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Cite as: [2005] ScotCS CSIH_46, [2005] CSIH 46
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Mowlem Technical Services (Scotland) Ltd, Re A Decision Of The Employment Appeal Tribunal [2005] ScotCS CSIH_46 (10 June 2005)
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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION |
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Lord Osborne Lord Nimmo Smith Lord Kingarth
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[2005CSIH46] XA49/03 OPINION OF THE COURT delivered by LORD OSBORNE in APPEAL TO THE COURT OF SESSION under section 37 of the Industrial Tribunals Act 1996 by MOWLEM TECHNICAL SERVICES (SCOTLAND) LIMITED (formerly SKILLBASE SERVICES LIMITED) Appellants; against A decision of the Employment Appeal Tribunal dated 12 January 2004 and communicated to the Appellants on 26 January 2004 _______ |
Act: I. Truscott, Q.C.; Lindsays, W.S.
Alt: B. Napier, Q.C.; Maclay Murray & Spens
10 June 2005
The background
[1] The appellants in this matter are Mowlem Technical Services (Scotland) Limited, formerly Skillbase Services Limited. The respondents are first, Raymond John King, and second, Falkirk Council. The background to this appeal is that the housing maintenance contract of the second-named respondents was put out to tender in about 1997. The contract was won by the appellants. The main purpose of the contract was the provision of building maintenance to a portion of the second-named respondents' council housing stock. This involved work being executed by a variety of trades. For the purpose of the performance of the contract, the appellants employed around 60 people and made use of about 50 vehicles, together with other assets. These other assets included premises which were made available to them by the second-named respondents on a rent free basis. It was a condition of the contract that the appellants delivered services through what were called local repair teams operating out of the premises just mentioned. This housing general maintenance contract was a substantially larger contract than any of the others held by the appellants in the area. Nevertheless, they did have certain other contracts and these and the housing general maintenance contract were administered out of a depot at Grangemouth, which had existed before the housing general maintenance contract was won by them. [2] Among the staff based at the Grangemouth depot was a branch manager, who was responsible for managing all the contracts supervised out of that branch. In essence central functions were carried out through the Grangemouth depot and service delivery was carried out through the local repair teams. The first-named respondent was appointed as the branch manager at the Grangemouth depot some months after the housing general maintenance contract was won. The administration processes for executing the maintenance work were essentially the same before and after the transfer of responsibility to the appellants in 1997. Work orders came from the housing offices to the local repair teams. These were then handed out to the tradesmen who executed the work. The associated paperwork was returned to the appropriate personnel after the works had been completed, for checking and pricing. About 80% of the Grangemouth branch turnover emanated from the housing general maintenance contract in the period immediately preceding certain changes which occurred in 2002. In addition to the tradesmen who were actually carrying out work, staff were required to organise the tradesmen and materials, to administer the orders for work, to check jobs, to deal with invoicing and recovery of payments from the second-named respondents and to deal with the bonus system which the appellants had introduced. The role of the branch manager was to supervise the Grangemouth branch. He was responsible for all of the contracts which were managed out of that branch. He did have contact with the second-named respondents at periodic liaison meetings. However, on a day-to-day basis the contact was effected by an assistant, who supervised the local repair teams directly. A Mr. Alan Small and a Mr. David Stirling Gray were members of the staff of the Grangemouth branch carrying on the function of schedule of rates surveyors. Mr. Gray worked primarily out of the Grangemouth branch and also at Abbotsinch, near Falkirk. He spent about 80% of his time on the housing general maintenance