Tom Stenner-Evans
Posted on 15 Sep 2014

Employment Law Monday Update - 15 September

Anyone who works in HR will know how quickly changes come about in Employment Law, and how hard it is to keep up with them all. With that in mind, the Michelmores Employment Team has created a weekly newsletter that encapsulates the most significant Employment Law developments of the last 7 days. The Weekly Update will be sent out around midday on Monday, so be sure to keep an eye out for it!

TUPE Service Provision Changes: Tribunal Erred on whether Project Manager was part of Organised Grouping of Employees

Costain Ltd v Armitage and another [UKEAT/0048/14]

The Facts

The claimant was employed as Project Manager for ERH Communications Ltd ('ERH'), a company that provided communications services to the Welsh Assembly under the All Wales Regional Maintenance Contract ('AWRMC'). His role involved the management of projects including, but not limited to, the AWRMC project.

The AWRMC came up for tender and ERH lost the contract to Costain Ltd. During the consultation process, the claimant was told that he would transfer to Costain under TUPE, as ERH estimated that he spent 80% of his time on the AWRMC project. Costain queried whether TUPE applied, as it appeared that he spent most of his time on one-off ancillary projects, rather than the AWRMC. Although he had recently spent an increased amount of time on the AWRMC, Costain argued that there was no reason to think that he had been assigned to it.

At the first instance Employment Tribunal, it was held that the claimant was assigned to an organised grouping of employees immediately before that group was transferred from ERH to Costain, and that his employment automatically transferred to Costain under TUPE. The Judge held that it was clear that there was an organised grouping of employees, organised by reference to the requirements of the AWRMC. It rejected Costain's assessment that the claimant spent only 40% of his time on the AWRMC.

Costain appealed to the EAT arguing that the Tribunal had failed to apply the correct legal test as to assignment, and provided insufficient reasons for its decision. It further argued that the Tribunal had placed too much emphasis on the percentage of time spent by the claimant on the AWRMC.

The Judgment

The EAT allowed Costain's appeal. It held that the Tribunal had failed to take account of the distinction between the AWRMC and other works carried out. This was crucial, given the nature of the claimant's role, as AWRMC was the subject of the service provision change, whereas the ancillary works were not. The Tribunal should have defined the organised grouping of employees, and then determined whether the claimant had been assigned to that grouping. On the question of whether the claimant was assigned to the grouping, the Tribunal Judge had failed to refer to the statutory provisions or any of the relevant case law.

The EAT was also concerned by the Tribunal's over-reliance on the percentages put forward by the parties as estimates of time spent by the claimant on each contract.


This case highlights that it is easy for Tribunals to make errors when dealing with the issue of eligibility to transfer on a service provision change. The Tribunal in this case erred by finding that there was an organised grouping of employees, without defining what the grouping consisted of. Whilst it is tempting to use the percentage of time spent on the relevant contract as the major criterion, the question of assignment will usually depend on a number of factors.

Labour Proposes Radical Reform of Employment Tribunals

Chuka Umunna MP, the Shadow Secretary of State for Business, Innovation and Skills, recently delivered a speech to the TUC Congress in which he indicated that, should the Labour Party be elected in 2015, it will undertake major reforms of the Employment Tribunal system.

Mr Umunna suggested that the introduction of fees in the Employment Tribunal has limited individuals' access to justice, and has indicated that Labour would abolish the current system and reform the Employment Tribunals.