Case update (1): TUPE – test for service provision change

Summary: Can a single employee be an “organised grouping of employees” for the purposes of the TUPE service provision change test?

Yes, confirms the Court of Appeal in Rynda (UK) Ltd v. Rhinjsburger.

Background: The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) operate to transfer employees’ contracts of employment where a contractor stops carrying out activities for a client and those activities are either performed by another contractor, or, brought in house; i.e. there is a service provision change. The test for which employees transfer in these circumstances is any employees in an organised grouping whose principal purpose is the carrying out of activities on behalf of the client.

Facts: Ms Rhinjsburger was a commercial property manager. She was employed from May 2009 to 31 December 2010 to manage properties in the Netherlands. She had no duties other than managing the Netherlands properties and no one assisted her in carrying out that work. Although for a short period Ms Rhinjsburger also managed some properties in Germany.

Ms Rhinjsburger’s employer, Drivers Jonas Deloitte LLP, decided to withdraw from managing the Netherlands properties and the owners of the properties, the Rynda Group, arranged for one of its subsidiaries Rynda (UK) Ltd, to take over the management. Ms Rhinjsburger’s employment with Drivers Jonas Deloitte LLP ended on 31 December 2010. On 1 January 2011, Ms Rhinjsburger started working for Rynda (UK) Ltd as a senior asset manager. She continued to do exactly the same job as before, managing the Netherlands properties. Eight months later, she was dismissed.

Ms Rhinjsburger brought an unfair dismissal claim against Rynda (UK) Ltd. However, in order to have sufficient service to bring the claim she asserted that her employment had commenced in May 2009 and that she had TUPE transferred from Drivers Jonas Deloitte LLP to Rynda (UK) Ltd on 1 January 2011.

Both the Tribunal and the EAT found that Ms Rhijnsburger was an “organised grouping”, which had as its principal purpose the property management services for the Netherlands properties. The fact that Ms Rhijnsburger had, in the past, assumed some responsibility for the German properties, did not undermine this finding, as she had always devoted the majority of her time to the Netherlands properties. Further, Ms Rhijnsburger’s employer had consciously arranged its affairs so that she was solely responsible for managing the Netherlands properties.

The Court of Appeal agreed with the EAT’s decision and set out a useful test to apply when assessing whether there has been a service provision change TUPE transfer; as follows:

1. Identify the service that was provided to the client;
2. List the activities which the staff of the outgoing service provider performed in order to provide that service;
3. Identify the employee, or employees, of the outgoing service provider who ordinarily carried out those activities; and
4. Consider whether the outgoing service provider organised that employee, or those employees, into a “grouping” for the principal purpose of carrying out the listed activities.

Implications: This is a useful reminder that one individual can amount to an ‘organised grouping’ for the purposes of a TUPE service provision change. It is also the first time that the Court of Appeal has given guidance on what constitutes an ‘organised grouping’ and is a helpful summary of a tricky area.