England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL CIVIL DIVISION
APPEAL FROM ORDER OF THE EMPLOYMENT APPEAL TRIBUNAL

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 2nd February 2001

LORD JUSTICE PILL:

1. This is an appeal by Sellers Arenascene Ltd ("the appellants") against a decision of the Employment Appeal Tribunal, the President Mr Justice Morison Presiding, given on 14 September 1999 whereby they allowed the appeal of Mr T C Connolly ("the respondent") against a decision of an industrial tribunal held at Leeds on 6 March 1998. The industrial tribunal had held that the respondent's claim that he was unfairly dismissed by the appellants failed on the ground that he did not have two years continuous employment prior to the date of his dismissal. The EAT also dismissed a cross-appeal against the finding of the industrial tribunal that had he had two years continuous service they would have found that there had been a transfer of his contract of employment to the appellants for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981. It followed from the findings of the EAT that the respondent had the requisite period of continuous service with the appellants and had been unfairly dismissed.
2. The case has a long and complex history. The respondent's claim had first been brought on 11 September 1992 and was first heard by an industrial tribunal early in 1993. The issue was whether there had been a transfer of the respondent's contract of employment to the appellants. The tribunal held that the appellants had purchased only a part of the relevant undertaking, that it was not the part in which the respondent was employed and that there was no transfer of the respondent to the appellants. The Employment Appeal Tribunal, in a decision dated 16 February 1995, held that while the decision was flawed by a factual error it was legally correct and the appeal was dismissed. However, on an appeal to the Court of Appeal, it was decided on 17 January 1997 that the appeal be allowed to the extent that the case be remitted for further hearing before a freshly constituted industrial tribunal. Sir Brian Neill stated that "at that hearing it will be necessary to investigate the employment position of Mr Connolly after the letter of 19 May 1992 and before the transfer on 20 June 1992 and his dismissal on 22 June to see whether he was employed by any company, and if so, by which company".
3. The issue on transfer was considered by the freshly constituted industrial tribunal in December 1997. In their extended reasons, they set out the submissions of the parties on that issue. They stated:

"These arguments are set out at the commencement of the hearing in December 1997. Having considered those arguments and the evidence led by the parties, at the conclusion of that hearing the tribunal decided that a jurisdictional issue was evident from the evidence as to whether the applicant was an employee within the definition in the Employment Rights Act 1996, section 230, for the requisite qualifying period".

That involved a consideration of the status of the respondent during the period before 19 May 1992. The tribunal went on to state that "further evidence was taken by the tribunal in respect of this aspect and further submissions were taken on Friday 6 March 1998 and the tribunal considered the [respondent's] functions". The tribunal's conclusion was that it had "no hesitation in finding that the employment status of Mr Connolly did not begin until he entered an agreement with IRH plc on 3 April 1992. Mr Connolly therefore had insufficient service to bring a claim of unfair dismissal and the Tribunal is therefore without jurisdiction in relation to his claim".

4. The tribunal went on to resolve the transfer issue in the respondent's favour. Thus the respondent failed on a point which had been taken at no stage in the earlier proceedings and was not taken by the appellants at the second industrial tribunal hearing. It was taken by the members of the tribunal themselves at a late stage, though they did give an opportunity, in March 1998, for further submission on the issue.
5. The question of the circumstances in which a person having a controlling shareholding in a company can be employed by that company, within the meaning of section 230(1) of the 1996 Act, has been the subject of substantial debate in the Courts both before and after the decision of the industrial tribunal now under consideration. In Fleming v Secretary of State for Trade and Industry [1997] IRLR 682, Lord Coulsfield, sitting in the Inner House, believed that the Employment Appeal Tribunal in Buchan v Secretary of State for Employment [1997] IRLR 80, the President Mummery J presiding, had come "very near to asserting the existence of a rule of law if they do not quite reach that point". The rule of law contemplated was that a controlling shareholder cannot be an employee. Mummery J had stated (at p 82) that:

"The tribunal were entitled, on the material before them, to conclude that Mr Buchan was not an employee of the company but was, through the company, running his own business enterprise. As beneficial owner of 50 per cent of the shares in the company he was able to block any decision by the board or of the company at a general meeting with which he did not agree, including a decision as to his own dismissal or terms of service. In other words, Mr Buchan's agreement was necessary before he could be dismissed summarily or on notice. If he did agree to a decision to dismiss him, then that would not be a 'dismissal' within the meaning of the Act of 1978. It would be a case of what is sometimes called 'Self-dismissal.'"

