Amaryllis v McLeod & Ors UKEAT/0273/15/RN

Appeal against a decision that the Claimants's employment had transferred under TUPE. Appeal allowed and decision set aside.

The Claimants worked for Millbrook who had a contract with the MOD, amongst others, to undertake specific work. Amaryllis then won the contract but decided that none of the Millbrook employees would transfer to them under TUPE. An ET found that a transfer had taken place, saying that "the department had not "morphed" from being one dedicated principally to servicing the MOD contract into one operated principally to service the needs of all customers, which happened to include the MOD as its major customer" and the "activities were "fundamentally" the same as the activities carried out by [Millbrook] within the meaning of Regulation 3(2A) of the Regulations". Amaryllis appealed.

The EAT allowed the appeal. It is a necessary condition of satisfying Regulation 3(3)(a)(i) that at the relevant time the principal purpose of the organised grouping of employees is carrying out the relevant activities for the particular client. It is not sufficient to satisfy the Regulation that a department carries out certain work. The Employment Judge relied on facts relevant to carrying out such activities in general rather than to carrying out such activities for the relevant client and did not adequately address the issue of what the principal purpose of the organised grouping of workers was at the relevant time.

______________

Appeal No. UKEAT/0273/15/RN

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE

At the Tribunal

On 10 March 2016

Judgment handed down on 9 June 2016

Before

THE HONOURABLE MRS JUSTICE SLADE DBE

(SITTING ALONE)

AMARYLLIS LTD (FORMERLY OF MONTROSE ROAD CHELMSFORD ESSEX) (APPELLANT)

**

**

McLEOD & OTHERS (RESPONDENTS)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant MR ANDREW HOGARTH (One of Her Majesty's Counsel) Instructed by: JW Employment Law Solicitors 34 Chichester Drive Chelmsford Essex CM1 7RY

For Mr McLeod MR ALEXANDER LINE (of Counsel) Instructed by: DAS Law Ltd North Quay Temple Back Bristol BS1 6FL

For Millbrook Furnishings Industries Ltd MR MARTIN PALMER (of Counsel) Instructed by: Paris Smith LLP Solicitors 1 London Road Southampton SO15 2AE

**SUMMARY**

TRANSFER OF UNDERTAKINGS - Entity

In considering whether there has been a service provision change within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 Regulation 3(1)(b)(i) the Employment Judge failed to reach permissible conclusions on the facts. He appears to have relied upon facts which did not support a conclusion that at the relevant time, immediately before the change of provider, Millbrook had an organised grouping of employees whose principal purpose was to carry out relevant activities for the relevant client. The Employment Judge relied on facts relevant to carrying out such activities in general rather than to carrying out such activities for the relevant client and did not adequately address the issue of what the principal purpose of the organised grouping of workers was at the relevant time. Finding that there was a service provision change within the meaning of TUPE Regulation 3(1)(b) set aside.

**THE HONOURABLE MRS JUSTICE SLADE DBE**
  1. Amaryllis Limited ("Amaryllis") (the Second Respondent to claims by Mr McLeod and thirteen others; "the Claimants") appeals from the decision of an Employment Tribunal ("ET"), Employment Judge Coles ("the EJ") sitting alone in a Judgment and Reasons sent to the parties on 13 February 2015 ("the Judgment") following a Public Preliminary Hearing ("PPH"). The EJ held that there was a relevant transfer by way of a service provision change within the meaning of Regulation 3(1)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 **("TUPE") on 26 April 2014 from Millbrook Furnishings Limited ("Millbrook"), the First Respondent to the claim, to Amaryllis. The EJ held that all the Claimants save for one were assigned to an organised grouping of employees which was the subject of a service protection change. Before me as before the EJ Mr Hogarth QC represented Amaryllis, Mr Palmer, Millbrook, and Mr Line, Mr McLeod.
  1. Following a hearing before HH Judge Richardson under Rule 3(10) of the Employment Appeal Tribunal Rules 1993 (as amended) three grounds of appeal were set down for a Full Hearing. All grounds concern the interpretation and application of the service provision change regulations in TUPE.
**Transfer of Undertakings (Protection of Employment) Regulations 2006**
  1. Regulation 3(1):

