The EAT has held that when it comes to a service provision change, the percentage of time an employee spends on the activities does not determine if they are in scope to transfer. Instead the key issue is how work was organised and whether the employee was assigned to an organised grouping of employees.
Those employers who are involved in service provision contracts therefore need to avoid simply looking at the amount or percentage of time an individual is spending on the activities (although this remains a relevant factor) and instead focus on how employees are organised to undertake the work. This requires a deliberate “putting together” of employees for the purpose of undertaking the activities such that the employee in question has been specifically assigned to work on the transferring activity. This means that employers should also consider the wording of contracts of employment when employing new staff in relation to job title and duties. If these are more general in nature then greater flexibility can be achieved but this may mean that such employees do not transfer in the event that the contract on which they are primarily working is lost.
In the EAT case of Costain v Armitage and ERH, Mr Armitage was employed as a Project Manager for ERH who undertook work on telecommunications projects for the Welsh Assembly. One of the contracts was transferred to Costain who argued that Mr Amitage’s role was not assigned to the contract it was now undertaking as he was a trouble-shooter working for ERH on a number of projects under different contracts. The EAT agreed that the fact that Mr Armitage spent 67% of his time on the project immediately before the transfer was not sufficient for the tribunal to conclude he was in scope to transfer. The tribunal should have looked more widely at the purpose of his role, his responsibilities, how the cost of his services were met and how these were allocated as well as the amount of time spent on each part of the business. The case has therefore been remitted to a fresh tribunal.
Simon deMaid comments, "This case confirms that employers need to be careful when looking at who is in and out of scope to transfer when there is a service provision change, taking time to consider how work is being organised. It is clear from this case that someone spending less than 50% of their time on the activity immediately before the transfer could still be in scope under the TUPE regulations.”