Appeal No. UKEATS/0012/11/BI

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF

	At the Tribunal
	On 15 February 2012

Before
THE HONOURABLE LADY SMITH
(SITTING ALONE)

ARGYLL COASTAL SERVICES LTD	APPELLANT

MR I STIRLING AND OTHERS	RESPONDENTS

JUDGMENT

	APPEARANCES

For the Appellant	MR BRIAN NAPIER 
(One of Her Majesty’s Counsel)
Instructed by: 
Archon Solicitors Limited
Martin House
5 Martin Lane
London
EC4R 0DP
	
For the Nautilus Respondents

For Ms A Struthers	MR N M SIDDALL
(of Counsel)
Instructed by:
Nautilus International
1 & 2 The Shrubberies
George Lane
South Woodford
London
E18 1BD

MR K McGUIRE, 
(Advocate)
Instructed by:
Blackwood Partners LLP
70 Queen’s Road
Aberdeen
AB15 4YE

SUMMARY
TRANSFER OF UNDERTAKINGS – Transfer

TUPE. Service provision change.  Vessel chartered by MOD to work in Falklands.  Contract lost to Dutch company following re-tendering process.  Tribunal considered application of TUPE per regulation 3 but failed to consider regulation 4; case accordingly remitted for a rehearing.  Observations regarding interpretation of “activities”, “organised grouping of employees”, “principal purpose”, and “situated in Great Britain”, as used in regulations 3 and 4.

THE HONOURABLE LADY SMITH 
Introduction
1.	This appeal concerns an office in Milngavie, a boat in the South Atlantic – the “St Brandan” - its crew, and a re-tendering process in which a Dutch company were successful but, for an interim period, chartered a different boat from another Scottish business.  That might sound like a daunting preface to a question in an honours examination paper in International Private Law.  It is not.  The circumstances arose in a claim before the Employment Tribunal by thirteen Claimants under the “service provision change” provisions of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).

2.	I will, for convenience, continue to referring to parties as Claimants and Respondents.

3.	The Claimants are 11 members of the crew of the St Brandan (Mr I Stirling and others) and the only two people who worked for the company which owned it (Ms A Struthers and Mr F P Sosin).  The only Respondents with an interest in the appeal were the companies which were First and Third Respondents before the Employment Tribunal – (1) Argyll Coastal Services Limited and (3) Van Winjgaarden Marine Services BV.

4.	By judgment registered on 29 October 2010, following a pre-hearing review, the Employment Tribunal sitting at Glasgow, Employment Judge Douglas Fairley presiding, held:

“1. With effect from 19 May 2009, the employment contracts of each of the claimants transferred to the First Respondent pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006;  and
2. The claims insofar as directed against the Third Respondent are dismissed.”

Background
5.	J & A Gardner & Co Limited (“JAG”) is a Scottish maritime company which used to own a fleet of vessels.  Its office was at Milngavie.  In 1982, JAG contracted with the Ministry of Defence (“MOD”), presumably by charterparty, to provide a vessel for the delivery of cargo in and around the Falkland Islands.  JAG were able to fulfil a need that MOD had for a shallow drafted small coaster.  The JAG/MOD contract continued until 2009.  By 2001, the only vessel owned by JAG was the St Brandan.  It worked in the Falkland Islands, for the MOD contract.

6.	The St Brandan required a crew of eight for its operation.  They were drawn from a pool of sixteen.

7.	Prior to 1997, the crew were employed by JAG.  On 1 April 1997, new contracts of employment were put in place under which their employer was “Guernsey Ship Management Limited” (“GSML”) of Frances House, Sir William Place, St Peter Port, Guernsey.  Under a contract between JAG and GSML, the latter had undertaken to employ the crew of the St Brandan.  JAG paid GSML a small administration fee per crew member and transferred funds to them for the crew’s wages, each month.  JAG were thus, from 1 April 1997, no longer liable to pay employer’s national insurance for the crew members and made savings in the order of £3-4,000 per month.   GSML carried out a similar service for a number of clients.  The Employment Judge referred to this arrangement as being one which satisfied HMRC.

8.	GSML subcontracted the performance of most of their employer’s obligations to J&A Gardner & Company (Management) Limited, a wholly owned subsidiary of JAG.  The day to day work subcontracted to JAGM was in fact carried out by the JAG employees referred to below.

