A recent Employment Appeal Tribunal (EAT) decision provides important clarification of when a group of employees constitutes an “organised grouping” for the purposes of a service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
Background
Mrs Oliveira was employed by a temporary work agency, G-Staff Ltd (G-Staff), and supplied to Butchers Pet Care Limited (Butchers) as an alutray (aluminium tray) operative. On 13 July 2018, a new temporary work agency, Mach Recruitment Ltd (Mach), took over the supply contract from G-Staff and began providing the same services to Butchers. On 18 July 2018, Mrs Oliveira signed an agreement with Mach during one of her shifts at Butchers. Mrs Oliveira’s first language is Portuguese and she did not understand the documents she signed. They included an application form and a document headed terms and conditions. Following this, Mrs Oliveira continued working at Butchers with the same people with whom she had always worked.
In 2021, Mach’s contract with Butchers came to an end. Mrs Oliveira did not hear from Mach until she received a P45 in February 2022. Mrs Oliveira brought several claims in the employment tribunal (ET), including a claim for unfair dismissal. She argued that her employment had transferred under TUPE when Mach replaced G-Staff. Mach argued that no such grouping existed and that any continuity in staffing was coincidental rather than deliberate. The ET had to determine whether there had been a service provision change under TUPE in this scenario.
ET decision
The central issue for the ET to determine was whether there was “an organised grouping of employees” whose “principal purpose” was to carry out the relevant work for Butchers immediately before the transfer. If there was such an “organised grouping”, TUPE would apply.
The judge at first instance found that there was an organised grouping working on the Butchers contract. Mach appealed, arguing that the ET had misapplied the legal test.
EAT decision
Mach argued that the ET had erred by treating a group of employees working for Butchers as an “organised grouping”, when in fact their allocation was coincidental i.e. the result of shift patterns and ad hoc working practices, not deliberate planning. Mach contended that a conscious decision to create a dedicated team was required for TUPE to apply and that the evidence did not support such a finding.
The EAT rejected this argument and dismissed Mach’s appeal. It held that the judge had correctly applied the legal principles from TUPE case law and that they were entitled to find an “organised grouping” on the facts, even if the evidence of formal organisation was limited. The EAT also accepted Mrs Oliveira’s testimony that she worked consistently with the same team in the same role. Mach was unable to offer contrary evidence to disprove Mrs Oliveira’s testimony, including evidence that showed coincidental shift patterns or a differently structured workforce.
Importantly, the EAT clarified that a “literally conscious decision to segregate a particular group” is not required. It is sufficient if, in practice, a group of employees consistently operates together for a particular client, even if the arrangement is not formalised. The EAT emphasised that service provision change cases should not be overcomplicated with rigid technical distinctions between “group” and “grouping”.
The EAT recognised the flexible nature of agency work in its judgment, but held that the existence of a team consistently assigned to the same role and working for one client could still meet the threshold for an “organised grouping”.
Key takeaways
This decision is a timely reminder for employers, especially those in the recruitment and outsourcing sectors, to pay close attention to how they organise their workforce in practice. TUPE situations can arise unexpectedly and can be complicated.
This decision also highlights the importance of record-keeping. In the absence of formal documentation or explicit decisions, a consistent pattern of allocating the same employees to a particular client and role may suffice to create an “organised grouping” for TUPE purposes.
There are several steps employers can take to minimise the risk of being caught out by TUPE:
- Routinely review workforce allocation practices: Ensure clarity on whether teams are being informally but consistently dedicated to specific clients and roles.
- Document organisational decisions: While not strictly necessary, keeping records of how and why employees are assigned to particular clients and roles can help evidence the employer’s intent (or lack thereof) in the event of a dispute.
- Prepare for TUPE risks in contract transitions: Recognise that TUPE may apply even where the organisation of staff is flexible or ad hoc, if in practice a “grouping” exists.
This decision underscores the importance of substance over form in TUPE cases. For employers, the key takeaway is that a tribunal will look at the practical reality of workforce arrangements, not just formal structures.
