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TUPE service provision change: single employee was an organised grouping (Court of Appeal)

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In Rynda (UK) Ltd v Rhijnsburger [2015] EWCA Civ 75, the Court of Appeal considered whether a single employee was an "organised grouping of employees" which had, as its principal purpose, the carrying out of activities on behalf of a client, for the purposes of the TUPE service provision change test.
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The Court of Appeal has held that a commercial property manager, who was solely responsible for managing a group of Dutch properties for a client, was an "organised grouping of employees" for the purposes of regulation 3(3)(a)(i) of the TUPE regulations. Although she worked alone, she was effectively a one-person department and the employer had deliberately allocated her to the Dutch properties. Accordingly, when the management of the client's entire portfolio was transferred to a subsidiary of the owner, there was a service provision change and the property manager transferred to the subsidiary. The fact that she had, in the past, assumed some responsibility for other properties did not undermine this, as she had always devoted the majority of her time to the Dutch properties, and so the "principal purpose" test was satisfied. (Rynda (UK) Ltd v Rhijnsburger [2015] EWCA Civ 75.)

Background

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE) apply to a "relevant transfer", which covers two types of event:
  • A transfer of a business, undertaking or part of a business or undertaking where there is a transfer of an economic entity that retains its identity (regulation 3(1)(a)).
  • A client engaging a contractor to do work on its behalf, reassigning such a contract or bringing the work "in-house", providing certain conditions are met (a service provision change) (regulation 3(1)(b)). One of these conditions is that there must be "an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client" (regulation 3(3)(a)(i)). The organised grouping of employees may be a single employee (regulation 2(1)).
In Eddie Stobart Ltd v Moreman and others [2012] IRLR 356, the EAT held that, to constitute an "organised grouping", it is not enough that employees carry out the majority of their work for a particular client. Rather, employees must be organised by reference to the requirements of the client and be identifiable as members of that client's team (see Legal update, Service provision changes: guidance on the meaning of an "organised grouping of employees"). Therefore, there may not be an identifiable grouping of employees if the contractor uses different employees each day or week to provide the service, or the employees provide services to a number of clients; for example, in a shared services environment.
In Ceva Freight (UK) Ltd v Seawell Ltd [2013] CSIH 59, the Inner House of the Court of Session found that where one employee spends all of their time working for a particular client, it does not follow that the employee is an organised grouping for the purposes of regulation 3(3)(a)(i) of TUPE. In that case, the employee, Mr Moffat, was not deliberately organised by reference to the client's contract and did not carry out the relevant activities alone. He worked as part of a team whose principal purpose was not the client's contract; it was to provide outbound logistics services for a variety of clients. The Court of Session reinforced the notion that the term "organised grouping" implies that there must be an element of conscious organisation by the employer of its employees in the nature of a team, dedicated to servicing the client.
Where TUPE applies, the employment contracts of those employees assigned to the relevant organised grouping of resources or employees pass from the transferor to the transferee (regulation 4(1)).
For further information, see Practice note, TUPE (2): service provision changes.

Facts

Ms Rhijnsburger was a commercial property manager. In 2009, she was employed by Drivers Jonas, which managed a large portfolio of properties across Europe (the H20 properties), owned by the Rynda Group. Ms Rhijnsburger's main responsibilities were managing the H20 properties in the Netherlands, but she also worked on the H20 properties in Germany. However, following a period of illness, her duties changed and she focused only on the Dutch properties.
In April 2010, Drivers Jonas was acquired by Deloitte LLP to form Drivers Jonas Deloitte LLP (DJD). Ms Rhijnsburger's employment transferred to DJD, where she was solely responsible for managing the Dutch H20 properties. She had no other duties and no-one assisted her in carrying out this work.
Soon after the acquisition, DJD decided to withdraw from managing the H20 properties and the Rynda Group arranged for one of its subsidiaries, Rynda (UK) Ltd (RUKL), to take over this function. DJD's contract to manage the portfolio, and Ms Rhijnsburger's employment, ended on 31 December 2010. On 1 January 2011, she started working for RUKL as a senior asset manager. She continued to do exactly the same job as before, managing the Dutch H20 properties. Eight months later, she was dismissed.
Ms Rhijnsburger brought an unfair dismissal claim against RUKL. However, in order to have sufficient continuous service to bring the claim, she had to establish that she had transferred from DJD to RUKL under TUPE on 1 January 2011.