9.	JAG had, at the time to which these claims relate, only two office staff – Ms A Struthers, managing director and Mr F Sosin, cashier/accountant.  Unlike the crew, they were, throughout, employed by JAG.  Paragraph 19 of the Tribunal’s judgment contains the findings in fact about their work:

“19. Although the operation of the St Brandan under the contract with the MOD was undertaken exclusively in the Falkland Islands, JAG’s head office – from which the administration of the contract was undertaken, and the running of the vessel co-ordinated – was located in Milngavie, to the north west of Glasgow.  By the period of time to which these claims relate, the only office-based staff employed by JAG were a Managing Director, Annabel Struthers, and a Cashier/Accountant, Frank Sosin.  From the office in Milngavie, Ms Struthers and Mr Sosin took all steps that were necessary to operate the MOD contract in the South Atlantic.  As already noted, from 2001 onwards, that was the only function of JAG, and the principal (indeed only) purpose of Mr Sosin and Ms Struthers on a day to day basis was the provision of the services undertaken by JAG for the MOD using the St Brandan.”

10.	The JAG/MOD contract was due to expire in 2009 and the MOD went out to tender.  JAG were unsuccessful.  MOD instead, on 30 January 2009, entered into a time charterparty with the Third Respondents for the hire of four vessels and crew.  Section 17 of the charterparty provided for the employment of the vessels to be restricted to: “As per MOD statement of requirement Ref. S&MO CB3193”.  That statement set out requirements which included the cargo transportation work that had formerly been carried out by the St Brandan.

11.	As at January 2009, the Third Respondents owned only three of the four vessels required for the purposes of the MOD contract.  They, accordingly, had, on 29 January 2009, entered into a time charterparty with the First Respondents, to hire a vessel called “Tamar”, and crew.  That vessel would be suitable for the St Brandan work.  Section 17 of that charterparty made no reference to the MOD requirements; it simply provided that the employment of the vessel was restricted to “Carriage and delivery of general cargo.”

12.	The Tamar took over from the St Brandan, in the South Atlantic, on or about 19 May 2009.
Relevant Law
TUPE 2006
13.	In so far as material, these regulations provide:
“2.	INTERPRETATION
(1)	In these regulations – 
…
references to “organised grouping of employees” shall include a single employee;
…
“relevant transfer” means a transfer or a service provision change to which these Regulations apply in accordance with regulation 3 and “transferor” and “transferee” shall be construed accordingly and in the case of a service provision change falling within regulation 3(1)(b), “the transferor” means the person who carried out the activities prior to the service provision change and “the transferee” means the person who carries out the activities as a result of the service provision change;
…
3. A relevant transfer
(1)	These Regulations apply to – 
(a)	a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity;  
(b)	a service provision change, that is a situation in which –
(i) activities cease to be carried out by a person (“a client”) on his own behalf and are carried out instead by another person on the client’s behalf (“a contractor”);
(ii) activities cease to be carried out by a contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person (“a subsequent contractor”) on the client’s behalf;  or
(iii) activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by the client on his own behalf, 
and in which the conditions set out in paragraph (3) are satisfied.   
…
(3) The conditions referred to in paragraph (1)(b) are that
(a) immediately before the service provision change –
(i) there is 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;  
(ii) the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration;  and 
(b) the activities concerned do not consist wholly or mainly of the supply of goods for the client’s use.
(4) Subject to paragraph (1), these Regulations apply to -
…
…
(c) a transfer of an undertaking, business or part of an undertaking or business (which may also be a service provision change) where persons employed in the undertaking, business or part transferred ordinarily work outside the United Kingdom.  
…
4.	Effect of relevant transfer on contracts of employment
(1)	Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee”.

14.	Although, before the Employment Tribunal, the Claimants had sought to advance their case under reference to both regulation 3(1)(a) and 3(1)(b), the first of these was not pressed and, before me, was not advanced at all.  Parties were agreed that this was a “service provision change” claim and that the Claimants, accordingly, required to bring themselves within regulation 3(1)(b) if they were to show that there had been a relevant transfer. Prior to the 2006 Regulations, it had not been determined that the EC Acquired Rights Directive applied to service provision changes.  The UK Government decided to legislate so as to expressly apply the regulations to service provision change circumstances such as had come to be encountered when outsourcing occurred.  Authorities regarding the scope of the Acquired Rights Directive – such as Albron Catering BV v F N V Bondgenoten Case C-242/07 [2011] IRLR 76, ECJ – are not, accordingly, in point for the purposes of the present case.