contract for the second-named respondents. The remaining 20% of his time was spent doing other similar work on other contracts. [3] In 2001, the second-named respondents conducted a review of their housing maintenance function, the result of which was that they decided that the contract mentioned above should be determined and the work undertaken by them in-house. The appellants were notified of this decision by letter dated 23 October 2001, after which discussions took place as to how the change was to be handled. The appellants' expectation was that relevant employees would be transferred to the second-named respondents. Pursuant to that the appellants provided a list of employees for the second-named respondents. An issue arose as to who should be transferred with the undertaking to which the contract had related. Subsequently, the issue was partly resolved in that there was agreement over the tradesmen who should be transferred. However, there remained a dispute over certain other staff members. Relations between the appellants and the second-named respondents deteriorated in the lead up to the transfer of responsibility in 2002. Each suspected the motives of the other. The second-named respondents suspected that the list of employees was being "loaded" with administration staff personnel in order to reduce the appellants' prospective redundancy responsibility, since the latter had decided to close their Grangemouth branch. The issue as to which employees were to be transferred to the second-named respondents remained unresolved in relation to Mr. Small, Mr. Gray and Mr. King. Eventually this issue became the subject of proceedings before the Employment Tribunal. By a decision dated 23 May 2003 and entered in the register on 6 June 2003, the Employment Tribunal decided that the housing and general maintenance contract and the activities associated therewith carried on by the appellants between 1998 and 2001 constituted an undertaking for the purposes of regulation 3 of the Transfer of Undertaking Regulations 1982; that there was a relevant transfer of that undertaking as between the appellants and the second-named respondents on 1 April 2002; that Mr. King was not wholly or predominantly employed in that undertaking; and that Mr. Small and Mr. Gray were wholly or predominantly employed in that undertaking. [4] Since this appeal is in substance concerned with the decision of the Employment Tribunal in so far as it relates to the position of Mr. King, it is appropriate for us to narrate that part of that tribunal's decision which relates to him. At page 7 of the decision of the Employment Tribunal, they say this:"Turning now to consider the question of Mr. King, we have no real difficulty in holding that Mr. King was not wholly or mainly assigned to the contract. Mr. King had only infrequent contact with the respondents (the second-named respondents in these proceedings) (evidence of Mr. Don and Ms. Letts); he was not directly involved in the operational aspects of the contract on a day-to-day basis (Mr. Don) and we think that he was, as Mr. Don said, more of a figurehead in relation to this matter. There were other contracts being administered out of the Grangemouth or central depot and Mr. King was the branch manager for that depot. He accepted that he had responsibility for those other contracts.
In these circumstances we consider that it is not possible to say that he was assigned in any way to this contract. The fact that he may have been spending more time on it latterly is simply indicative of a change in the relative proportions of turnover being generated. He had no particular responsibilities in relation to this contract other than those which went with his role as branch manager. We therefore hold that Mr. King was not wholly or mainly assigned to the undertaking which was the subject of transfer.
This leaves the other surveyor, Mr. Gray. In our view it is clear that Mr. Gray was doing substantially the same job as Mr. Small. It has been conceded that Mr. Small was wholly or mainly assigned to the undertaking. The only difference between Mr. Gray and Mr. Small was that Mr. Gray for about 20% of his time was working on administration connected with other contracts. That percentage was not disputed and indeed was confirmed by other witnesses. Accordingly, in our view, although it is not possible to say that Mr. Gray was assigned to the Falkirk contract, it is appropriate to say that he was mainly assigned to it."
