some useful guidance on how to approach the often difficult issue of identifying a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Facts  

A company known as Millbrook Furnishings Industries Limited was in the business of renovating chairs for the Ministry of Defence. They had done so for over fifty years.

However, between 2003 and 2008, it was actually Amaryllis Limited that secured the contracts for this work (along with other services), albeit that they sub-contracted all the renovation work to Millbrook.  

In 2008, Millbrook began undertaking this renovation work again directly for the MoD.

In 2014, the MoD retendered the renovation work and this time it was Amaryllis that was awarded the contracts.  

At this point, Millbrook argued that a number of their employees transferred under TUPE to Amaryllis as they spent the majority of their time carrying out the work that had now gone to Amaryllis.

Despite the MoD giving its view that TUPE applied and Amaryllis submitting its tender on the basis that TUPE applied; it subsequently had a change of heart and decided it did not.

At first instance the employment tribunal concluded that TUPE (in the form of a service provision change) applied to a number of the Millbrook employees. This decision was appealed by Amaryllis.  

Decision

The EAT decided that the original employment tribunal had got it wrong and had done so on two grounds

Firstly, it had lost sight of the fact that for there to be a service provision change under TUPE, there must be an ‘organised grouping of employees’ whose principal purpose was to carry out the relevant activities for the client. This requires more than simply showing that employees spend the majority of their time carrying out certain work. There must be some level of purpose or thought in organising or dedicating a group of employees to that work. It is not enough that by mere happenstance the majority of an employee’s time is spent carrying out work for a particular client. The tribunal in this case had been overly swayed by employees’ timesheets, and that was not the whole story.

Secondly, the tribunal had placed too much emphasis on the historical background and lost sight of the fact that it is the arrangements in place immediately before the transfer which are relevant rather than any past practices. Importantly, any arrangements in place between 2003 and 2008 could not be relevant as at that time it was in fact Amaryllis who were Millbrook’s client and not the MoD under the subcontracting arrangements.      

The decision was set aside and sent back to the tribunal to reconsider the case.

Comment    

The case is a useful reminder of the correct tests to be applied when determining the presence of a relevant under TUPE. It is tempting simply to conclude that those employees who spend a majority of their time working on the contract will transfer under TUPE to the organisation who takes on the contract. However, as this case clearly demonstrates, that approach misses out the crucial first step of identifying whether or not there is in fact an organised grouping of employees dedicated to the contact. It is only if there is such a grouping that you then consider which employees are assigned to that grouping and so transfer under TUPE.   

 Amaryllis Limited v McCleod & Others UKEAT/0273/15