Ceva Freight (UK) Ltd v Seawell Ltd
| Jurisdiction | Scotland |
| Judgment Date | 21 June 2013 |
| Neutral Citation | [2013] CSIH 59 |
| Docket Number | No 42 |
| Date | 21 June 2013 |
| Court | Court of Session (Inner House) |
Court of Session Inner House Extra Division
Lord Eassie, Lord Brodie, Lord Wheatley
Employment law - Employee working wholly on contract for one client - Other employees working for same client to lesser extent - Services moved in-house - Whether a service provision change - Whether a relevant transfer - Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246)
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) ("the TUPE Regulations") make general provision for the protection of employment in circumstances where the undertaking of one business is transferred to another. The Regulations apply when a "relevant transfer" occurs. Regulation 3 provides, "(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."
The claimant was employed by the appellants ("Ceva") as a logistics co-ordinator. His time was spent wholly, or almost wholly, working on an account with the respondents ("Seawell"), particularly regarding the supply of goods to an off-shore platform operated by Seawell. Others employed by Ceva worked on the same contract but for lesser proportions of their working time. Seawell decided to end the contract with Ceva and move the relevant services in-house. Ceva claimed that a "service provision change" in terms of the TUPE Regulations had then occurred and that the claimant's employment would transfer to Seawell. Seawell refuted that. The claimant lost his employment with Ceva and was not employed by Seawell. He brought proceedings in the employment tribunal ("ET") against both, claiming that one or other of them had dismissed him unfairly. The tribunal held that the claimant's employment had transferred to Seawell and made an order for him to receive compensation. Against that decision, Seawell appealed to the Employment Appeal Tribunal ("EAT"), which upheld the appeal. The EAT held that the tribunal had erred and had no basis for concluding that the claimant's employment had transferred to Seawell. Against that decision, Ceva appealed to the Court of Session. Before the court, it was argued for the appellants, inter alia, that in considering whether the conditions of reg 3(3) had been satisfied and whether a service provision change had occurred, the EAT had erred in respect that: (1) a document containing the claimant's job description had not been considered; (2) the claimant had been deliberately assigned to be solely responsible for the Seawell contract and it was his exclusive role; and (3) the claimant constituted an "organised grouping", per reg 3(3)(a)(i), as defined by the nature of the activities. For the respondents, it was argued that the decision of the EAT should be upheld since on a proper construction of the TUPE Regulations, having first identified the relevant activities and then having considered whether there was an organised grouping, the requirements of reg 3 had not been met.
Held that: (1) whereas there was no dispute that a "service provision change" had occurred, that could only constitute a "relevant transfer" if the conditions set out in reg 3(3) had been met (para 28); (2) in addressing the matter it was first necessary to identify the scope and nature of the activities before considering how the activities were carried out (paras 29, 30); (3) where, as in this case, the activities were carried out by the collaboration, to varying degrees, of a number of employees who are not organised as a grouping having as their principal purpose the carrying out of the activities for the client, it was not legitimate to isolate one of that number on the basis that the employee in question devoted all, or virtually all, of his or her working time to assisting in the collaborative effort (para 33); (4) the conditions of reg 3(3) had not been met, the ET proceeded upon an error of law and the EAT had been correct to reverse the decision (para 35); and appeal refused.
Ceva Freight (UK) ltd and Seawell ltd were the subject of proceedings in the employment tribunal in which a former employee claimed unfair dismissal. The tribunal upheld the claim against Seawell in a judgment issued on 17 May 2011. Against that decision, Seawell appealed to Employment Appeal Tribunal, which upheld the appeal on 19 April 2012 (UKEATS/0034/11/BI). Against that decision, appellants appealed to the Court of Session.
Cases referred to:
Argyll Coastal Services Ltd v Stirling and ors UKEATS/0012/11, 15 February 2012, unreported
Eddie Stobart Ltd v Moreman and orsICRUNK [2012] ICR 919; [2012] IRLR 356
Edinburgh Home-Link Partnership and ors v City of Edinburgh Council and ors UKEATS/0061/11/BI, 10 July 2012, unreported
Hunter v McCarrickUNKICRUNK [2012] EWCA Civ 1399; [2013] ICR 235; [2013] IRLR 26
Kimberley Group Housing Ltd v Hambley and orsICRUNK [2008] ICR 1030; [2008] IRLR 682
Mowlem Technical Services (Scotland) Ltd v KingENR [2005] CSIH 46; 2005 1 SC 514
The cause called before an Extra Division, comprising Lord Eassie, Lord Brodie and Lord Wheatley, for a hearing on the summar roll, on 8 March 2013.
At advising, on 21 June 2013, the opinion of the Court was delivered by Lord Eassie-
Opinion of the Court-
[1] The appellants ('Ceva') in this appeal under sec 37(1) of the Employment Tribunals Act 1996 (cap 17) ('the 1996 Act') against a decision of the Employment Appeal Tribunal ('EAT') carry on business as freight forwarders and management logistics co-ordinators. The claimant before the employment tribunal ('ET'), 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 per cent of his time working on the Seawell account and Ceva's general manager spent somewhere less than ten per cent. Moreover, two warehousemen were also engaged in the provision of services to Seawell and they spent between 20 per cent and 30 per cent of their time on Seawell's business.
[5] In the latter part of 2009, Seawell indicated that they intended to take the business...
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