6. The issue came before the Employment Appeal Tribunal in Secretary of State for Trade and Industry v Bottrill [1998] ICR 564, the President Morison J presiding. The tribunal in this case purported to apply the law as stated by the EAT in Bottrill. They cited a passage from the judgment of Morison J in Bottrill:

"The Higher Courts have taken the view that the issue as to whether a person is or is not an employee is a pure question of fact. The shareholding of the person in the company by which he alleges he was employed is a factor to be taken into account because it might tend to establish either that the company was a mere simulacrum or that the contract under scrutiny was a sham. In our judgment it would be wrong to say that a controlling shareholder who, as such ultimately had the power to prevent his own dismissal by voting his shares to replace the board, was outside the class of person given rights under the Act on an insolvency."

7. The tribunal went onto express conclusions on the jurisdictional issue:

"6. It is accepted by the respondent that Bottrill is the authority which we should apply to the facts of this case. We have done so. We have considered in detail Mr Connolly's position as an entrepreneur operating in a number of fields in a number of capacities through the organisation of a company in which he retained ultimate control. We have considered the submission of the applicant that the agreement under which he was an employee from 1987 to 1992 of EGP Sports Group Ltd, could not be considered as a sham and further that the companies through which the applicant operated could not be considered as mere simulacra of Mr Connolly. The Tribunal did not accept that in Bottrill the EAT sought to lay down a proposition of law that if the employment contract was not a mere sham it must thereby be a valid contract. The Tribunal considered all the facts produced to it in relation to Mr Connolly's role as Managing Director of businesses which he had built up from scratch. These were businesses which represented his personal ingenuity and success in the field of corporate hospitality and related aspects of the modern sporting world. Contrary to the facts in Bottrill, where the individual was a small element in a larger organisation, in this case the applicant was the key individual and also the shareholder. We considered the applicant's arguments that because of the option agreement he had entered, there was a restriction on the freedom with which he could exercise his shareholder's rights and the tribunal also considered the agreement which he entered in 1986 with County Ltd, for which he was required as a condition of his facility, to retain a controlling shareholding in EGP. That arrangement came to an end before June 1990 and can therefore be disregarded. However that documentation was indicative of Mr Connolly's position in EGP. He was the individual whose presence was an essential aspect of the group. The bankers required him to remain with the group as controlling shareholder as a condition of their support. In their relationship EGP without the applicant in control was not acceptable.

7. The Tribunal noted that the issue of Mr Connolly's status as an employee had not been considered at an earlier stage. It would normally be an aspect on which the Department of Employment would have analysed at the time when Mr Connolly received redundancy payments and protected payments in connection with notice at the end of his employment from the Secretary of State in relation to the insolvency of Arenascene Ltd. However the Tribunal did not consider that the failure to identify this point at an earlier date detracted from its present significance or meant that the Tribunal should not now take the point into consideration. Having taken the point into consideration the Tribunal had no hesitation in finding that the employment status of Mr Connolly did not begin until he entered an agreement with IRH PLC on 3 April 1992. Mr Connolly therefore had insufficient service to bring a claim of unfair dismissal and the Tribunal is therefore without jurisdiction in relation to his claim."

