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TUPE update: Directors not part of organised grouping of employees

In the case of Edinburgh Home-Link Partnership v The City of Edinburgh Council and others, the EAT has found that directors of a charity were not assigned to the 'organised grouping of employees' for the purposes of TUPE and did not therefore transfer under TUPE when the services were taken in-house.

Background

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply where, in broad terms, a client either engages a contractor to do work on its behalf, reassigns the contract or brings the work 'in-house', provided certain statutory conditions are met. These statutory conditions are that there must be an organised grouping of employees situated in Great Britain before the change, which carries out, as its principal purpose, relevant activities on behalf of the client.

This is known as a 'service provision change' under TUPE.
Where TUPE applies, the employment contracts of those employees assigned to the organised grouping transfer from the transferor to the transferee.

Facts

Edinburgh Home-Link Partnership (HL) provided outreach services, on behalf of The City of Edinburgh Council, to vulnerable individuals in relation to housing matters. 
The Council decided that they would take these services 'in-house', as a service provision change under TUPE.

The case involved two directors, whose roles were mainly strategic; essentially, running the business, organising training for staff, working on tenders and dealing with trustees. The amount of time that the directors spent on actual service delivery was very small.

Decision 

The Tribunal found that neither director was sufficiently assigned to the organised grouping and therefore did not transfer to the Council.

The directors appealed to the EAT.

The EAT dismissed the appeal and found that neither director had been assigned to the organised grouping. The EAT found that their strategic roles were distinct from the actual provision of the services to the Council; they were not sufficiently involved, for the purposes of TUPE, in carrying out activities for which the Council had contracted.

Comment

This case serves as a useful reminder that TUPE does not simply apply to every single employee who is linked in some way to the client activity. If an employee's role is primarily strategic, he/she may not be assigned to the organised grouping and may not therefore satisfy the statutory test. See also the case of Eddie Stobart v Moreman, which we referred to in our June 2012 TUPE update (see Related publications).

For the full text of the judgment see Related links.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2012. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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