10.04.2012

New Ruling by Employment Appeals Tribunal (EAT):



Are you working for an English company? Or maybe an Italian company acquiring a company in England? You may want to take note - Employees coming from two different companies are not protected by TUPE.

The Employment Appeals Tribunal (EAT) has provided further clarification on what “service provision change” means under the Transfer of Undertakings (Protection of Employment Regulations 2006 (TUPE). Under TUPE, employee contracts are transferred from one company to another when an organisation outsources services or changes outsourcing provider.

In the recent case of Argyll Coastal Services Ltd v Stirling and others, the transfer of contracts of employment under TUPE for 11 employees was considered. The case involved a Ministry of Defence (MOD) contract for delivering cargo in and around the Falkland Islands. This contract was previously held by J & A Gardner & Co Ltd (JAG) who owned St. Brandan - the vessel on which the 11 Claimants worked as crew. Although the Claimants indisputably worked as crew on the St. Brandan, the complicated company structure of JAG meant that the Claimants were actually employed by different companies.

When the Dutch shipping firm, Van Winjgaarden Marine Services consequently won the contract, taking over from JAG and they promptly hired a new vessel from Argyll Coastal Services Ltd (Argyll).

The Employment Tribunal originally found that the contracts of the 11 Claimants were transferred to Argyll, but Argyll subsequently appealed.

The EAT upheld Argyll’s appeal stating that the tribunal had failed to consider the requirements of Regulation 4 TUPE. The judge at the appeal, Lady Smith focused on the requirements for a “service provision change”, explaining that employees need to show that immediately before the contract change, there had been an organised grouping of employees situated in Great Britain which had as “its principal purpose” the carrying out of “activities concerned”.

She explained that “organised grouping of employees connotes a number of employees which is less than the whole of the transferor’s entire workforce, deliberately organised for the purpose of carrying out the activities required by the particular client contract and who work together as a team.”

Lady Smith then went on to say that “The reference to ‘situated in Great Britain’ clearly requires that group to be based in Great Britain.” Although, part of the grouping may work outside of Great Britain and still qualify for protection under TUPE.

As a final clarification Lady Smith stated that an organised grouping cannot be made up of employees with different employers, as was the case here. However, if a client moves his business from multiple service providers to a single service provider for instance, then “TUPE may apply to two separate groupings of employees”.

Avv. Gabriele Giambrone, Senior Partner of Giambrone Law ILP commented, “The commercial world is constantly evolving. More complicated company structures and employment contracts mean that the law is having to be interpreted with new eyes every day. It is important that the law keeps up with the ever-evolving relationship between employees and employers, ensuring that relevant protections are still in place and more importantly, that there is clarity in the law.”

If you are either:
• An employee working for an English company which is currently going through an acquisition and/or changing its outsourcing provider; or
• An Italian company acquiring an English company in England
and would like some advice on your rights - please feel free to contact Giambrone Law ILP’s experienced legal team.

Anne Carrion
Iain James Buchan
Avv. Gabriele Giambrone

Giambrone Law ILP
Largo Antonio Sarti, 4
00196, Rome, Italy

T: +44 (0) 870 111 2158
+39 06 326 498
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E: rome@giambronelaw.com