15.	Under the regulations, the Claimants required to establish both that there had been a relevant transfer and that that transfer had had the effect of preventing termination of each of their individual contracts of employment.  To that end they required, first, to show that there had been a service provision change. They relied on regulation 3(1)(b)(ii) which they could not do unless they could show that immediately before the contract change there had been:
•	“an organised grouping of employees situated in Britain.
•	Which had “as its principal purpose”
•	The carrying out of “the activities concerned” that is, the activities required under the contract between the transferor and the client “on behalf of the client”

16.	Each of those elements required to be established by the Claimants.

17.	There is no authority as to the meaning of any of the above save the observation in Enterprise Management Services Ltd v Connect-Up Ltd UKEAT/0462/10/CEA where HHJ Peter Clark observed, at paragraph 8:

“The expression ‘activities’ is not defined in the regulations.  Thus the first task for the Employment Tribunal is to identify the relevant activities carried out by the original contractor.”

18.	I would offer the further observations.  It seems to me that the phrase “organised grouping of employees” connotes a number of employees which is less than the whole of the transferor’s entire workforce, deliberately organised for the purpose of carrying out the activities required by the particular client contract and who work together as a team.  The reference to “situated in Great Britain” clearly requires that group to be based in Great Britain.  Whilst regulation 3(4)(c) makes it clear that, of itself, the fact that a person or persons who are part of that organised grouping of employees work outside the United Kingdom does not prevent the provisions of regulation 3(3)(a)(i) being satisfied, it does not, to my mind, in any way detract from it being a  fundamental pre-requisite of a “service provision change” transfer that there be an organised grouping of employees situated in Great Britain.

19.	Turning to “principal purpose” there seems to be no reason why the words should not bear their ordinary meaning.  Thus, the organised grouping of employees need not have as its sole purpose the carrying out of the relevant client activities, that must be its principal purpose.

20.	Regarding “activities” it seems plain from the terms of both regulation 3(1)(b) and 3(3)(a)(i) that Parliament, by using the word “activities” had in mind considering what it was that the client required of the transferor or employer.  What exactly was the service that was contracted for?

21.	If a claimant can show that a relevant service provision change occurred, he then requires to satisfy the requirements of regulation 4(1).  That involves considering whether or not the claimant was assigned to the organised grouping of resources referred to in regulation 3(3)(a)(i).  In the course of the hearing before me, Mr Siddall sought to argue that the phrase “organised grouping of employees” had a different meaning in regulation 4(1) from that which it bore for the purposes of regulation 3(3)(a)(i).  He referred to no authority for that proposition and, ultimately, his submission came to be no more than it was possible that it could have a different meaning so as to encompass employees who were not actually part of the organised grouping identified for regulation 3 purposes.  His submission was hard to follow and I reject it.  It would be contrary to principal for a phrase used in adjacent paragraphs in the same regulations to be given, without express statutory direction, different meanings and there is no reason for departing from that principle in this case.

The issues for the Employment Tribunal
22.	The issues for the pre-hearing review had been fixed at a case management discussion on 5 May 2010 and were:
•	“identity of the employer”;  and
•	“application of the TUPE Regulations.”

23.	The first of these referred to the identity of the employer(s) of the crew member Claimants.  There was no doubt that Ms Struthers and Mr Sosin were employed by JAG.  However, both parties agreed that the second bullet point was the important issue, the First and Third Respondents urged the Employment Judge to concentrate on the first issue and not to determine the first issue at all and the Claimants maintained that they were entitled to succeed if the second issue was resolved in their favour irrespective of the outcome of the first issue.  In these circumstances, the Employment Judge did not resolve the “identity of the employer”.

Judgment of the Employment Tribunal
24.	The Employment Judge found, as noted above, not only that TUPE applied but that the Claimants’ contracts had transferred and had transferred to the First Respondent.  I say more below regarding him having done so, in circumstances where the TUPE issue for the PHR had been limited, at the case management discussion, to “application of the TUPE Regulations”.