8. Following the decision of the industrial tribunal but before the decision of the Employment Appeal Tribunal, the Court of Appeal affirmed the decision of the EAT in Bottrill ([1999] ICR 592). Giving the judgment of the Court, Lord Woolf MR stated that "of the two approaches we have no hesitation in preferring the approach of the appeal tribunal in this case and that of the Inner House in Fleming". Lord Woolf stated, at p 603-604:

"We recognise the attraction of having in relation to the Act of 1996 a simple and clear test which will determine whether a shareholder or a director is an employee for the purposes of the Act or not. However, the Act does not provide such a test and it is far from obvious what Parliament would have intended the test to be. We do not find any justification for departing from the well established position in the law of employment generally. This is whether or not an employer and employee relationship exists can only be decided by having regard to all the relevant facts. If an individual has a controlling shareholding that is certainly a fact which is likely to be significant in all situations and in some cases it may prove to be decisive. However, it is only one of the factors which are relevant and certainly is not be taken as determinative without considering all the relevant circumstances.

Even if it had been possible to come to a different conclusion, we are far from satisfied that could be provided by the simple test which the appeal tribunal in Buchan [1997] IRLR 80 was looking for. The facts of the present case illustrate that whether or not there is a controlling shareholder may not, by any means, be clear cut. We recognise the force of the contention by Mr Barklem on behalf of Mr Buchan that in any event, on the special facts of this case, it may be possible to regard Mr Bottrill as not having a beneficial controlling shareholding. There are also the logical problems to which Morison J referred in taking a controlling shareholding as the test. During the life of a contract such control of a company can change and it would indeed be extraordinary if this should affect the employment status of an individual during the same contract for the purpose of making claims against the Secretary of State under the Act of 1996. Finally there is the irony that, if control were to be the decisive test, it would probably only 'bite' for the purposes of claims against the Secretary of State when the individual was no longer in control because of the insolvency of the company.

Both the Inner House [in Fleming] and Morison J in their judgments made it clear that the scope for abuse is limited. We would reaffirm the views which they express as to the use of devices to seek remedies against the Secretary of State in inappropriate circumstances. However, those cases apart, it is right to note that in a case such as this where national insurance contributions have been paid, to deprive an individual of his claims under the Act of 1996 could be to deprive unjustly that individual of the benefits to which he could properly expect to be entitled after he and his 'employer' had made the appropriate contributions.

We agree with the appeal tribunal that the industrial tribunal was entitled to conclude that there was a genuine contractual relationship between Mr Bottrill and his company, and that the industrial tribunal, having carefully and properly weighed the competing factors, had arrived at a conclusion which is unimpeachable on the facts. Miss Eady expressly accepted that, if she was wrong in supporting the approach in law in Buchan [1997] IRLR 80, the appeal must be dismissed.

She asked us to provide what guidance we can because of the frequency with which problems of the type exemplified by this case arise. We are anxious not to lay down rigid guidelines for the factual inquiry which the tribunal of fact must undertake in the particular circumstances of each case, but we hope that the following comments may be of assistance.

The first question which the tribunal is likely to wish to consider is whether there is or has been a genuine contract between the company and the shareholder. In this context how and for what reasons the contract came into existence (for example, whether the contract was made at a time when insolvency loomed) and what each party actually did pursuant to the contract are likely to relevant considerations.

If the tribunal concludes that the contract is not a sham, it is likely to wish to consider next whether the contract, which may well have been labelled a contract of employment, actually gave rise to an employer/employee relationship. In this contest, of the various factors usually regarded as relevant (see, for example, Chitty on Contracts,, 27^th ed (1994) vol 2, pp 703-704, para 37-008), the degree of control exercised by the company over the shareholder employee is always important. This is not the same question as that relating to whether there is a controlling shareholding. The tribunal may think it appropriate to consider whether there are directors other than or in addition to the shareholder employee and whether the constitution of the company gives that shareholder rights such that he is in reality answerable only to himself and incapable of being dismissed. If he is a director, it may be relevant to consider whether he is able under the articles of association to vote on matters in which he is personally interested, such as the termination of his contract of employment. Again, the actual conduct of the parties pursuant to the terms of the contract is likely to be relevant. It is for the tribunal as an industrial jury to take all relevant factors into account in reaching its conclusion, giving such weight to them as it considers appropriate."