"3. A relevant transfer

(1) These Regulations apply to -

(b) a service provision change, that is a situation in which –

(ii) activities cease to be carried out by a contractor on a client's behalf (whether or not these activities had previously been carried out by the client on his own behalf) and are carried out instead by another person ("a subsequent contractor") on the client's behalf; …

and in which the conditions set out in paragraph (3) are satisfied.

(3) The conditions referred to in paragraph (1)(b) are that –

(a) immediately before the service provision change –

(i) there is 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;

4. Effect of relevant transfer on contracts of employment

(1) Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of … employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee."

**The Judgment of EJ Coles**

Findings of Fact

  1. Millbrook has been in business for many years. It currently has about 370 employees. For over fifty years it held contracts with the Ministry of Defence ("MOD") for the renovation of upholstered wood and metal furniture ("the Renovation Contract"). Millbrook did not have the Renovation Contract with the MOD between 2003 and 2008 when Amaryllis secured a different contract which included the supply of new furniture as well as renovation. As Amaryllis did not yet have any furniture renovation facilities in-house they sub-contracted the majority of the furniture renovation work under the MOD contract to Millbrook.
  1. In 2008 the MOD split the supply of new furniture from the furniture renovation contract. Millbrook was awarded the renovation contract until 17 December 2012. With effect from December 2012 the MOD awarded contracts under a framework agreement including to Millbrook and Amaryllis. Under that agreement the ET observed "it would appear that [Millbrook] was actually given all of the renovation work".
  1. The ET held at paragraph 9:

"9. In early 2014, the Furniture Renovations Contract was re-tendered between the four contractors on the framework agreement. The tender was described as Lot 4 Renovation and Repair of Defence Furniture. The first respondent was unsuccessful in this re-tender and instead the contract was awarded to the second respondent [Amaryllis]."

  1. It was contended before the ET by Mr Hogarth QC on behalf of Amaryllis that one area of work would not be required to be carried out by Amaryllis, that which was carried out "in situ" by Millbrook at various military bases where it was not practical for the items to be transported to the factory. Millbrook's factory was in Totton, Hampshire.
  1. The EJ held at paragraph 11 that:

"11. … a significant number of the employees of [Millbrook] had, over varying periods of employment but some quite lengthy, been engaged in carrying out renovations work under what they would generally describe as the MOD contract. It is right to say that not all of the work being carried out by those employees for MOD related to "renovations" which is the relevant work applicable to the contract in question, but also included on occasion construction of new furniture. The claimants' evidence and witness statements, however, confirmed that they regarded the greater part of their duties as relating to renovation work.

12. It is also averred and emphasised on behalf of the second respondent, and conceded by the first respondent to an extent which is in dispute, that the area of the factory where renovation work was carried out by the employees in question also incorporated work being carried out on inter-company projects as well as contracts which had been secured from customers other than MOD."

  1. There was before the EJ a spreadsheet based on timesheets completed by the Claimants over two periods of six months and three months respectively up to the end of the time when the contract was lost to Amaryllis. The figures were not challenged. The EJ held at paragraph 14 that they:

"14. … purported to show that, over the six months period, an average of 69.1% of the employees' time was spent on the renovations contract and 68.5% over the three month period. …"

  1. At paragraph 15, the EJ stated that he regarded as relevant albeit not determinative certain events and correspondence before and after notification on 7 April 2014 that Amaryllis had been awarded the Renovation Contract. These were:
  1. That the MOD considered that TUPE would apply. If tenderers took a different view they were invited to submit two tenders on the basis of TUPE applying and not applying. Amaryllis did not submit two tenders.
  1. On 7 April 2014 the HR Director of Millbrook sent an email to Amaryllis attaching a schedule of 31 employees who it considered would transfer under TUPE.
  1. On 17 April 2014 Amaryllis responded that it was not in dispute that four employees but not others would transfer under TUPE.
  1. Amaryllis decided, having taken legal advice, that none of the Millbrook employees would transfer to them under TUPE.
  1. In the event some of Millbrook's employees were deployed but the majority were told they would be dismissed. "The department closed down".

