Compass Group UK and Ireland v (1) Burke (2) De-Graft-Enorzah (3) Oasis Catering

The 1981 Transfer of Undertakings (Protection of Employment) regulations (better known as TUPE) operate to protect employees in the event of a transfer.

In Compass Group UK and Ireland v (1) Burke (2) De-Graft-Enorzah (3) Oasis Catering, the Employment Appeal Tribunal (EAT) said that tribunals must stick to the basic principles as set out in the European case of Spijkers when deciding whether there is a basic economic entity.

Ms Burke and Ms De-Graft-Enorzah’s union, GMB, instructed Thompsons to act on their behalf.

Basic facts

Ms Burke and Ms De-Graft-Enorzah worked in the “production kitchen” at Malorees infant school (providing hot meals for that school and five others) until March 2005 when it was closed for refurbishment and the team was dispersed.

The two women remained at Malorees for the summer, although Ms-De-Graft-Enorzah occasionally worked at Stonebridge which then provided meals for three of the five schools. During this time, they were both employed by Compass, the outside contractor for the service.

When the kitchen reopened in September, Oasis was awarded the contract for the Malorees kitchen and one other school but did not employ the two women. They claimed unfair dismissal or, alternatively, statutory redundancy.

Relevant cases

These include:

  • Spijkers Gebroeders v Benedik Abbatoir CV and Alfred Benedik en Zonen BV, in which the European Court of Justice stipulated that the decisive criterion in a TUPE transfer is whether the business retains its identity. Other important criteria include the type of undertaking; whether assets have been transferred; whether employees have been taken over; whether customers have been transferred; and the degree of similarity between activities carried on before and after and the period of any suspension of those activities.
  • Cheesman v R Brewer Contracts Ltd, in which the EAT said that to establish whether there is an undertaking, the courts needed to find a “stable economic entity” with more than one works contract, an organised grouping of people and assets enabling the exercise of an economic activity with a specific objective. It also needed to be reasonably well structured and autonomous.

Tribunal decision

Ostensibly relying on Spijkers, the tribunal said that, as a result of the kitchen closure and the dispersal of the original team during the summer term of 2005, the “stable economic entity” that had been in place ceased to exist from March 2005. There was therefore no “entity” capable of transfer during that term, whether as a part or as a whole.

That being so, it concluded that there had not been a transfer of an undertaking or part of one from Compass to Oasis and it dismissed all of the claims against the latter. Compass and the two women appealed.

EAT decision

The EAT disagreed, concluding that the tribunal was wrong to say there was no stable, economic entity after March 2005. Relying on Cheeseman (which was based mainly on Spijkers), it said that it was clear that Compass was engaged in the exercise of an economic activity “pursuing a specific objective” during the summer term when it supplied meals to the children at Malorees school.

This activity was sufficiently structured and autonomous to satisfy Cheeseman in that it had a unit manager (Ms De-Graft-Enorzah) an assistant (Ms Burke), and use of the kitchen which was providing meals for about 100 children. The customers remained the same (school, children and staff); the premises were the same, as was the equipment. Nor was there any gap in the activities. There was, in other words, a stable economic entity.

It also said that the tribunal put far too much emphasis on the refurbishment of the kitchen. There was no reason why a business should lose its stability “simply because it replaces certain parts of its plant”.

It thought that the fact that only a part of the work was transferred to Oasis was irrelevant as it just meant there had been a transfer of part of the Malorees operation to Oasis.

In any event, Ms Burke and Ms De Graft Enorzah were continuously assigned to the entity (or to the part that had transferred) and the appeal therefore had to succeed.