9. In allowing the appeal on the jurisdictional issue, the EAT pointed out that the tribunal had not had the benefit of Lord Woolf's judgment in Bottrill "and accordingly it is understandable that they did not follow his guidelines". Morison J went on to state that the tribunal "had to choose between the conflicting approach of the EAT in Bottrill and that taken in Buchan". They concluded that the tribunal members misdirected themselves by placing too much reliance on Mr Connolly's controlling shareholding and on the decision in Buchan. That conclusion is not wholly justified upon the decision of the industrial tribunal, as expressed. They stated that they had applied Bottrill and cited a paragraph from the judgment of Morison J in Bottrill which was cited with approval by Lord Woolf MR in the Court of Appeal.
10. The real basis of the decision of the industrial tribunal on the jurisdictional issue has to be determined, however, together with whether it can be upheld and, if not, what course this Court should take. To do so, it is necessary to consider the facts found and the reasoning of the industrial tribunal.
11. The factual background has been set out in the judgments which followed the several earlier proceedings and I gratefully adopt that of the EAT on 14 September 1999:

"2. The factual background to the matter whilst complex, was well documented by the tribunal in its decision. Mr Connolly formed EGP, a sports promotion business in 1978. Arenascene Ltd was a 99% subsidiary of EGP with Mr Connolly owing the other share. On 25^th June 1987 Mr Connolly entered into a service agreement with EGP by which he was to act as Chairman and Managing Director of EGP and its subsidiary Arenascene Ltd. The agreement recorded that the appointment commenced on 1^st March 1978. The tribunal accepted that although they were separate companies. Arenascene Ltd and EGP were operated as one organisation with Mr Connolly as the Managing Director of the whole.

3. On 1^st November 1990 20% of the shareholding of EGP was sold to Expedier plc and an option to sell the remaining 80% was entered into, though it expired without having been exercised. The 20% shareholding held by Expedier plc was sold to IRH plc on 28^th November 1991 and on 3^rd April 1992 Mr Connolly and his fellow shareholders sold their holding in EGP, which at that time was still the 99% owner of Arenascene Ltd, to IRH plc. Also on 3^rd April 1992 Mr Connolly entered into a contract of service under which he contracted with IRH plc to be a Director of that company and Managing Director of EGP and Arenascene Ltd. The contract commenced on 3^rd April 1992 continuing to the fixed date of 31st March 1995 at a fixed annual salary, with a car and holiday expenses. The tribunal considered that Mr Connolly was employed by IRH plc from 31^st March 1992 to be Director and Chief Executive of EGP and Arenascene Ltd.

4. On 15^th May 1992 Smith and Williamson were appointed Receivers of IRH plc. Mr Connolly was dismissed by the Receivers on 19^th May 1992, but the tribunal found that he did not appear to receive the letter of dismissal. Mr Connolly remained Director and Chief Executive of EGP and Arenascene Ltd and carried on his functions with those companies until Grant Thompson were appointed Receivers of those subsidiaries of IRH plc on 21^st May 1992.

5. On 15^th June 1992 the Receivers of EGP wrote to Mr Connolly indicating that the appointment of Joint Administrative Receivers did not alter the agreement of 3^rd April 1992 between himself and IRH plc. Mr Connolly continued to work as before until 22^nd June 1992 when the Receivers of EGP and Arenascene Ltd gave him formal notice that his employment was terminated. The tribunal found that the Receivers treated Mr Connolly as an employee of those companies prior to the termination of his employment.

6. On 20^th June 1992 the business of Arenascene Ltd was sold by the Receivers to Expectshow Ltd which subsequently changed its name to Sellers Arenascene Ltd, the Respondent."

