Ceva Freight Uk Limited V. Seawell Limited
| Jurisdiction | Scotland |
| Judge | Lord Brodie,Lord Eassie,Lord Wheatley |
| Neutral Citation | [2013] CSIH 59 |
| Date | 21 June 2013 |
| Docket Number | XA118/12 |
| Court | Court of Session |
| Published date | 21 June 2013 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Eassie Lord Brodie Lord Wheatley | [2013] CSIH 59 XA118/12 OPINION OF THE COURT delivered by LORD EASSIE in the Appeal by CEVA FREIGHT (UK) LIMITED Appellants; against SEAWELL LIMITED Respondents: _______________ |
Alt: Napier QC; Pinsent Masons LLP
21 June 2013
Introductory
[1] The appellants -"Ceva"- in this appeal under section 37(1) of the Employment Tribunals Act 1996 against a decision of the Employment Appeal Tribunal carry on business as freight forwarders and management logistics co-ordinators. The claimant before the Employment Tribunal, Mr Craig Moffat, who has not taken part in the appeal to this court, was employed by them as a logistics co-ordinator until his employment came to an end on 31 December 2009.
[2] The background to the ending of Mr Moffat's employment with Ceva and the involvement of the present respondents - "Seawell"- in his claim for compensation arising out of the ending of his employment may be summarised as follows.
[3] In about April 2008 Seawell became a customer of the appellants, Ceva. Seawell operated various North Sea oil drilling or well platforms including the Noble Platform. In broad terms the work thereafter done by Ceva for Seawell consisted of arranging for the movement of goods and materials to their offshore platforms. Ceva would first receive and store goods and materials needed for the platforms and which had been purchased by Seawell (which Ceva described as the "inbound" part of their operation); thereafter Ceva arranged for the goods and materials required by a platform to be taken from the warehouse for shipping to the platform in question (the "outbound" operation). The provision of such services to Seawell was not peculiar to Ceva's contract with Seawell; Ceva supplied similar services to a number of other customers.
[4] Mr Moffat's working time in his employment with Ceva was wholly, or almost wholly, devoted to looking after the customer needs of Seawell, particularly as respects the supply of outbound goods to the Noble Platform. However, Mr Moffat was not the only employee engaged in providing the services which Ceva furnished to Seawell. In addition to the work done by Mr Moffat, his immediate line manager spent about 20% of his time working on the Seawell account and Ceva's general manager spent somewhere less than 10%. Moreover, two warehousemen were also engaged in the provision of services to Seawell and they spent between 20% and 30% of their time on Seawell's business.
[5] In the latter part of 2009, Seawell indicated that they intended to take the business carried out for them by Ceva back into their own management. At that point CEVA claimed that under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (S.I. 2006/246) -"the TUPE Regulations"-, Mr Moffat's employment would, as a result, be transferred to Seawell because a "service provision change" in terms of the regulations had occurred. That was refuted by Seawell. In the event, Seawell carried out their intention and the customer relationship ceased on 31 December 2009. Following that cessation Mr Moffat lost his employment with Ceva; and he was not taken on by Seawell. He therefore presented a claim to the Employment Tribunal against both Ceva and Seawell claiming that one or other of them had dismissed him unfairly. One of the central issues before the Employment Tribunal, before the Employment Appeal Tribunal, and subsequently before this court, was whether or not a "relevant transfer" in the form of a "service provision change "had taken place. The answer to that question determines which of Ceva and Seawell should meet Mr Moffat's claim for unfair dismissal. It is the question with which this appeal is concerned.
The legislative texts
[6] It is convenient at this stage to note the relevant provisions of the TUPE Regulations.
"Interpretation
2.-(1) In these Regulations -
'assigned' means assigned other than on a temporary basis;
.......
references to 'organised grouping of employees' shall include a single employee;
'relevant transfer' means a transfer or a service provision change to which these Regulations apply in accordance with regulation 3 and 'transferor' and 'transferee' shall be construed accordingly and in the case of a service provision change falling within regulation 3(1)(b), 'the transferor' means the person who carried out the activities prior to the service provision change and 'the transferee' means the person who carries out the activities as a result of the service provision change;
.......
A relevant transfer
3.-(1) These Regulations apply to -
(a) a transfer of an undertaking, business, or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity;
(b) a service provision change, that is a situation in which -
....
(iii) activities cease to be carried out by a contractor or a subsequent contractor on a client's behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by the client on his own 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;
(ii) the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; and
(b) the activities concerned do not consist wholly or mainly of the supply of goods for the client's use.
Effect of relevant transfer on contracts of employment
4.-(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 resources or 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 Employment Tribunal's decision
[7] So far as relevant to this appeal, the Employment Tribunal found that Mr Moffat's employment was transferred from Ceva to Seawell by virtue of the TUPE Regulations on 31 December 2009 and made orders for him to receive compensation from Seawell accordingly.
[8] Before the Tribunal Ceva argued that Mr Moffat had devoted his entire time and energies to the Seawell account, and the management fee charged by Ceva included his salary and a percentage of the salaries of the other members of Ceva's workforce who spent some of their time assisting him. This was in the event not disputed by Seawell, and the fact that all of the work formerly done by Mr Moffat was now done by Seawell was similarly accepted by Seawell. Ceva maintained that because the claimant was employed by Ceva wholly on the Seawell account, and that account had now transferred to Seawell, it followed that in terms of regulation 3(1) of the TUPE Regulations there had been a service provision change and that Mr Moffat's employment thus transferred to Seawell in terms of regulation 4. In support of that contention, which involved the proposition that Mr Moffat was assigned to "an organised grouping of employees" which had "as its principal purpose" the carrying out of the activities concerned on behalf of the client, Ceva invoked the terms of regulation 2(1), which provides that references to an organised grouping of employees shall include a single person; that, it was argued, fitted the circumstances of the present case.
[9] In response Seawell argued that there was no effective service provision change in terms of regulation 3(1)(b)(iii) and therefore no transfer of employment. An essential condition for the occurrence of any service provision change under regulation 3(1)(b)(iii) was the existence - stipulated by regulation 3 (3)(a)(i) - of an organised grouping of employees which had as its principal purpose the carrying out of the activities concerned on behalf of the client. While in terms of regulation 2 an organised grouping of employees could include a single person, it did not follow in the circumstances of the present case that, because Mr Moffat spent all of his time on the Seawell account, he, by virtue of that circumstance, constituted such a grouping. In this case, the employees performing the duties necessary to provide the service to Seawell included workers other than Mr Moffat; he might be an important cog in the wheel, but he was not the wheel itself.
[10] In reaching its decision the Employment Tribunal first decided that the activities which had been carried out by Ceva were the same as those carried out by Seawell after the transfer. The work done by Ceva was to provide a continuous and on-going service and accordingly there was no doubt that regulation 3(1)(a)(iii) was satisfied in that following the transfer the activities would be carried out by the transferee. The real issue in the case was whether Mr Moffat could constitute, in terms of regulation 3(3)(a)(i), an organised grouping of employees whose principal purpose was the carrying out of the relevant activities.
[11] The Employment Tribunal concluded that its preference lay with Ceva's submission. It held that Mr Moffat was in charge of the activities required for the Seawell account and thus responsible for making those activities happen. It was not necessary to include within the organised grouping of employees every person who had anything to do with...
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