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When might a CEO or Director be in scope for TUPE when a client brings a service back in-house?

View profile for Martin Cornforth
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In the case of Mr R Kissick and others v Department for Education: 2202244/2022 an Employment Tribunal has considered when senior personnel are in scope to transfer on a service provision change.


During 2017, the Department for Education ‘DfE’ entered a contract for services with 2buy2. The DfE decided to bring the service back in house and on 1st February 2022 the service transferred. Those 2buy2 staff assigned to the services transferred to the DfE.

2buy2 contended that the CEO, Operations Director, Finance Director, and Procurement Director ought to transfer to DfE, but the DfE argued that the individuals in these roles also had statutory roles for the Company, and thus their roles for 2buy2 would continue after the transfer. As such the DfE refused to accept the transfer of these senior personnel.

The legal position

When a service is brought back in house (insourcing), any individual assigned to an organised grouping dedicated to the service, transfers under the TUPE Regs.

In this case there was no dispute that an organised group existed. The dispute was whether senior personnel were assigned to the organised group. It is unusual for senior personnel to be assigned to a specific service as they would usually have overarching responsibilities to the Company across a range of services. As such although senior personnel may undertake work on a specific service it does not follow that the group has been deliberately organised in this way.

The Decision on TUPE

In this case the Employment Tribunal decided that unusually the CEO, Operations Director, Finance Director, and Procurement Director were assigned to the organised grouping and thus in scope to transfer for the following reasons:

  • The most important factor was that the contract between 2buy2 and the DfE referred to "key personnel." Each of the four Claimants were listed as key personnel. Moreover, 2buy2 were obliged under the contract to notify the DfE of any change to key personnel and the DfE could object to the change. The Tribunal decided that the DfE required these provisions regarding key personnel because these individuals were viewed as crucial to service delivery.
  • The Tribunal accepted evidence that the Claimants each spent at least 80% of their time on the DfE contract. The Tribunal accepted that the Board of 2buy2 had identified the DfE contract as the main priority for the business and had thus directed the Claimants to spend most of their time on delivering this service. There was also substantial evidence of work undertaken by each Claimant on this contract. Although time spent on a service will not be decisive by itself it is a powerful factor to weigh in the balance.
  • The DfE had argued that even if the Claimants spent considerable time on delivering the service to the DfE, their job descriptions were broader than this in practice. The Tribunal noted that the Company had the power to direct that the Claimants engage in specific activities. The Company exercised that power by directing the Claimants to make the service provision, on the DfE contract, the number one priority.
  • The Tribunal noted that the DfE contract absorbed 75% of 2buy2's business. As 2buy2 was a small business the Employment Tribunal accepted that senior personnel were more likely in this particular scenario to be assigned to an organised grouping delivering a service. The Tribunal noted that this would be less likely to occur in a larger company where senior personnel were supervising a wider range of services.

The DfE's initial resistance to the transfer of senior personnel had been based on some senior personnel also undertaking statutory roles for the Company. These roles were not operational roles and were irrelevant to the employment status of the Claimants. The Tribunal found that from an operational perspective there was far less work for the Claimants to do after the transfer. 2buy2 offered the Claimants new contracts after the transfer but on much reduced salaries, reflecting the reduction in work.

The outcome

Given that TUPE applied the Tribunal decided that the Claimants had been dismissed by the DfE and that the dismissal was unfair. The Respondent's main argument had been that the Claimants did not transfer and as such it did not really have a fair reason for dismissal. Although the DfE would almost certainly have followed a redundancy procedure had the Claimants transferred it did not do so because it did not acknowledge that they had transferred.

The Claimants were unsuccessful with a claim for failure to consult because the claim had been pursued against the DfE alone, despite 2buy2 having been the relevant employer at the time the failure to consult occurred. In this scenario the Claimants were unable to succeed with a claim against the DfE alone.

This case highlights that when handling a service provision change the transferee needs to carefully scrutinise who may be in scope to transfer from an early stage. If the DfE did not want senior personnel to be in scope to transfer this could have been addressed in the initial service contract by defining with greater care the role of key personnel or potentially excluding key personnel altogether from the scope of the contract.


Our experienced employment and commercial teams can advise on service contracts during the negotiation stage right through to termination and transfer of staff.

If you require further advice regarding this, or any other legal issue, please contact Chattertons:

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