Submissions of the appellants
[6] It was indicated by senior counsel for the appellants that the broad criticism of the decision of the Employment Appeal Tribunal would be that they had not appropriately identified and reacted to an error of law on the part of the Employment Tribunal. He recognised that the present appeal had to be shown to be on a question of law. Having regard to the state of affairs already outlined, it was submitted that this court had to be mainly concerned with the correctness in law or otherwise of the decision of the Employment Tribunal. In that connection reliance was placed upon Hennessy v. Craigmyle & Company Limited 1986 I.C.R. 461, at page 470; Campion v. Hamworthy Engineering Limited 1987 I.C.R. 966, at page 972; Walls Meat Company Limited v. Selby 1989 I.C.R. 601, at page 605; and Scottish Midland Co-operative Society Limited v. Cullion 1991 I.R.L.R. 261, paragraph 10. If the Employment Tribunal's decision was unassailable, this court would not allow an appeal, even though valid criticisms might be made of the decision of the Employment Appeal Tribunal; thus this court had to focus upon the issue of whether the decision of the Employment Tribunal involved any error of law. [7] Senior counsel then proceeded to draw our attention to authorities on the matter of the assignation of an employee to an undertaking. The first of these was Botzen & Others v. Rotterdamsche Droogdok Maatschappij B.V. [1986] 2 C.M.L.R. 50; 1985 E.C.R. 519. In paragraph 15 of the decision it was indicated that an employment relationship was essentially characterised by the link existing between the employee and the part of the undertaking or business to which he was assigned to carry out his duties. In order to decide whether the rights and obligations under an employment relationship were transferred under Directive No. 77/187 by reason of a transfer within the meaning of Article 1(1) thereof, it was therefore sufficient to establish to which part of the undertaking or business the employee was assigned. Reliance was also placed on Buchanan-Smith v. Schleicher & Company International Limited [1996] I.C.R. 613. Assistance could be got from the observations of Mummery J. at pages 616 to 623. [8] It was evident from the observations of Mummery J. that the issue of assignment raised essentially a question of fact. It was necessary to have regard to a number of factors in reaching conclusion on such an issue. However, while that issue was an issue of fact, here it was submitted that the Employment Tribunal had erred in law in that they had failed to take into account in reaching their conclusion relevant evidence, in particular, the evidence of Mr. King himself. In that connection reference was made to passages in the decision of the Employment Tribunal at pages 4 and 7, dealing with the positions of Mr. Small and Mr. Gray. While the Employment Tribunal had taken into account the evidence of those individuals, they had not taken into account the evidence of Mr. King. It appeared that the Employment Tribunal had ignored Mr. King's evidence in reaching a conclusion on the issue before them, which was extraordinary. In particular they appeared to have disregarded Mr. King's evidence concerning the proportion of his time spent on the housing general maintenance contract, as opposed to other contracts. The allocation was 80% and 20%. These percentages were identical with the percentages of the time of Mr. Gray spent on the former contract and other contracts. The Employment Tribunal's neglect of the evidence of Mr. King might be attributable to the circumstance that they had heard his evidence at an earlier stage in the proceedings than other evidence. [9] Senior counsel submitted that the basis of the present appeal was not comparable to the situation in OCO Mechanical Engineers Limited v. J. Bissett & Others (EAT/6/98) (unreported - 11 November 1998), where it was said that the fact that a Tribunal did not refer to one particular piece of evidence did not indicate that it did not take it into account when arriving at its decision. The complaint in the present case was not a complaint about the form of the decision, but one relating to its substance. Reference was also made to Jones and Kingston v. Darlows Estate Agency (EATRF97/1246/3); (unreported - 6 July 1998). What was alleged here was an error of law such as was contemplated in Melon v. Hector Powe Limited 1980 S.C. 188, at page 198. A useful description of the requirements of a decision of an Industrial Tribunal, now an Employment Tribunal, was to be found in Meek v. City of Birmingham District Council [1987] IRLR 250. [10] Against the foregoing background it was submitted that, standing the materiality of Mr. King's involvement in the operation of the contract, the omission of any reference to the substance of his evidence by the Employment Tribunal amounted to an error of law. Alternatively, the decision was perverse, in the sense of being a decision which no reasonable Tribunal, directing itself properly on the law, could have reached. In particular, no reasonable Tribunal could have come to the conclusion on the evidence available to the Employment Tribunal here that Mr. King had not been assigned to the undertaking to which the contract related whereas Mr. Small and Mr. Gray had been assigned. [11] Turning to the issue of the disposal of the appeal, senior counsel invited the court to allow the appeal and hold that Mr. King had been assigned to the undertaking to which the contract related; no other result than that was possible on the evidence. Alternatively, if the court did not accept that contention, the matter should be remitted to a freshly constituted Employment Tribunal for reconsideration of the controversial issue of new. If that submission did not commend itself, the case should be remitted to the Employment Tribunal which had heard it to reconsider its decision, in the light of the decision of this court.Submissions for the second-named respondents