12. The factors on which the industrial tribunal relied in reaching their conclusion on the jurisdictional issue are set out in those paragraphs of their extended reasons already cited when considering the law they applied. It is also necessary to set out their findings of fact as stated in paragraph 4 of the extended reasons:

"… the fact that he was subject to PAYE and NIC, his remuneration by salary, his method of payment, his holiday entitlements and other aspects. The tribunal heard submissions from the respondent [the present appellants] to the effect that the applicant [the present respondent] would require to show that he was an employee throughout the two year period. The Tribunal made further findings of fact at that stage as follows:

a) The applicant had an 88% shareholding in EGP Sports Group Ltd and its subsidiary, Arenascene Ltd from the start of the relevant period on 23 June 1990 as he had done for some years before that date.

b) Despite sale of 20% of the Share Capital to Expedier plc and provision of shares to family members, the applicant remained a controlling shareholder throughout the period until April 1992.

c) The sale of the 20% of shares did not affect the applicant's controlling interest although he was subjected to certain restrictions. These lapsed when the Expedier plc option agreement expired in August 1991.

d) It was not, however, until April 1992 that the applicant became an employee of IRH PLC and at that stage, although his agreement dated 3 April 1992 provides in a schedule that his employment is regarded as continuous back to the date of the incorporation of EGP, the Tribunal did not find that the applicant had been an employee of EGP prior to that date. Insofar as the findings identified as relevant by the applicant are concerned, he was remunerated by salary and paid PAYE and NIC as such. He behaved as an employee but had an interest as shareholder over and above that of employee and stood to gain if the company prospered. The tribunal did not find that the applicant was an employee of EGP or Arenascene Limited prior to April 1992.

e) In reaching that factual conclusion the Tribunal had regard to the situation where the applicant was an accomplished and expert entrepreneur operating a number of businesses; some on a franchise basis, some as joint ventures under the umbrella of a company operating three divisions and a subsidiary. In respect of EGP he was at pains to retain overall absolute control. The Tribunal therefore concluded as a matter of fact that the applicant was not an employee until he sold his majority holdings and entered into a service agreement on 3 April 1992."