25.	As for the way in which the Employment Judge reached his conclusion, his reasoning appears to be as follows: this was a “service provision change” case, under regulation 3(1)(a) of TUPE.  He agreed with Mr Napier, who also appeared for the Respondents before him, that the Third Respondents did not, when JAG lost the contract, carry out the relevant service for the MOD.  It was carried out by the First Respondents.  He considered that the First Respondent did so “on behalf of” the MOD; it did not matter if they did not know of the First Respondent’s identity at the time they contracted with the Third Respondent.  He then found that the sole purpose of the activities carried out in Milngavie was to support the “operational end of JAG’s activities (by which I mean the day to day activities of the St Brandan  in the South Atlantic)” (paragraph 68), that the activities in Milngavie had no “stand alone” purpose and that the administration of the operation of the St Brandan in the Falkland Islands “was carried out from JAG’s office in Milngavie by an organised grouping of employees consisting, immediately prior to 19 May 2009, of Mr Sosin and Miss Struthers.”

26.	The Employment Judge considered that it would “make no sense” (paragraph 69) at least from 2001, to regard the office based functions in Milngavie as being divorced from the delivery of the activities being carried out by the St Brandan.

27.	The Employment Judge made no findings as to whether or not the crew were “an organised grouping of employees”.

28.	He then considered whether, assuming that the crew were employed by GSML, not JAG, it mattered, for TUPE purposes, that there would be two transferor employers and concluded that it did not; neither party took issue with this proposition at the appeal hearing.

29.	Then, the Employment Judge observed that it did not matter whether the crew were employed by GSML or JAG and said, at paragraph 78:

“What matters is that the provisions of Regulation 3(1)(b) were engaged, and the Tribunal has jurisdiction to entertain all of the claims by virtue of Regulations 3(3)(a)(i) and 3(4)(c).  In my opinion, Regulation 3(1)(b) applied her to all of the Claimants and the Tribunal has jurisdiction to hear their claims on their merits.”

The Appeal
Submissions for the Respondents
30.	Mr Napier stressed that the Respondents’ approach was that the plain and ordinary meaning of TUPE applied.  There would only have been a relevant transfer if the Claimants were part of an organised grouping of employees situated in Great Britain before the transfer employed by the transferor and, pre-transfer, employed for the purpose of carrying out “activities” within the regulations.  Under reference to Metropolitan Resources v Church Dulwich [2009] IRLR 700 he emphasised the importance of adopting a straightforward and common sense application of the relevant statutory words to the individual’s circumstances before them (per HHJ Burke QC at paragraph 28).  Authorities on the Acquired Rights Directive were of no assistance.  It was also important to follow a structured approach asking what were the relevant activities?  Whether those activities had transferred over?  Whether  the conditions in regulation 3(3) had been satisfied?

31.	There was no issue between parties as to whether there was a difference between the pre and post transfer activities.  The Respondents accepted that any test of similarity was met.

32.	Mr Napier’s first and principal submission (which was, ultimately, acceded to by Mr Siddall) was that the Employment Judge had fallen into error in that he had wholly overlooked the requirement to consider regulation 4.  The PHR was held to decide whether or not there was a “relevant transfer”.  It was not held to establish whether, if there was such a transfer, that transfer was effective to transfer the contracts of the individual employees.  The latter question was separate from the question of whether or not TUPE applied.  Nowhere in the Employment Tribunal’s decision was there reference to regulation 4.  Nowhere did the Employment Judge make any finding in fact regarding the issue of whether or not the individual employees were assigned for regulation 4(1) purposes.  That was particularly significant on the present facts because it was far from clear to which (if any) “organised grouping of employees” the crew Claimants were signed.  Indeed, the Tribunal had made no findings regarding “organised grouping of employees” beyond their finding that the two officer workers in Milngavie were such a group.  However, there was not even a finding that Ms Struthers and Mr Sosin were “assigned” to that grouping.  Employment Tribunals require to deal only with the issues live before them (Taskmaster Resources Ltd v Kanyimo and Another [2007] UKEAT 0441-06/2002 para 14).

33.	Mr Napier indicated that the First and Third Respondents had not addressed the issue of individual assignations or transfers because they had taken the view that it was not within the scope of the hearing, which was restricted to the issue of whether or not there had been a relevant transfer.