[12] Senior counsel for the second-named respondents moved the court to refuse the appeal. In relation to the appellants' argument that the Employment Tribunal had not considered the evidence of Mr. King, it was submitted that simply because there was no express finding-in-fact related to his evidence did not mean that the evidence had not been considered and taken into account. In that connection reliance was placed on the Retarded Children's Aid Society Limited v. Day [1978] I.C.R. 437, at page 444. The essence of a sound decision by an Employment Tribunal was indicated in Meek v. City of Birmingham District Council. It appeared that the point taken by the appellants was narrow, to the effect that there had been a failure to make a finding-in-fact on the time which Mr. King had spent on the contract in question. The characterisation by Lord President Emslie of a question of law in Melon v. Hector Powe Limited, at page 198, was accepted subject to the qualification that to the list of situations described by him there had to be added a failure on the part of a Tribunal to take into account a relevant matter. In the present case the Employment Tribunal had made no error in law. It had identified correctly the issue which it required to decide, the issue of assignation, and it had made sufficient findings in the light of the evidence to enable it to dispose of that issue. If that submission were wrong, there would require to be a remit to the same Tribunal to reconsider the decision. In the case of Botzen & Others v. Rotterdamsche Droogdok Maatschappij B.V., the argument that an employee had to work full-time for a department if his contract of employment was to be transferred with that department was rejected. It was sufficient if the employee worked wholly or mainly for the undertaking transferred. The proper approach to the decision of an issue of assignment was explained by Mummery J. in Buchanan-Smith v. Schleicher & Company International Limited. Here the Employment Tribunal had accepted that Mr. Gray had been assigned to the undertaking transferred upon a sound basis; however, they were fully entitled to take a different view in relation to the position of Mr. King. The kind of considerations which would be relevant to a decision on assignment were explained in Duncan Web Offset (Maidstone) Limited v. Cooper [1995] I.R.L.R. 663 by Morison J. at page 635. It emerged from what was said there that the time spent on a particular contract was a factor, but not the only one, which had to be considered in connection with an issue of assignment. As to what an Employment Tribunal decision ought to contain reliance was placed on Jones and Kingston v. Darlows Estate Agency, OCO Mechanical Engineering Limited v. Bissett and Others and Prosperis Limited v. Spencer (UKEAT/0988/03/MAA) (unreported - 17 May 2004) at paragraph 42. These cases showed that decisions of an Employment Tribunal would not readily be disturbed, save where there was misdirection in law. [13] It was important to realise what material was before the Employment Tribunal. Among that material were documents showing job profiles of those who had been employed in the Grangemouth branch. The duties of the branch manager were described. The duties of Mr. Gray were also described. A comparison of these duties demonstrated that the job of the latter was very closely related in its responsibilities to the performance of the contract with the second-named respondents. The job description of Mr. King, however, was quite different. He had a series of general responsibilities for the performance of which he was accountable to his superior. These responsibilities related to the conduct, supervision and the financial arrangements for the branch as a whole. This material was to be found in 7/1 of process. Thus, while the amount of time spent by these two individuals on matters related to the contract with the second-named respondents might be the same, that was merely one factor among others which required to be considered in reaching a conclusion on whether Mr. King had been assigned to the undertaking to which that contact related. In summary, it was necessary for the appellants to show that the Employment Tribunal had gone overwhelmingly wrong before its decision could be disturbed. That could not be achieved in this case. [14] On the aspect of the appeal based on alleged perversity on the part of the Employment Tribunal, it was submitted that such a submission could succeed only where an overwhelming case was made out that the Tribunal had reached a decision which no reasonable Tribunal, on a proper appreciation of the evidence and the law, would have reached. That was the approach desiderated in Yeboah v. Crofton [2002] IRLR 634 in paragraphs 92 to 96.Decision
[15] In our opinion, the proper approach to the issue of assignment was explained by Mummery J. in Buchanan-Smith v. Schleicher & Company International Limited. In that case he relied upon the observations of Morison J. in Duncan Web Offset (Maidstone) Limited v. Cooper & Others in paragraph 15. In that passage, Morison J. said:"There will often be difficult questions of fact for industrial tribunals to consider when deciding who was 'assigned' and who was not. We were invited to give guidance to industrial tribunals about such a decision, but declined to do so because the facts will vary so markedly from case to case. In the course of argument a number were suggested, such as the amount of time spent on one part of the business or the other; the amount of value given to each part by the employee; the terms of the contract of employment showing what the employee could be required to do; how the cost to the employer of the employee's services had been allocated between different parts of the business. This is, plainly, not an exhaustive list; we are quite prepared to accept that these or some of these matters may well fall for consideration by an industrial tribunal which is seeking to determine to which part of his employers' business the employee had been assigned."