13. On behalf of the appellants, Mr Hand QC submits that the question whether or not a person is an employee is one of fact. Neither the EAT nor this Court should interfere with the finding of fact of the industrial tribunal, the industrial jury, unless the industrial tribunal had misdirected itself in law or reached a conclusion which on the evidence was perverse. It is submitted that the tribunal took all relevant factors into account and reached a conclusion which was open to them upon the evidence. Mr Hand accepts that some of the factors taken into account such as the fact that the respondent was "an accomplished and expert entrepreneur" might equally be characteristic of a senior employee but submits that, against the background in this case, the reasoning of the tribunal was not defective and they were entitled to conclude that the respondent was not an employee. A key finding, submits Mr Hand, is the finding in paragraph 6 that the respondent was "an entrepreneur operating in a number of fields in a number of capacities through the organisation of a company in which he retained ultimate control". Mr Hand also submits, and I accept his submission on this point, that the subsidiary finding of the EAT that "Mr Connolly was not at all times the majority shareholder in EGP" was unsupported by evidence and cannot be sustained.
14. The contract between EGP Sportsgroup Ltd ("EGP") and the respondent dated 25 June 1987 was stated on its face to be a service agreement. It was prepared by solicitors and signed by the respondent on behalf of the company as well as on his own behalf. It was based on a standard form with appropriate insertions for the identity of the respondent, the commencement date, the salary and the period of notice required to terminate. A number of clauses in the standard form were deleted, notably the power of the company to determine the agreement summarily upon the occurrence of certain events, that restricting competition with the company for a period after termination of the agreement and that relating to the disclosure of confidential information. As is to be expected with a standard form service agreement between employer and employee, provision was made for the duties of the appellant, his hours of work, holidays and other predictable matters including what was to happen if the appellant unreasonably refused to agree to the transfer of the agreement by way of novation to a company which had acquired the assets or equity share capital of EGP. Provision was made, in common form, that he should obey the directions of the Board of Directors and be answerable to the Board.
15. The deletions were plain on the face of the document and it is not, and could not be, suggested that any attempt was made to disguise the true nature of the transaction or to conceal deletions the effects of which were favourable to the respondent. The tribunal held, and rightly held in my view, that the service agreement was not a sham. It was a "genuine" contract, in the sense that expression is used by Lord Woolf in Bottrill. There is no suggestion that this service agreement was signed as a device to set up for the respondent remedies against the Secretary of State or to set up a favourable position in the event of insolvency.
16. The question is whether the service agreement actually gave rise to an employer/employee relationship. In my judgment, the reasoning and conclusion of the industrial tribunal on this issue cannot stand. While I have accepted that they did not purport to apply Buchan, they did not, as the EAT recognised, have the advantage of the reasoning of the Court of Appeal in Bottrill. I acknowledge that the fact that the respondent has a controlling shareholding is a significant factor in deciding whether he is an employee but in considering whether the agreement gave rise to an employer/employee relationship, the tribunal have attached to that factor a significance which excludes a proper consideration of other relevant factors. They refer to the respondent being at pains to "retain overall absolute control" and to his retention of "ultimate control". That they have misunderstood the relevance of the shareholding appears from their reliance upon the respondent's "interest as shareholder over and above that of employee and [that he] stood to gain if the company prospered". There are many situations in which people who are undoubtedly employees of a company stand to gain if the company prospers. Moreover, they appear to regard the skills contributed by the respondent as being inconsistent with a position as employee. They state that he was "an accomplished and expert entrepreneur operating a number of businesses", that he had built up businesses "from scratch", that the businesses "represented his personal ingenuity and success" and that he was a "key individual". In the circumstances of this case, I do not consider that the presence of those skills and the achievement of that success by the respondent militate against his being an employee.
17. Moreover, the fact that a third party, the company's bankers, required the respondent to remain with the group as controlling shareholder as a condition of their support does not bear upon the present issue unless a position as controlling shareholder is incompatible with the status of employee, which it is not. If a person with the skills and success attributed by the tribunal to the respondent were qualities which prevented a person in his position from enjoying the status of employee, it would be a severe and unwarranted deterrent to business enterprise. The tribunal's reliance on these factors nullifies first their own finding that the service agreement was not a sham and the companies could not be considered as "mere simulacra of Mr Connolly" and, secondly, their finding that "he behaved as an employee".
18. This Court has the benefit of those findings and an opportunity to consider the terms of the service agreement and to consider them in context. The Court in Bottrill acknowledged that the actual conduct of the parties pursuant to the terms of the contract is likely to be relevant but no evidence was called, when the members of the tribunal themselves took the point on jurisdiction, to demonstrate that the service agreement was not what it purported to be or that the respondent behaved other than as an employee. The decision of the tribunal could be upheld only on the basis that the controlling shareholding was a decisive factor which in the circumstances and on the evidence, in my view, it was not. In my judgment, the only legitimate conclusion was that the respondent was an employee. In those circumstances, the Court should uphold the finding of the EAT.
19. It is not necessary to that decision but I would add that it would in my judgment be an injustice to remit the matter to the industrial tribunal for a rehearing of this issue. It is over 8 years since the hearing before the first industrial tribunal began. The present point was not taken by the appellants either at that hearing or at the hearing before the second industrial tribunal in 1997. When the point was then raised by the tribunal, the appellants had an opportunity to call further evidence or to make further submissions, for example, by way of analysis of the company's articles of association. That background reinforces my conclusion that the Court should form its own view of the status of the respondent on the basis of the material before it.