34.	In deciding as he did, the Employment Judge had overlooked the significance of regulation 4 thus missing a crucial step in the legal analysis and, moreover, had gone beyond the terms set for the PHR without giving any indication that he had planned to do so.  He had failed to show the minimum requirements in relation to his reasoning process as required by rule 30(6) of the Employment Tribunal Rules (English v Royal Mail Group Ltd UKEAT/0027/08; Greenwood v NWF Retail [2001] 896 EAT paragraph 63).  In these circumstances, the judgment was fundamentally flawed and the entire case required to be remitted to a freshly constituted Tribunal, Employment Judge Fairley no longer being available.

35.	Mr Napier also dealt with the remainder of his grounds of appeal but not so as to detract from his principal submission being that for the above reasons there required to be a remit.  First, he submitted that if (which was not conceded) the crew members, Ms Struthers and Mr Sosin all comprised a single “organised grouping of employees”, there was no basis for applying the regulations to them because the majority of the group ordinarily worked outside the United Kingdom.  They could not satisfy the requirement that the organised grouping be “situated in Great Britain”.  He referred to the case of Holis Metal Industries Ltd v J M B and another [2008] IRLR 187 where, at paragraph 42, HHJ Ansell observed that, so far as international matters were concerned:

“…the only limitation is that there should have been an organised group of employees situated in Great Britain immediately before the service provision change…”

36.	On the facts, it could not be shown that looking at the crew, Struthers and Sosin together, they were situated in Great Britain.

37.	Mr Napier next submitted that, approaching matters on the basis that the Tribunal had namely that JAG employed Ms Struthers and Mr Sosin, the requirements of regulation 3 could not be satisfied in respect of the two office workers.  That was because the activities which comprise the service provision change were the tasks carried out before the change, by the St Brandan, in the Falkland Islands. The crew were not situated in Great Britain.  Even if one took account of the situation of their employer, that did not assist since GSML was based in Guernsey.

38.	Further, the Tribunal had erred in finding that there was an “organised grouping of employees” comprising only Ms Struthers and Mr Sosin.  Those two employees could not, by themselves, form an organised grouping of employees whose principal purpose was to carry out “the activities concerned” because those activities were intended by the client, the MOD, to be carried out principally in the South Atlantic around the Falkland Islands.  Whatever administrative activities were carried out in the Milngavie office, they did not amount to a set of activities capable of being separated from the activities in the South Atlantic or of supporting a relevant organised grouping of employees.  As HHJ Clark had observed in the Enterprise Management Services Ltd case, whether “activities” could be split into parts was an “interesting question” and “would require further fact finding”.  That was with a view not to having different facts substituted for those found by the Tribunal but dealing with an error by the Tribunal which amounted to an error of law, this issue being a mixed question of fact and law.

39.	Whilst, as above noted, Mr Napier did not take issue with the possibility of there being a relevant transfer that involved two transferors, in this case, what emerged was that on the crew side there might be an organised grouping of employees but they were employed by GSML carrying out the operational aspects of the MOD contract on the St Brandan in the Falkland Islands and TUPE did not apply.  Regulation 3(4)(c) did not help.  The Employment Judge had, in effect, allowed the crew to “piggyback” on the organised grouping of employees in Great Britain that he identified (Struthers and Sosin).  That was not an approach that was open to him however; the crew had a separate employer.  They could not be lumped together with Struthers and Sosin.  His application of regulation 3(4)(c) was erroneous.  It would be extraordinary if it was easier to satisfy the requirements of regulation 3(1)(b) where some of the potential transferring employees worked abroad, as opposed to working in Great Britain.  That cannot have been what the regulations intended.  He was not suggesting that there could not be a relevant transfer of employees who in fact worked outside Great Britain pre-transfer, but any such employee would, none the less, have had to have been assigned to “an organised grouping of employees that existed and was based in Great Britain”.

Submissions for the crew member Claimants
40.	Mr Siddall began by referring to the definition of employee in regulation 2 pointing to the definition being wider than that in section 230 of the Employment Rights Act 1996; the purpose of his doing so was not entirely clear.  Although he then, initially, sought to resist Mr Napier’s submission that the Employment Judge had erred by failing to consider regulation 4(1) and determine whether or not its requirements were satisfied, he ultimately conceded that that was a problem and recognised that that issue required to be remitted to a fresh Employment Tribunal for deliberation and decision.