The Conclusions of the EJ

  1. The EJ set out in paragraph 36 submissions made by Mr Hogarth QC. Counsel submitted that even if, historically, Millbrook could be said to have had an organised grouping of employees which had as its principal purpose the carrying out of the relevant activities on behalf of the MOD, the evidence shows that that was no longer the case at the relevant time and accordingly TUPE did not apply. In paragraph 37 the EJ said:

"37. I also accept… that the fact that the spreadsheet … shows that almost 70% on average of the time spent by the relevant employees on the MOD renovations contract showed that MOD was the departments [sic] "biggest customer", that did not mean that it was "dedicated" to MOD or that its principal purpose was to service the contract with MOD."

  1. However the EJ held that:

"38. Compelling as Mr Hogarth's arguments were, however, I formed the conclusion that I had to look at the reality of the situation as it existed "immediately" before the alleged transfer. … [This was] going back over a period which could reflect typical activity, which I accepted could properly be covered by the six month/three month periods covered by the spreadsheet at 1113 as well as the evidence relating to the past.

39. In the event, I was satisfied from the evidence present to me, on the balance of probabilities, that the department in which these claimants (and indeed others) worked had originally been set up with the specific purpose of servicing the MOD contract relating to renovations. …"

  1. The EJ observed at paragraph 40 that:

"40. Any commercial enterprise looking to maximise profit and utilisation of resources will and can quite properly seek and, in this case, secure contracts from other sources …"

The EJ held at paragraph 41:

"41. Nevertheless … on the evidence … the department had not "morphed" from being one dedicated principally to servicing the MOD renovations contract into one operated principally to service the needs of all customers, which happened to include the MOD as its major customer.

42. I was satisfied therefore, that there was at the material time an organised grouping of employees within the respondent organisation which had at its principal purpose the carrying out of the activities concerned on behalf of MOD. …"

  1. The EJ held that:

"42. … Although there may have been some doubt as to whether the "in situ" activities referred to above were included in the contract awarded to [Amaryllis], I was satisfied that those activities were "fundamentally" the same as the activities carried out by [Millbrook] within the meaning of Regulation 3(2A) of the Regulations. …"

The EJ concluded that three of the on-site workers were assigned to the organised grouping of employees working on the relevant MOD contract.