The transfer issue

20. The industrial tribunal's finding of fact are set out at paragraph 2:

"m) At about this time Mr Charles Webb (a former employee of EGP specialising in corporate events) wrote to the Receivers of Arenascene Ltd and EGP stating an offer proposing a purchase price of £3,500 for the assets of the corporate events division of EGP. The offer was on "EGP in Receivership" headed paper and listed a number of assets which comprised the client base and the mailing list relating to the corporate events division including the PA system, the monitor and a number of other items. Then in July 1992 Mr Webb saw an advertisement dated 8 July 1992 in the Huddersfield Daily Examiner, placed by Sellers Arenascene Ltd, seeking Sporting Events Executives. Mr Lamb, Director of Sellars Arenascene Ltd, responded positively to a letter dated 17 July 1992 and Mr Webb began working for Sellers Arenascene Ltd on a date shortly after 19 August 1992. At that time on 2 September 1992 CPW Golf Promotions Ltd, which was a company Mr Webb had formed, sold the corporate event equipment and assets which he had acquired from the Administrative Receivers to the respondent for £3,600, making a profit of £100 on the transaction. There was considerable conflict of interpretation between the parties over this aspect. The Tribunal found as follows. The respondent's original proposal to the Administrative Receivers was to acquire the business operations of Arenascene and the hospitality and corporate events division of EGP. That proposal was withdrawn in effect because the respondent was advised that a transaction in that format would necessarily involve a transfer of the undertakings and that would result in the obligations under Mr Connolly's Service Agreement passing to the respondent. The respondent therefore substituted for that proposal a letter dated 17 June 1992 which limited their offer to assets of Arenascene Ltd and in effect took on the business of Arenascene Ltd as a going concern. The commercial justification Mr Lamb put forward in evidence was that thereby Sellars International Ltd were acquiring a business with assets and profitability whereas the corporate events and hospitality divisions of EGP had run at a substantial loss over a period of time. Returning to the Business Information Document produced by the Receivers, this recorded that EGP had three divisions - corporate hospitality, events and golf and there was also the subsidiary business of Arenascene. The Tribunal found it implausible that the arrangements with Mr Webb were entirely unrelated to the transaction which took place between the Receivers and Sellars International Ltd and the Tribunal regarded that transaction as part and parcel of the related transaction with Mr Webb. The timescale in respect of the two transactions ran from 20 June 1992 to the beginning of September 19992 therefore in this period Sellers International Ltd acquired Arenascene Ltd and the corporate events division of EGP. They paid more in their offer of 17 June 1992 for the assets of Arenascene Ltd than they had originally offered, while contending at the same time that they were thereby acquiring less. It may be that there were aspects of the business of EGP Sports Group Ltd that did not continue because the respondent did not choose to continue with them. The respondent however placed themselves in the position, as a result of the transactions between June and September 1992, to carry on such aspects of EGP and Arenascene Ltd as they wished to, with the exception of Designer Golf, which was sold elsewhere by the Receivers.

n) What then of the position of Mr Connolly in the key period to which the Tribunal's attention was directed by the Court of Appeal? Mr Connolly was employed by IRH PLC to be Director and Chief Executive of EGP Sports Group Ltd and Arenascene Ltd. When the Receivers were appointed to IRH PLC they indicated to Mr Connolly that his contract with the company was at an end. However, Mr Connolly remained Director and Chief Executive of EGP Sports Group Ltd and Arenascene Ltd and continued to carry on his functions with those companies for a matter of days until the Receivers were appointed to those subsidiaries of IRH PLC. At that point Mr Connolly remained carrying out the functions which he had carried out prior to the IRH PLC receivership. In other words he was employed by IRH PLC to work in a division of their operation. He continued to work in that division of their operation and remained there until 22 June 1992. His employment then came to an end and the Receivers of EGP Sports Group Ltd and Arenascene Ltd treated him in practice as an employee of those companies prior to the termination of his employment. Those are the relevant findings of fact."