It is evident from this passage that a range of circumstances require to be considered in reaching a decision on the question of assignment. We have no reason to suppose, looking at the decision of the Employment Tribunal, that this approach was not followed in this case.
[16] In relation to the appellants' first argument, it seems to us that the question is whether the decision of the Employment Tribunal does or does not indicate that that Tribunal failed to take into account relevant material, in particular the evidence of Mr. King. In this connection, it is important to recognise the demands which the law has imposed upon employment tribunals as regards what must be stated in their decisions. In this connection guidance may be found in a number of cases cited to us, in particular, OCO Mechanical Engineers Limited v. J. Bissett & Others, Jones and Kingston v. Darlows Estate Agency and Meek v. City of Birmingham District Council. It is evident from these cases that, as Morison J. said in OCO Mechanical Engineers Limited v. J. Bissett & Others:"It seems to us that decisions are not to be reduced to some form of formula, where if something is referred to then it is all right, but if no reference is made to it, then it is not."
This aspect of the matter was elaborated by Mummery J. in Jones and Kingston v. Darlows Estate Agency when he said:
"It is, of course, important, as Mr. Nicholls emphasised, that industrial tribunals do address themselves to all the relevant evidence in a case and make appropriate findings of fact. In my judgment, there is no reason to doubt that the industrial tribunal did carry out this exercise in this case, as it was bound to do. It was not under any obligation, however, to set out in its extended reasons all the evidence which it heard on this point."
"Such an appeal ought only to succeed where an overwhelming case is made out that the Employment Tribunal reached a decision which no reasonable tribunal on a proper appreciation of the evidence and the law would have reached."
We are quite unable to hold that this standard has been achieved in the circumstances of the present case. While it may be that the Employment Tribunal had before it evidence relating to the proportion of the time of Mr. Gray and Mr. King thought to have been deployed on the contract which was the subject of the transferred undertaking, in our opinion that was but one of the factors that the Employment Tribunal had to consider. They were under necessity of considering the range of matters referred to by Morison J. in Duncan Web Offset (Maidstone) Limited v. Cooper, already narrated, among others. One of the sources of material available to the Employment Tribunal was the documentation setting out the job descriptions of, among others, Mr. Gray and Mr. King. As appears from our reference to these documents in our narrative of the arguments presented to us, it is quite apparent that the jobs of Mr. Gray and Mr. King were substantially different. Mr. Gray's responsibilities were very much related to the performance of the contract in question. Mr. King's responsibilities were of a much more general nature relating to the management of the branch as a whole, for which he was plainly accountable to his superiors. Having regard to that material and the other material which was before the Employment Tribunal we consider that it cannot be said that the decision of the Tribunal is perverse in the relevant sense. The decision which they reached, in our view, was one which they were entitled to reach in all the circumstances. It appears to us that there was a rational basis available to them for making a distinction, as regards assignment, between the positions of Mr. Gray and Mr. King. Accordingly, we reject the appellants' second argument based on alleged perversity. In all these circumstances, in our view the appeal must fail.