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TUPE or not TUPE?

TUPE or not TUPE: that is the question answered recently in the affirmative by the Court of Appeal in Rynda (UK) Ltd v Rhijnsburger [2015] after considering the meaning of “organised grouping of employees” and “service provision change” in the Transfer of Undertakings (Protection of Employment) regulations 2006 (“TUPE”). Lyons Davidson had been successfully representing Ms Rhijnsburger since she brought her claim for unfair dismissal in 2011.

TUPE regulations

The effect of TUPE is that where there is a “relevant transfer” under regulation 4, an employee’s employment with a previous employer will continue on the same terms and conditions (save for pension rights) with a new employer and continuity of employment will be preserved. The definition of a “relevant transfer” includes a “service provision change,” which, under regulation 3(1)(b), includes insourcing, outsourcing and a change of contractors. An employee will transfer under the “service provision change” only if immediately before the service provision change he or she was part of 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”.

Ms Rhijnsburger began working for a company known as Drivers Jonas Services in May 2009 before her employment transferred to Drivers Jonas Deloitte in April 2010. In January 2011, she started working for Rynda. Throughout this period, Ms Rhijnsburger managed a portfolio of properties in the Netherlands known as the H20 Portfolio. Until March 2010, she also managed a portfolio of German properties. On 22 October 2011, Ms Rhijnsburger was dismissed by Rynda.
Unfair dismissal

In November 2011 Ms Rhijnsburger brought a claim for unfair dismissal in the Employment Tribunal. In its defence, Rynda sought to argue that the claimant’s employment with the company had started in January 2011, that there had not been a “relevant transfer” to the company at this point from her previous employer, Drivers Jonas Deloitte and therefore she did not have the requisite one year’s continuous service to be eligible to bring the claim. The law has now changed so that two years’ continuous service is required to claim unfair dismissal.

At a hearing in March 2012, the Employment Tribunal decided that Ms Rhijnsburger was an “organised grouping of employees” within regulation (3)(3)(a)(i), whose principal purpose was managing the Dutch properties for Rynda (albeit that she had for a time also been responsible for some German properties). There was, therefore, a service provision under regulation (3)(1)(b)(ii) and Ms Rhijnsburger’s employment had transferred to Rynda under TUPE in January 2011.

Employment Appeal Tribunal

The effect of the Employment Tribunal’s decision was that Ms Rhijnsburger was deemed to have been continuously employed by Rynda since May 2009, which meant that she did have the requisite service to be eligible to bring a claim for unfair dismissal.

Rynda appealed the decision but this appeal was dismissed by the Employment Appeal Tribunal at a hearing in May 2013. Rynda then appealed to the Court of Appeal.

Court of Appeal

Following a hearing in January 2015, the judgment of the Court of Appeal was that Ms Rhijnsburger, as a single employee, was an “organised grouping of employees” within the meaning of TUPE regulation 3(3)(a)(i) and that her employment had transferred to Rynda in January 2011 as a “service provision change” in accordance with regulation 3(1)(b)(ii).

In reaching its decision, the Court of Appeal took the view that the employer had deliberately organised its business so that Ms Rhijnsburger was responsible for managing the Dutch properties (and was not part of a team delivering services to other clients). This state of affairs had not come about by accident and nor did it make any difference that Ms Rhijnsburger had also spent some time managing properties in Germany.

Points to note for employers

This case is a useful reminder not only that an “organised grouping” can be made up of a single employee but also that TUPE is only likely to apply where the employer has deliberately set out to create such a grouping, rather than where it has arisen by accident or chance. In practice, it will often not be immediately obvious how the organised grouping has come about, so the Employment Tribunal will look very carefully at the particular facts before making a finding on this point.

Employers hoping that TUPE will or will not apply in any given situation may wish to take legal advice before making any changes affecting the workforce. To discuss how the issues in this article might affect you or your business, contact our employment team by calling 0344 251 0070.

Posted on Apr 1st, 2015 by Lyons Davidson