The tribunal's conclusion was:

"In the event that the Tribunal is subsequently found to be incorrect in the way which it has applied the law on the jurisdictional point the Tribunal, particularly given the lengthy and complex history of this case to date, was anxious to reach a firm conclusion on the other aspects in dispute between the parties. In this respect the Tribunal had, as is clear from the findings of fact, no difficulty in finding for Mr Connolly that there was a transfer of the part of the undertaking in which Mr Connolly was engaged and that undertaking was transferred by a number of transactions to Sellers Arenascene Ltd (formerly Expectshow Ltd). The Tribunal found that the applicant was retained by the Receivers of EGP and Arenascene as an employee working in the business which they were seeking to sell as a going concern. They were at pains not to adopt his contract and thereby accept personal liability. However his status as part of EGP and Arenascene Ltd was not in issue and this is supported by the assistance given to the applicant in dealings with Insolvency Fund. He was scheduled in the Business Information Document as an employee. He was heavily involved in all aspects of EGP. The only aspect of the business of EGP which did not find its way into Sellers Arenascene Ltd (the respondent) was the division known as Designer Golf. The transaction originally proposed by the respondents was for an acquisition of the totality of he business other that Designer Golf. The reason for the applicant's dismissal by the receivers of EGP was related to the transfer of the business in which he worked which included corporate hospitality, events and Arenascene Ltd. A portion of EGP's business was transferred elsewhere but that did not detract in the Tribunal's decision from the conclusion that the business in which the applicant was engaged was transferred to the respondent in a number of transactions between June and September 1992. Had the applicant been in a position to show that he had two years' continuous service the Tribunal would have found that the applicant was transferred by virtue of that transfer to Sellers Arenascene Ltd and his dismissal as a result of that transfer was automatically unfair and unjustified for economic, technical or organisation reasons."

21. At the hearing, the appellants sought to amend their notice of appeal to add an allegation that the respondent had not been assigned to the part transferred and that the tribunal was wrong in law to hold that he had been. Permission was refused on the ground that this was in substance a new point which could not be raised at this late stage having regard to the history of the proceedings.
22. Having set out the appellants' submissions on this issue, the EAT concluded:

"It was common ground between the parties that an allegation of collusion would not be relied upon before the second tribunal. The tribunal made a finding that the transactions were interrelated, that is not the same as a finding of fraudulent behaviour, which was not made and was not alleged before the tribunal. Having heard both parties on this issue, and having remarked that there had been 'considerable conflict' between the parties, the tribunal was entitled to make findings of fact on this issue which cannot be interfered with on appeal."

23. The appellants' case on what was a cross-appeal to the EAT depends on an analysis of the transfer made and the circumstances in which it was made. The appellants accept that assignment can arise by implication and that exclusive employment in the part transferred is not necessary but submit that group structures should be carefully scrutinised and that the employee's duties must be predominately carried out in the part transferred. Consideration must be given to the contractual duties of the employee. In this case, the respondent's duties were spread across the whole group. A part of his duties was towards a part or parts of the group not subject of the transfer. It is also submitted that the finding that "corporate hospitality" had been transferred was contrary to the evidence.
24. It is accepted that the respondent may rely upon a series of transactions to establish a relevant transfer. It is also accepted that the EAT were correct to note that an allegation of collusion was not made before the tribunal. What Mr Hand submits however is that, if there was no collusion involving Webb, it was not open to the tribunal to find that there was a series of transactions between the same parties. The link required to bring the transactions within the regulations necessarily involved collusion or fraud and those features were agreed not to be present.
25. I agree with the EAT that the tribunal were entitled to reach the conclusion they did on this issue. First, they were entitled on the evidence to conclude that corporate hospitality was transferred. Secondly, they were entitled to hold that the transactions achieved a relevant transfer. Those were essentially questions of fact for the industrial tribunal and they set out and evaluated the relevant evidence which led to their conclusion.
26. For those reasons, I would dismiss this appeal.

LORD JUSTICE CHADWICK:

27. I agree.

MR JUSTICE WRIGHT:

28. I also agree.
ORDER: Appeal dismissed with costs; legal funding assessment. (Order does not form part of approved Judgment)