United Kingdom Employment Appeal Tribunal

BAILII case number: [1993] UKEAT 93_106_0612

Appeal No. EAT/93/106

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 6 December 1993

Before

THE HONOURABLE MR JUSTICE TUCKER

MR T S BATHO

MR R JACKSON

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L E ALLEN & CO (HW)          APPELLANTS

(1) MRS J HUNT (2) MISS A RUTH

(3) SECRETARY OF STATE FOR EMPLOYMENT          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR F GREENWOOD

PARTNER

L E Allen & Co (HW)

1 Astley Road

Thame

Oxon

OX9 3WQ

For the lst & 2nd Respondents NO APPEARANCE BY

OR REPRESENTATION

ON BEHALF OF THE 1ST

& 2ND RESPONDENTS

For the 3rd Respondent LORD MESTON

(OF COUNSEL)

Treasury Solicitor

Queen Anne's Chambers

28 Broadway

London SW1H 9JS


 


MR JUSTICE TUCKER: These are appeals by employers from two decisions of the Industrial Tribunal sitting at Reading on 21 April 1992 given in two similar applications by former employees whereby the Appellants were ordered to pay to the Respondents certain sums of money which had been deducted from wages and holiday pay in contravention of Section 1(1) of the Wages Act 1986.

Each of the first 2 Respondents was employed as a clerk/typist by a company called L E Allen & Co Ltd. That company were consultant engineers and assessors operating in the South of England and in Wales. The Respondents worked at one of the area offices at High Wycombe. Unfortunately that company failed, and on 4 February 1991 it went into liquidation. The liquidators endeavoured to continue the business or to sell it off. What they succeeded in doing was to sell off local branches as going concerns, in most cases to former employees and in at least one case - Southampton - to an outsider.

Several of the company's former employees including these two Respondents, Mrs Hunt and Miss Ruth, were owed money by the company for unpaid wages and holiday pay. There is no doubt that they are entitled to recover the sums owing but the question is from whom?

At Southampton it was apparently agreed that the Secretary of State for Employment would make the payment as he is required to do under Section 122 of the Employment Protection (Consolidation) Act 1978 on the insolvency of an employer if certain conditions are satisfied. Industrial Tribunals sitting at Bristol on 1 July 1992 and at Cardiff on 3 August 1992 reached similar conclusions in respect of five other employees.

The Industrial Tribunal at Reading, from whom this appeal comes, decided differently. They were the first Tribunal to pronounce upon the problem so far as it affected L E Allen & Co Ltd's employees. The Reading Tribunal decided that there had been a transfer of an undertaking covered by Regulation 5 of the Transfer of Undertakings Regulations 1981; that the Appellants became the Respondents' contractual employers and that they, the Appellants, were liable to make good the sums owed.

The Appellants submit that that was a perverse decision and that it cannot stand with the decisions made by other Tribunals which are indistinguishable from it. By their amended Notice of Appeal the Appellants contend:

"(1) that the Industrial Tribunal findings in paragraph 9 that the Applicant's contract of employment subsisted at the moment of transfer is contrary to its earlier findings

(2) the dismissal was not connected with the transfer of the undertakings."

Mr Greenwood, a partner in the Appellant firm, has appeared before us and we are grateful to him for the commonsense way in which he presented his case. We wish to acknowledge also the very great assistance which we have received from Lord Meston who appears for the Secretary of State as a Respondent to the appeal. Lord Meston was most helpful in outlining the facts and in defining the issues. He submits that the findings of other Tribunals can be distinguished on their facts.

The essential question in each case is, in our opinion, the reason for the dismissal of the Respondents. The evidence in the present case is that they were both made redundant by the liquidator on 28 February 1991. That appears from the Notes of Evidence and is referred to in the Tribunal's Reasons. Whereas at Cardiff the Tribunal made an express finding in the course of their decision as to the principal reason for the dismissal in each case, ie that it was the failure of the company and not the transfer of the undertaking, there was no such finding made at Reading. Indeed, there are two errors apparent on the face of the decision. First in that the present Appellants, became the Respondents' contractual employer on 28 February 1991. That event did not occur until the following day, 1 March. Second, of less importance, that the Appellants had not made a deduction of wages and holiday pay. The deduction had been made not by them but by the company, the former employers.

There is, we regret to say a third error contained in paragraph 9 of the Tribunal's reasons. In that paragraph the Tribunal refers to Regulation 5(1) of the Regulations and goes on to say:

"The Tribunal finds as a fact that the business acquired by the second respondent was a relevant transfer of an undertaking covered by Regulation 5. As the applicant's contract of employment subsisted at the moment of transfer of the business from the liquidator to the second respondent, the second respondent became the applicant's contractual employer and as such responsible for all arrears of wages and holiday pay due to the applicant."

The mistake was in finding that the contract of employment subsisted "at the moment of transfer of the business". It did not. The contract was between the Respondents and the company and it had been terminated by the liquidator on 28 February. The new contract which was between the Respondents and the firm did not commence until 1 March. But the main ground of complaint is that the Tribunal made no finding, as they ought to have done, as to the reason for the dismissal. It was important and there was an obligation upon the Tribunal to determine whether the reason expressed in the notice, ie redundancy, was a genuine reason for the dismissal or whether it was a device to get round the provisions of Regulation 5.

The Cardiff Tribunal who addressed this question found that each of the Applicants before them was dismissed by reason of redundancy and that the principal reason was the failure of the company. In our opinion, if the Reading Tribunal had addressed the same question, it is extremely unlikely that they would have reached a different conclusion. There is, it is true, a small distinction to be drawn between the cases in that at Reading the new employment commenced the next day whereas at Cardiff there may have been a short gap of indeterminate length. But we do not regard this as sufficient to cause different Tribunals to reach different conclusions on situations which are essentially similar.

In our opinion the decision by the Reading Tribunal is flawed for the reasons we have set out. It cannot stand. Normally we would remit the case to the Tribunal for further consideration but both sides agree that where as here the sums in dispute are comparatively small, where the parties have already been put to considerable expense and where there has been such delay, it would be inappropriate to take that course.

In these circumstances, and by agreement, we quash the order made by the Tribunal and substitute for it an order that the sums owing to the Applicants be paid by the Third Respondent, the Secretary of State in each case. When I say by agreement, I mean of course only in the event of us reaching the conclusion which we have reached.