  1. The EJ therefore held that there was a service provision change from Millbrook to Amaryllis resulting in a relevant transfer within the meaning of TUPE and that all the Claimants except one transferred to Amaryllis.
**The Submissions of the Parties**
  1. Three grounds of appeal were permitted to proceed to a Full Hearing. Grounds 3 and 4 are related. Mr Hogarth QC contended that the EJ erred in failing to consider the principal purpose of the relevant organised grouping of employees immediately before the service provision change. Counsel contended that the EJ erred in holding that the department in which the Claimants worked had been set up 50 years ago for the purpose of servicing "the MOD contract" when he had accepted in paragraph 35 that there was no evidence of Millbrook's intention in setting up the department 50 years ago. Further, it was contended that at paragraph 39 of his Judgment the EJ ignored the five year period between 2003 and 2008 when the group of employees was engaged on work for Amaryllis not for the MOD. The MOD, the relevant client for the purposes of the TUPE claim, was not a renovations contract client of Millbrook in that period. The EJ failed to consider "the primary purpose" of the organised grouping of workers at the relevant time. This is immediately before the alleged service provision change.
  1. Mr Hogarth QC submitted that there is a distinction to be drawn between "happenstance" and "purpose". To fall within TUPE Regulation 3(3)(a)(i) the organised grouping of employees must have as its purpose work for a particular client. Counsel contended that customers are won and lost. If a department of a business carries out work for several customers and loses all but one that does not mean that the grouping of workers had as its principal purpose the carrying out of activities on behalf of the remaining client. In this regard Mr Hogarth QC gave the example of Ocado. At the start of its operations Ocado had one customer, Waitrose. It has now acquired more. There has not been a change of purpose of the employees engaged on the delivery services. Their purpose is to deliver groceries not to deliver groceries for one client. Whether they deliver on behalf of one or more clients is mere happenstance.
  1. Mr Hogarth QC relied upon the judgment of Underhill P (as he then was) in [Eddie Stobart Ltd v Moreman]() [2012] ICR 919. Eddie Stobart lost three clients out of an original five. One of those clients placed orders mainly when the night shift was on duty and the other mainly when the day shift was on duty. The ET held that the circumstances did not fall within TUPE Regulation 3(3)(a)(i). Underhill P upheld the decision of the ET. He held that the Regulation did not apply where as a result of combination of circumstances but without any deliberate planning or intent employees are found to be working mostly on tasks for a particular client. In Seawell Ltd v Ceva Freight (UK) Ltd [2013] CSIH 59 the Court of Session held that the concept of "organised grouping" implied that there was an element of conscious organisation by the employer of his employees into a grouping in the nature of a team which had as its principal purpose the carrying out of the identified activities. The Court of Appeal in [Rynda (UK) Ltd v Rhijnsburger ]()[2015] ICR 1300 at paragraph 43 considered Eddie Stobart and Seawell of assistance.
  1. Mr Hogarth QC relied upon the judgment of the EAT, in [Costain Ltd v Armitage and another ]()UKEAT/0048/14 in which HH Judge Eady QC held at paragraphs 34 and 35 that the concept of an "organised grouping" implies that there is an element of conscious organisation by the employer of its employees into a team dedicated to the client.
  1. Mr Hogarth QC contended that in failing to reach a decision on the purpose of the organised grouping of Millbrook's employees immediately before the transfer the EJ also failed to distinguish between a group of employees whose purpose was to carry out a certain type of work from those whose purpose is to carry out work for a particular client. It is the latter which falls within Regulation 3(3)(a)(i). The former does not.
  1. As for ground 6 of the Notice of Appeal, Mr Hogarth QC contended that the EJ erred in holding that the work done by "on-site" employees was "fundamentally" the same as the work carried out by Millbrook at its factory which was awarded to Amaryllis. It was said that the EJ reached a perverse conclusion in paragraph 42 in which he stated that there was "some doubt" whether on-site work was part of the contract awarded to Amaryllis when the unchallenged evidence given by Amaryllis was to the effect that the on-site work was not in the contract awarded to them.
  1. Mr Palmer, counsel for Millbrook, said that the three grounds of appeal amount to challenges to the Judgment on grounds of perversity. Mr Palmer referred to paragraphs 22 and 31 to 35 of the statement of Mr Paul Croll, Finance Director of Millbrook who gave evidence to the ET that the job description of sprayers and production/service operatives stated that the purpose of their jobs was to support or assist in the service of the MOD Furniture Renovation Contract. Counsel submitted in answer to ground 3 of the Notice of Appeal that it can be seen from paragraphs 14 and 42 of his Judgment that the EJ had carefully considered what work the renovations department of Millbrook was undertaking in the period immediately before the relevant transfer.
  1. Mr Palmer adopted the guidance of Lady Smith in [Argyll Coastal Services Ltd v Stirling and others]() UKEATS/0012/11 in which the Judge held at paragraph 19 that there seems to be no reason why the words "principal purpose" should not bear their ordinary meaning. Counsel accepted that the ET should consider the employer's principal purpose and intention in having the organised grouping of employees at the relevant time. Mr Palmer accepted that the findings of fact in paragraphs 10, 11, 13 and 14 of the Judgment are vague if they are to be regarded as relevant to purpose or intention. However the EJ reached a permissible conclusion, which contrary to the contention in ground 4 of the Notice of Appeal, was not perverse, that the principal purpose of the relevant organised grouping of employees was the performance of the MOD Renovations Contract. This was the case notwithstanding the department was undertaking some work for other clients. In this regard Mr Palmer drew attention to paragraph 45 of the statement of Mr Croll in which he said that the only reason Millbrook was able to do other renovation work was because of the core regular business provided by the MOD Furniture Renovation Contract which enabled them to offer continuous employment to skilled employees.
  1. As for ground 6 of the Notice of Appeal, Mr Palmer said that Millbrook accepted that the contract awarded to Amaryllis did not include in situ work. This was work done by Millbrook under their contract with the MOD and ceased after the contract was awarded to Amaryllis. The EJ did not err in concluding that workers engaged on the in situ work were part of the grouping assigned to the MOD contract. This conclusion was rightly derived from paragraphs 10 and 42 of the Judgment.
  1. Mr Line, for Mr McLeod, contended that the EJ did not err in holding that a service provision change took place on or about 26 April 2014 pursuant to TUPE Regulation 3(1)(b)(ii).
  1. The material point at which the EJ was required to consider whether TUPE Regulation 3(3)(a)(i) was satisfied was immediately before the transfer. Mr Line acknowledged that the EJ may quite rightly be criticised for not making a clear finding about the principal purpose immediately before the transfer of the organised grouping of workers which the Claimants formed a part. However counsel contended that it can be seen from paragraphs 39 to 42 of the Judgment that the EJ looked at the reality of the situation and reached a permissible conclusion.
  1. As for ground 4, Mr Line contended that it is not necessary that a grouping of employees perform work for only one client for TUPE Regulation 3(3)(a)(i) to apply. Counsel drew attention to paragraphs 41 to 45 of the statement of Mr Croll in which he explained that:

