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Law for Business

Knowhow - guidance - precedents

05 OCT 2012

Seawell Ltd v Ceva Freight (UK) Ltd and Moffat UKEAT(S)/0034/11/BT (2012) EMPLR 143

Service provision change

19 April 2012

Employment Appeal Tribunal

Lady Smith

The fact that a person spends 100% of their time providing services for one client does not mean that, when the client appoints a different provider, there is necessarily a ‘service provision change' under TUPE. As this case illustrates, for there to be a ‘service provision change' that employee must be part of an organized grouping of employees whose principal purpose is providing those services.

Ceva provided storage and shipping services to Seawell, a supplier to offshore oil platforms. Ceva employed Mr M for 100% of his time on the Seawell contract. Others also worked on the contract, including warehouse operators, but the percentages of their time spent on the Seawell contract were between 10% and 20% each (about 90% in total) .

Seawell took the services in house. Ceva claimed this was a service provision change under TUPE, so that his employment transferred to Seawell.

The EAT disagreed. For there to be a service provision change, there must be:

-           an organised grouping of employees;

-           whose principal purpose is to carry out activities on behalf of the client;

-           after the change those activities are to be carried out by the transferee (in this case, Seawell).

Ceva argued that Mr M constituted the organized grouping of employees. But the EAT held that the storage and shipping activities were carried out not just by Mr M but also by other employees of Ceva. The principal purpose of that grouping as a whole was not just the Seawell contract. The definition of ‘service provision change' was not therefore satisfied. TUPE did not therefore transfer Mr M to Seawell and Mr M was therefore dismissed by Ceva.

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