To satisfy the requirements of a service provision change (SPC) under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), employees have to show they were “assigned” to an “organised grouping” (among other things). In London Borough of Hillingdon v Gormanley, the Employment Appeal Tribunal (EAT) held that tribunals must consider the structure of the organisation and the contractual role that the employees played within it when deciding whether or not they were “assigned”.
RG Ltd employed three members of the same family - Robert (who was a director), his wife Anne (the company secretary) and their son Graham. By 2008, their only contract was with Hillingdon Council, carrying out repair and maintenance work on its housing stock. On 1 October 2012 Hillingdon extended the contract to 31 March 2013.
In November 2012 “completely out of the blue” Hillingdon told RG that they were not going to give them any more work and that TUPE did not apply. After taking advice, RG Ltd wrote to Hillingdon in early December arguing that TUPE applied to all 17 company employees (including the Gormanleys).
Although Anne Gormanley did not work for RG Ltd after 20 December 2012, Robert and Graham Gormanley continued to be paid by the company until they were made redundant on 9 August 2013.
All the tribunal claims brought by RG's employees were settled, with the exception of the claims submitted by the Gormanleys.
Regulation 3 of TUPE states that there is an SPC when “activities” are no longer carried out by one employer and are carried out in future by another, as long as immediately before the transfer, “there is an organised grouping of employees” whose “principal purpose” is to carry out the activities concerned on behalf of the client.
Section 4 states that an SPC will not terminate the contract of an employee who is “assigned to the organised grouping of resources or employees that is subject to the relevant transfer ….”
Following a pre-hearing review in June 2013 at which the tribunal found that TUPE applied, the employment judge held that there was an organised grouping of workers in RG Ltd whose principal purpose was carrying out housing maintenance for Hillingdon.
It also held that the Gormanleys were part of that organised grouping and were therefore subject to the TUPE transfer.
The Council appealed against those decisions, arguing that the dismissal of Robert and Graham Gormanley for redundancy from RG Ltd broke the chain of causation of their loss by any act carried out by Hillingdon.
Relying on the judgment in the case of Botzen v Rotterdamsche Droogdok Maatschappij BV, the EAT held that tribunals have to consider the structure of the organisation that has been transferred and the contractual role that the employees played within it in order to decide if they have been “assigned to an organised grouping of employees”.
In this case, the tribunal judge failed to consider the obligations of the Gormanleys under their contract and job descriptions, as well as those which they were actually performing at a particular moment in time. It pointed to the fact that Robert and Graham Gormanley continued to be employed by RG Ltd for more than six months after the Hillingdon contract had been lost, the implication being that if they had found other work, they would have continued in employment.
Although the case was remitted to another tribunal to consider these points, the EAT ordered the Gormanleys to pay the £1,600 appeal fee because the Council’s appeal resulted in the tribunal decision being overturned.