"41. … The Renovations Contract was, however, the primary contract and by far the largest contract. Having the Renovation Contract did however mean that we had the skilled workforce who could then be used for other smaller pieces of renovations work."

Counsel submitted that the question of whether an organised grouping of employees has at its principal purpose the carrying out of activities for a particular client is case specific. The EJ reached a permissible conclusion that there was an organised grouping of employees which had at its principal purpose the carrying out of activities on behalf of the MOD.

  1. As Mr McLeod was not one of the one-site employees, Mr Line made no submissions on ground 6 of the Notice of Appeal.
**Discussion and Conclusion**
  1. The issue to be determined in this appeal is whether on the findings of fact made by EJ Coles he reached an impermissible conclusion in deciding that within Millbrook there was:

"Immediately before the service provision change - 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."

within the meaning of TUPE Regulation 3(a)(i). If these conditions are not satisfied there is no service provision change within the meaning of TUPE Regulation 3(1)(b)(i).

  1. Although counsel have referred to a number of authorities it is important not to lose sight of the words of the Regulation. In order for Regulation 3(3)(a)(i) to be satisfied the elements of particular relevance to this appeal are that:

(1) There must be an organised grouping of employees. On a natural meaning of the phrase it must be the employer who organises a group of employees.

As Underhill P held in Eddie Stobart at paragraph 18 a group is not synonymous with a "grouping" let alone an organised grouping. The Judge held that a group of employees:

"18. … may in practice, but without any deliberate planning or intent, be found to be working mostly on tasks which benefit a particular client. The paradigm of an "organised grouping" is indeed the case where the employees are organised as "the [Client A] team", though no doubt the definition could in principle be satisfied in cases where the identification is less explicit."