41.	Mr Siddall, none the less, sought to, as he put it, have the judgment “upheld” on three points.  First that there had been a relevant transfer namely a service provision change falling within regulation 3(1)(b).  Secondly, that, immediately prior to the transfer there was an “organised grouping of employees” whose principal activity was the performance of work for the client, situated in Great Britain.  Thirdly, that regulation 3(4)(c) did serve to allow the crew member Claimants to be assigned to an organised grouping of employees in Great Britain.

42.	I have already referred to an argument advanced by Mr Siddall to the effect that “organised grouping of employees” has a different meaning in regulation 3 from regulation 4, and my rejection of it.

43.	Mr Siddall turned to the question of multiple transferors.  There could be more than one transferor.  He referred to Albron Catering at paragraph 20 and 24 and submitted that the approach of the European Court of Justice could be applied to regulation 3(1)(b).  It showed that it was perfectly acceptable for the organised grouping of employees referred to in regulation 3 to have a multiplicity of employers.  That being so, all of Mr Napier’s criticisms fell away.  There was no difficulty in interpreting the facts as showing that there was a relevant transfer.  He also submitted that Mr Napier was attempting to argue questions of fact which it had already been determined by the Employment Tribunal.  That was not open to him.  Having identified the activities as they did, the Tribunal reached the conclusion that was correct and not open to criticism.  Mr Siddall referred to a cross-appeal lodged on behalf of the crew member Claimants to the effect that the Employment Tribunal had erred in failing to find that the transferee employer was the Third Respondent.  He made no submissions in support of it on the basis that if he succeeded in his arguments regarding regulation 3, as above, he would ask that the issue of the identity of the transferee employer be remitted as well as the regulation 4 issue.

Submissions for Ms Struthers
44.	Mr McGuire submitted that the Tribunal had not erred in law.  The Employment Judge had correctly identified that Ms Struthers was employed by JAG and was part of an organised grouping of employees, consisting of herself and Mr Sosin.  The activities in question were those carried out by JAG in the performance of its contract with MOD.  The sole purpose of Ms Struthers’ activities was, “along with Mr Sosin” to support the operational end of the activities performed by the St Brandan in the South Atlantic.  The Tribunal’s reasoning was not open to criticism.  They did not suffer from the same problem as the crew in that they were based in Great Britain.  Regarding the regulation 4 problem, Mr McGuire submitted that it was not a material error.  Based on the findings made by the Tribunal, it was self evident and without doubt that Ms Struthers contract of employment was assigned to the organised grouping of employees identified by the Tribunal because she was part of it.  There could be no doubt that her contract of employment would have transferred to the First Respondent.  He asked that her case be treated separately and not be remitted notwithstanding the regulation 4 issue.

45.	Mr Sosin was present in person.  He confirmed that he had nothing to add to the submissions that already had been made.

Discussion and Decision
46.	I have no difficulty in acceding to Mr Napier’s submission that the Tribunal erred in determining that the Claimants’ contracts of employment had transferred without considering whether or not the requirements of regulation 4(1) were satisfied.  The issue of whether or not a particular employee was assigned to the “organised grouping of employees” affected by the transfer and thus entitled to the protection of TUPE is not a mere formality.  It can only be resolved after a proper examination of the whole facts and circumstances.  Being involved in the carrying out of the relevant activities immediately prior to the transfer will not necessarily mean that that employee was assigned to the organised group.  It is not difficult to think of circumstances where it will not be possible to conclude that an employee was assigned to the organised grouping such as where he was only working on that matter on a temporary basis – to provide cover for a member of the group who is on leave, for instance.  An employment tribunal has to take care to be satisfied that the particular claimant was in fact assigned to the relevant organised grouping prior to the transfer before it can reach what is a highly significant conclusion for both claimant and putative transferee, that the contract of employment transferred across when the client changed their service provider.  It is self evident that to consider the issue raised by regulation 4, consideration of the whole facts and circumstances in which the Claimants worked will be required and I am satisfied that that needs to be carried out afresh, particularly since the remit will be a new tribunal.

47.	The Tribunal’s error is such that its judgment falls in its entirety and the case will, accordingly, require to be remitted for a rehearing.

48.	In these circumstances, anything that I have already said or have to say regarding the regulation 3 issues that arise are obiter and it is only by way of hoping to assist in focussing the issues that I make the following observations.

