In the recently decided case of Rynda (UK) Ltd v Rhijnsburger, the Court of Appeal (CA) considered whether, for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006, a single employee was an "organised grouping of employees", and whether the employee's principal purpose was to carry out activities on behalf of a client. Nicola Stibbs reports.

The background

Where the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply, the employment contracts of those employees assigned to the relevant organised grouping of resources or employees pass from the transferor to the transferee.

TUPE can apply in two types of event:

  • a business transfer; or
  • a Service Provision Change (SPC): a client engaging a contractor to do work on its behalf, reassigning such a contract or bringing the work "in-house", providing certain conditions are met.
    • One 'condition' for an SPC is that there must be "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". An organised grouping of employees may be a single employee.

The Employment Appeal Tribunal (EAT) has previously decided that for a SPC to take place, it is not enough that employees carry out the majority of their work for a particular client (which we reported on back in March 2012). Employees must be organised according to the requirements of the client and be identifiable as members of that client's team. For example, if the contractor uses different employees each day or week or the employees provide services to a number of clients there may not be an identifiable grouping of employees.

The Court of Session in Scotland has also previously found that even where one employee spends all of their time working for a particular client, it does not mean the employee is an "organised grouping" for TUPE purposes - the employee in question worked as part of a team whose principal purpose was not the client's contract; it was to provide services for a variety of clients.

The facts

In Rynda (UK) Ltd v Rhijnsburger, Ms Rhijnsburger was a commercial property manager. In 2009, she was employed by Drivers Jonas, which managed a large portfolio of properties across Europe, owned by the Rynda Group. Ms Rhijnsburger's main responsibilities were managing the properties in the Netherlands, but she also worked on properties in Germany.

In 2010, Drivers Jonas was acquired by Deloitte LLP to form Drivers Jonas Deloitte LLP (DJD). Ms Rhijnsburger's employment transferred to DJD, where she was solely responsible for managing the Dutch properties. She had no other duties and no-one assisted her in carrying out this work.

DJD withdrew from managing the properties and the owner of the properties, Rynda Group arranged for one of its subsidiaries, Rynda (UK) Ltd (RUKL), to take over this function. DJD's contract to manage the portfolio, and Ms Rhijnsburger's employment, ended on 31 December 2010. On 1 January 2011, she started working for RUKL as a senior asset manager. She continued to do exactly the same job as before. Eight months later, she was dismissed.

Ms Rhijnsburger brought an unfair dismissal claim against RUKL. In order to have sufficient continuous service to bring the claim, she had to establish that she had transferred from DJD to RUKL under TUPE on 1 January 2011.

The employment tribunal found that there had been a SPC under TUPE. Ms Rhijnsburger was an "organised grouping", which had as its principal purpose the property management services for the Dutch properties.

The decision

RUKL appealed to the CA on the "organised grouping" and the "principal purpose" limbs of the TUPE test. RUKL argued there was not a sufficient element of deliberate planning or intent about Ms Rhijnsburger's dedication to the Dutch H20 properties.

The CA dismissed the appeal.  The CA identified a four-stage process for tribunals to follow in cases of this type.

  1. Identify the service which the transferor (the outgoing employer) was providing to the client.
  2. List the activities which the staff of the transferor performed in order to provide that service.
  3. Identify the employee or employees of the transferor who ordinarily carried out those activities.
  4. Consider whether the transferor organised that employee or those employees into a "grouping" for the principal purpose of carrying out the listed activities.

Applying this process, the CA found this was a case in which a single employee did amount to an organised grouping. It was not a matter of pure chance that Ms Rhijnsburger was managing the Dutch properties; at all times the employer (DJD and later RUKL) decided who she would work for. In contrast to Ceva Freight (UK) Ltd v Seawell Limited, it was a conscious decision of the employer which created this situation.  Moreover, Ms Rhijnsburger was not part of a team which delivered services to other clients. No other employee assisted her in managing the Dutch properties.

The fact that Ms Rhijnsburger was not part of a team which delivered services to other clients also meant that the organised grouping (herself) had been carrying out activities on behalf of the client as its principal purpose.

What does this mean for me?

This case is notable as one of the few CA decisions on the SPC requirements of TUPE and is consistent with the findings in previous Employment Appeal Tribunal cases. The four-stage process should assist employers in establishing whether there has been a SPC. However, TUPE decisions often turn on their specific facts, and findings of fact will not be overturned in appeal cases. We would, therefore, always recommend that you contact us with any queries you have on the specific situation you are dealing with.