The paradigm of a "grouping" may also be illustrated by the CJEU cases which gave rise to the need to introduce the service provision change to Article 1 of Directive 77/187 in Directive 2001/23/EC, the Amended Acquired Rights Directive. There had previously been doubt as to whether, for example the Directive and un-amended TUPE would apply where a client changed contractor for labour intensive services without a transfer of any assets. Catering and cleaning contracts gave rise to particular difficulties. There can be an "organised grouping" of one such as a cleaner. Contrary to Mr Hogarth's submission, a solicitor assigned to one client may be a grouping (see Jackson LJ in Rynda paragraph 42).

(2) The organised grouping within the putative transferor must have as its principal purpose carrying out the relevant activities not in general but for the particular client which activities will be undertaken by the putative transferee.

Accordingly it is not sufficient to satisfy the Regulation that a department carries out certain work. It must be organised for the principal purpose of carrying out that work for the client in question, in this case furniture renovation for the MOD. Underhill P in Eddie Stobart held at paragraph 18:

"18. … Taking it first and foremost by reference to the statutory language, regulation 3(3)(a)(i) does not say merely that the employees should in their day-to-day work in fact (principally) carry out the activities in question; it says that carrying out those activities should be the (principal) purpose of an "organised grouping" to which they belong. In my view that necessarily connotes that the employees be organised in some sense by reference to the requirements of the client in question. …"

It is a necessary condition of satisfying Regulation 3(3)(a)(i) that at the relevant time the principal purpose of the organised grouping of employees is carrying out the relevant activities for the particular client. Therefore an ET deciding a claim under the service provision Regulation must make a finding as to the purpose of the organised grouping. That decision as other decisions taken by an ET can be taken by inference from facts it finds as well as on the basis of direct evidence of purpose.

(3) The relevant time at which there is to be an organised grouping of employees which has as its principal purpose the carrying out of the activities concerned on behalf of the client is immediately before the transfer.

By application of Regulation 4(1) it is the contracts of those employees who are employed in the "organised grouping of … employees that is subject to the relevant transfer" which are statutorily transferred. Regulation 3(3)(a)(i) refers to the existence of that organised grouping with the relevant purpose "immediately before the transfer". The EJ must therefore decide whether immediately before the transfer all the conditions of Regulation 3(3)(a)(i) were satisfied.

  1. Mr Hogarth QC asserted and Mr Palmer for Millbrook and Mr Line for Mr McLeod recognised that there were deficiencies in the Judgment of the EJ. Mr Palmer accepted that the EJ should have considered Millbrook's purpose and intention in deploying the "organised grouping of employees". Mr Line observed that one may criticise the EJ for not looking at the purpose of Millbrook but contended that this failure did not vitiate his decision. Mr Palmer pointed out that Amaryllis had not challenged the Judgment on the basis that it was not Meek compliant (Meek v Birmingham City Council .
  1. Although the EJ referred in paragraphs 15 to 21 to the approach by Amaryllis to whether the contracts of Millbrook employees would transfer to them under TUPE at the time of their tender for the MOD contract and thereafter, that evidence was not referred to or apparently relied upon in his conclusions. The belief or approach adopted by a party to whether TUPE applies may sometimes be relevant but, despite the observation in paragraph 15, rightly it does not appear to have been relied upon by the EJ in this case.
  1. The basis of the conclusion reached by EJ Coles in paragraph 42 that there was at the material time an organised grouping of employees which had as its principal purpose the carrying out of the activities concerned on behalf of the MOD was based on his findings at paragraphs 39 and 41.
  1. By ground of appeal 3(1) it is said that in paragraph 39 the EJ reached conclusions about the original purpose for which the department was set up some 50 years earlier yet in paragraph 35 he accepted that there was no evidence of the intention of Millbrook from that time. In my judgment this challenge is but one example of the difficulty in reading the Judgment. Paragraph 35 is one of those in which the EJ sets out the submissions made by Mr Hogarth QC. The acceptance by the EJ in paragraph 35 that there was no available evidence of what was the intention of Millbrook when the MOD contract came into being is inconsistent with the finding by the EJ in paragraph 39 that the he was satisfied from the evidence presented to him that the department had originally been set up to service the MOD contract. Further, if the first line of paragraph 37 means what it says the EJ could not have reached his conclusion at paragraph 42. The EJ held:

"36. … In Mr Hogarth's submission, the same is applicable here - namely that, even if, historically, the first respondent could be said to have had an organised grouping of employees which had as its principal purpose the carrying out of the relevant activities on behalf of the MOD, the evidence shows that that was no longer the case at the relevant time and that accordingly the statutory provisions are not applicable.