49.	The questions that the Tribunal will require to address include the following.
•	What, if any, organised groupings of employees existed?
•	Was there an office based organised grouping? If so, there would seem to be no doubt that it was situated in Great Britain. That, however, would not be sufficient. The Tribunal would then have to ask whether they had as their principal purpose the carrying out of the relevant activities?
•	If there was an office based organised grouping, what activities did they carry out?
•	Were the crew part of any office based grouping? How could that be, if they had a different employer? – the application of section of 394(c) cannot, in my view, be relied on so as to allow them to “piggy back” onto any grouping of Struthers and Sosin that is found to have existed.
•	Were the crew of themselves an organised grouping of employees? If so, were they situated in Great Britain? Only if both those questions are answered in the affirmative need there be any further consideration of the activities that they were carrying out. If they are not both answered in the affirmative then that would demonstrate that TUPE did not apply.

50.	Regarding the issue of what were the “activities” carried out for the MOD by JAG, the starting point would seem to be to ask what was the service that the client contracted for?  The answer may be no more than that the MOD contracted for the hire of a vessel and crew to carry cargo around the Falkland Islands with the Master of the vessel receiving day to day instructions from the MOD regarding what was required in that regard.  Whilst ancillary matters arise, such as the employers’ duties in relation to the crew, the need to arrange insurance for the vessel and to arrange for repair of the vessel if required, and the paperwork involved in, for instance, invoicing the MOD, these being matters which – whilst they might be seen as facilitating the activity in which the claimant is interested – are not the activity itself , as the Employment Judge, in referring to operational end of the contract being the “activities” in the South Atlantic, appeared to accept.

51.	I am mindful of the Employment Judge having found that the ‘office based’ activities were not divorced from the work of the St Brandan but there are, as I see it, two problems in his approach.  The first is that the only detailed findings he makes about Ms Struthers and Mr Sosin’s work is where, at paragraph 21, he finds that they in fact carried out the various employer’s duties that had been subcontracted by GSML to JAGM.  At best, that demonstrates that they carried out work for GSML – in circumstances where he did not find that the GSML arrangement was a sham and did not find that JAG employed the crew.  It is not clear whether or not he was including their de facto work in relation to the crew in finding that their work was not divorced from the operation of the St Brandan.  If he was, I find it difficult to accept that it was open to him to do so when JAG were not found to be the employers of the crew.  The second is that the other findings he makes about their work are vague and amount to no more than that their office work was administrative with regard to the running of the St Brandan.  The provisions of regulation 3 would, however, appear to require an examination of what exactly were the activities that were carried out rather than just a determination of their characterisation.  Quite apart from anything else, some of their work must have related to the need to protect and preserve what appears to have been the company’s principal asset - the St Brandan – to consider and plan for the future of that asset, to, if their premises were leased, attend to their tenant’s responsibilities and, if they owned the premises, manage, protect and preserve that asset also.

52.	Regarding the expression “an organised grouping of employees”, I would refer to my comments in the “Relevant Law” section above.  I would reject Mr Siddall’s contention that a single organised grouping of employees could be made up of employees who have different employers.  Such an interpretation flies in the face of commonsense, in my view.  It would not be one which gives the words their ordinary, straightforward, meaning.  It seems plain to me that Parliament envisaged a situation where a group of an employers’ employees is put together by that employer to carry out some particular work that a contract with a particular client requires and does so.  The group will be subject to the same employer control and direction, to the same client confidentiality requirements (if applicable) and the same duties of care all stemming from that single contractual relationship.  They can properly be regarded as bound together in a single joint enterprise to fulfil their employer’s contractual duties to the client.  Employees of another employer would be outsiders; they could not be regarded as part of the same grouping or bound to the same contractual duties.  Whilst I agree that there would seem to be no objection in principle to the idea that where a client moves his business from two service providers to a single service provider, TUPE may apply to two separate groupings of employees, that is a quite different matter.

Disposal
53.	In these circumstances, I will pronounce an order upholding the appeal, setting aside the judgment of the Employment Tribunal and remitting the cases to a freshly constituted Employment Tribunal for a rehearing.

54.	The remit requires to be to a fresh Tribunal as Mr Fairley has returned to full-time practice at the Scottish Bar.