Case of the week: Argyll Coastal Services Ltd v Stirling and others

Argyll Coastal Services Ltd v Stirling and others

FACTS

The claimants were 11 members of the crew of the St Brandan boat and two people who worked for the company that owned it, J&A Gardner & Co Ltd (JAG). JAG contracted with the Ministry of Defence (MoD) to provide a vessel to deliver cargo to the Falklands.

The St Brandan fulfilled that contract with a crew drawn from a pool of 16, administered by two office staff employed in Scotland. The crew members were employed by Guernsey Ship Management Ltd (GMSL).

The JAG/MoD contract went out to tender in 2009 and JAG was unsuccessful. The MoD entered into an agreement with a Dutch company, Van Winjgaarden (VW), for the hire of vessels and crew. VW entered into a further agreement to hire the Tamar boat from Argyll Coastal Services Ltd and this vessel took over from the St Brandan to provide the service to the MoD.

The claimants brought claims that their contracts of employment transferred to Argyll Coastal Services Ltd, on the basis that there was a service provision change under TUPE.

DECISION

The issue in this case was whether or not there had been a service provision change under TUPE.

The claimants had to show that there had been an organised grouping of employees situated in Great Britain that had as its principal purpose the carrying out of the activities concerned on behalf of the MoD. The Employment Appeal Tribunal (EAT) observed that an organised grouping of employees indicates a number of employees that is less than the entire workforce and deliberately organised for the purpose of carrying out activities required by the particular client contract and who work together as a team. “Activities” means the service that was contracted for. The group must be based in Great Britain, albeit some members can work outside Great Britain. A claimant also has to show that he or she was assigned to the organised grouping to have a claim under TUPE.

In this case, the tribunal had failed to consider whether or not the employees were “assigned” to the organised grouping of employees. The appeal succeeded and the EAT did not need to determine whether or not there had in fact been a service provision change. However, the EAT observed that the tribunal would be required to address the following questions:

• What, if any, organised groupings of employees existed?
  
• Was there an office-based organised grouping? If so, there was no doubt that it was situated in Great Britain?
  
• If there was an office-based grouping, what activities did it carry out?
  
• Were the crew members part of any office-based grouping? How could that be, if they had a different employer?
  
• Were the crew themselves an organised grouping of employees? If so, were they situated in Great Britain?

The EAT said that, regarding the activities carried out, the starting point would be to ask: what was the service that the client contracted for?

The EAT rejected a suggestion that an organised grouping could be made up of employees with different employers.

IMPLICATIONS

The reference to the employees being “deliberately” organised echoes the recent decision of the EAT in Eddie Stobart Ltd v Moreman and others. In that case, it was said that the requirement of an organised grouping means that the employees must be organised by reference to the requirements of the client in question and does not apply to a situation where a group of employees may, without any deliberate intent or planning, be found to be working mostly on tasks that benefit a particular client.

The observations of the EAT suggest that the only way in which there could have been a service provision change in this case was if the two office-based employees were an organised grouping with the principal purpose of carrying out the MoD contract and the crew of the St Brandan were assigned to that grouping. That seems unlikely on the facts found by the original tribunal, but the case has been remitted to a different tribunal.

Guy Lamb, employment partner, DLA Piper