37. I also [emphasis added] accept, as advanced by Mr Hogarth, that the fact that the spreadsheet at document 1113 shows that almost 70% on average of the time spent by the relevant employees on the MOD renovations contract showed that MOD was the departments [sic] "biggest customer", that did not mean that it was "dedicated" to MOD or that its principal purpose was to service the contract with MOD."

Saying "I also accept" implies that the EJ accepted the immediately preceding proposition. However in light of his conclusion at paragraph 42 the EJ could not have accepted Mr Hogarth's propositions.

  1. The observation in paragraph 41 that the department had not "morphed" (implicitly from its inception 50 years earlier) from being one principally dedicated principally to servicing the MOD contract, does not pay regard to the period between 2003 and 2008. In that period even if there were an organised grouping of employees the grouping was not dedicated to carrying out activities for the relevant client. The client of Millbrook in that period was Amaryllis not the MOD. That the EJ considered a continuous 50 year period relevant in making his observation that the department was dedicated principally to servicing the MOD contract indicates that he was relying on the work carried out in the department rather than work carried out by Millbrook under its contract with the relevant client, the MOD. For a number of years Millbrook's client for this work was not the MOD but Amaryllis.
  1. Mr Palmer contended that even if the EJ erred in failing to have regard to the fact that the MOD was not a client between 2003 and 2008 this did not affect the EJ's decision as he correctly applied the test in Regulation 3 to the period "immediately before the service provision change". The reference in paragraph 42 to "the material time" does not give me confidence that the EJ reached his decision being satisfied of all the elements in Regulation 3(3)(a)(i) at the correct point in time. Paragraph 42, containing the EJ's conclusion is introduced with the words "I was satisfied therefore". The preceding paragraphs are those apparently accepting Mr Hogarth QC's arguments which I have considered should not be so read, and also the paragraphs setting out his conclusion on evidence as to the intention of Millbrook in setting up the department 50 years ago, which he said in paragraph 35 did not exist. Further, the EJ erred in deciding that it was the constant purpose of the department to carry out furniture renovation work for the relevant client, the MOD, when in the period between 2003 and 2008 as the MOD was not a client of Millbrook.
  1. Having regard to the errors in approach to the relevant issues to be decided in determining whether the claims fell within TUPE Regulation 3(3)(a)(i) I cannot accept the contention of Mr Palmer and Mr Line that grounds 3 and 4 of the Notice of Appeal are in essence perversity challenges to findings of fact and that the EJ reached permissible conclusions.
  1. Ground 6 of the Notice of Appeal concerns Millbrook but not Mr McLeod as he was not an on-site worker. It is asserted by Amaryllis that there was evidence before the EJ that on-site work was not in the contract awarded to them by the MOD. In my judgment the EJ did not err in treating the on-site renovation work as "fundamentally" the same as the factory based activities and as falling within Regulation 3(2A). However, in light of the conclusion reached on grounds 3 and 4, the decision of the EJ in relation to the on-site employees must also be set aside.
**Disposal**
  1. The appeal succeeds. The decision of Employment Judge Coles that there was a relevant transfer on 26 April 2014 from Millbrook Furnishings Limited to Amaryllis Limited by way of a service provision change within the meaning of Regulation 3(1)(b)(i) of the Transfer of Undertakings (Protection of Employment) Regulations is set aside.

Published: 10/06/2016 11:26

message