Employment tribunal and EAT decisions

An employment tribunal found that there had been a service provision change under regulation 3(1)(b) of TUPE. It found that Ms Rhijnsburger was an "organised grouping", which had as its principal purpose the property management services for the Dutch H20 properties. The fact that Ms Rhijnsburger had, in the past, assumed some responsibility for the German properties, did not undermine this finding, as she had always devoted the majority of her time to the Dutch properties. Nor was it relevant that Ms Rhijnsburger's future role was due to be reviewed.
RUKL appealed to the EAT, but was unsuccessful. The EAT upheld the employment tribunal's findings, adopting its reasoning. RUKL appealed to the Court of Appeal, both on the "organised grouping" and the "principal purpose" limbs of the test in regulation 3(3)(a)(i) of TUPE. It claimed that the tribunal and EAT had wrongly focused on the work that Ms Rhijnsburger happened to be doing, rather than following the approach set down by the EAT in Eddie Stobart (see Background). In other words, it argued that there was not a sufficient element of deliberate planning or intent about Ms Rhijnsburger's dedication to the Dutch H20 properties.

Decision

The Court of Appeal (Jackson LJ giving the leading judgment) dismissed the appeal, finding that there had been a service provision change under TUPE and that Ms Rhijnsburger's employment had transferred to RUKL.
Examining the relevant authorities, the Court of Appeal identified a four-stage process for tribunals to follow in cases of this type:
  • Identify the service which the transferor was providing to the client.
  • List the activities which the staff of the transferor performed in order to provide that service.
  • Identify the employee or employees of the transferor who ordinarily carried out those activities.
  • Consider whether the transferor organised that employee or those employees into a "grouping" for the principal purpose of carrying out the listed activities.
Applying this process, the court found that this was a case in which a single employee did amount to an organised grouping. It could not be said that it was a matter of pure chance that Ms Rhijnsburger was managing the Dutch H20 properties; at all times the employer (DJD and later RUKL) decided who she would work for. For example, DJD required Ms Rhijnsburger to work full time for the Dutch properties, with no assistance from any other employee. As such, it was a conscious decision of the employer which created this situation, in contrast to Eddie Stobart, in which the connection of groups of employees to particular clients was a random consequence of the way the shift patterns worked.
This case could also be distinguished from Seawell (see Background). Unlike Mr Moffat, Ms Rhijnsburger was not part of a team which delivered services to other clients. No other employee assisted her in managing the Dutch properties.
The second ground of appeal (that the organised grouping did not have as its principal purpose the carrying out of activities on behalf of the client) was rejected for the same reasons.

Comment

While this case is notable as one of the few Court of Appeal decisions on the service provision change provisions of TUPE, it does not take the law any further. However, the judgment contains an analysis of the existing EAT authorities in this area, including Eddie Stobart and Seawell (see Background), as well as Argyll Coastal Services Ltd v Stirling and others UKEATS/0012/11 (see Legal update, TUPE: guidance on approach to determining service provision change). Those decisions are likely to remain the most useful source of comprehensive guidance about whether there has been a service provision change.

Case

Rynda (UK) Ltd v Rhijnsburger [2015] EWCA Civ 75, 13 February 2015 (Bailii).
End of Document
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Resource ID 7-600-4668
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Published on 17-Feb-2015
Resource Type Legal update: archive
Jurisdictions
  • England
  • Wales
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