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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> National Union Of Teachers & Ors v St Mary's Church Of England (Aided) Primary School & Ors [1994] UKEAT 905_93_2503 (25 March 1994)
URL: http://www.bailii.org/uk/cases/UKEAT/1994/905_93_2503.html
Cite as: [1994] UKEAT 905_93_2503
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At the Tribunal
Judgment delivered on 2 November 1994
Before
THE HONOURABLE MR JUSTICE MUMMERY (PRESIDENT)
MRS P TURNER OBE
MISS D WHITTINGHAM
(2) R FIDGE (3) D A CHILDS-CLARKE (4) A J ERMELLINO
(2) KENT COUNTY COUNCIL (3) TEMPORARY GOVERNING BODY
OF ST MARY'S C OF E (AIDED) PRIMARY SCHOOL
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellant MR G CLAYTON
Solicitor
Hamilton House
Mabledon Place
LONDON WC1H 9BD
For the Respondents (1st and 3rd) MR J R McMANUS
Messrs Lee Bolton & Lee
1 The Sanctuary
Westminster
LONDON SW1P 3JT
For the Respondent (2nd) MR O HYAMS
(of Counsel)
County Solicitor
Kent County Council
County Hall
Maidstone, Kent
ME14 1XQ
MR JUSTICE MUMMERY (PRESIDENT) This appeal raises the question whether the Acquired Rights Directive EC77/187 ("the Directive") is enforceable against the governing body of a voluntary aided school, as an emanation of the State within the meaning ascribed to that expression by the European Court of Justice in Foster v. British Gas Plc [1991] 2 AC 306.
The appeal is from a decision of the Industrial Tribunal held at Ashford on 11th and 12th October 1993. For Reasons notified to the parties on 20th October 1993 the Tribunal unanimously decided, on the hearing of a preliminary issue, that the Governing Body was not an emanation of the State for the purposes of the Directive. By a Notice of Appeal dated 28th October 1993 the Applicants in the proceedings, the National Union of Teachers ("NUT"), Mr Roy Fidge and two other teachers, appeal to this Tribunal on the ground that the Industrial Tribunal erred in law in reaching that conclusion.
The Facts
The Tribunal never reached the stage of hearing evidence. The Tribunal stated in paragraph 4 of its Decision that, for the purpose of deciding whether the NUT or any of the individual applicants could claim to enforce the Directive against the Governing Bodies, the Tribunal proceeded on the basis of the following undisputed facts -
(1) At all material times the individual Applicants were members of the NUT;
(2) Until 18th April 1993, when they were all dismissed, the Applicants were teachers at St Mary's Church of England (Aided) Junior School ("the Junior School") for children between 7 and 11. The Respondents claim to have dismissed the individual Applicants by reason of redundancy.
(3) The Junior School was situated in Swanley. In adjoining premises there was a County School, St Mary's Infants School ("the Infants School"), for children between 4 and 7. (The Junior School was a Church of England voluntary aided school. Its existence had been promoted by the Diocesan Board of Education of the Diocese of Rochester).
(4) After a lengthy decision-making process, the Kent County Council, as Local Education Authority, published a notice on 14th November 1991 proposing the closure of both of the Infants School and the Junior School. On the same day the Diocesan Board published a notice proposing the creation of a new voluntary aided school to be known as St Mary's Church of England (Aided) Primary school ("the New School"). It was to be an "All through" school for children between the ages of 4 and 11.
(5) On 15th July 1992, the Secretary of State for Education gave approval for the closure of the Infants School and the Junior School and for the establishment of the New School.
(6) On 24th July 1992, the Secretary of State modified the previously arranged implementation date for the closure of the Infants and Junior Schools and the opening date of the New School to 19th April 1993.
(7) A temporary governing body of the New School was established pursuant to S.12 and Schedule 2 of the Education (No.2) Act 1986. The temporary governing body first met on 4th September 1992.
(8) Thereafter, the individual Applicants all applied for posts at the New School. Mr Fidge, who had been Headmaster of the Junior School, applied for the post of Headmaster. The other individual Applicants, who had been classroom teachers at the Junior School, applied for similar posts at the New School. None of their applications were successful. On 18th April 1993, all the individual Applicants were dismissed by reason of redundancy.
The Proceedings
The proceedings before the Industrial Tribunal took the following course.
(1) On 4th February 1993, NUT presented an application to the Tribunal complaining of failure to consult with their representative regarding the transfer of the undertaking. The NUT represented teachers at the Junior School. The details of the complaint referred to the merger of the Junior and the Infants School to form the New School and complained that the governing body of the Junior School had failed to acknowledge the employee teachers' rights to transfer to the new employer and had failed to consult with Union representatives on the measures envisaged in relation to the employees, as required by the Directive. The Respondents included the Kent County Council ("the KCC"). The complaint against the KCC was that it was the employer of teachers currently employed to work at the Infants School and it had similarly failed to consult and acknowledge the rights of teachers in that school to transfer to the employment of the governing body of the New School.
(2) By a Notice of Appearance dated 19th February 1993, the Governing Body of the Junior School disputed the complaint. It denied that it had failed to acknowledge the employees' right to transfer or had failed to consult with the Union representatives. The bases of the denial were that -
(i) No relevant transfer had taken place. The Junior School closed as a result of the exercise of statutory powers and the New School commenced existence.
(ii) The Directive was not relevant as it did not have direct effect against the governing body of the Junior School. Even if the Directive did have direct effect, it would only be enforceable against an emanation of the State. It was denied that the governing body of the Junior School was an emanation of the State.
(3) On 13th May 1993, Mr Fidge and the other two individual Applicants presented applications to the Industrial Tribunal. They complained of unfair dismissal. According to the details of their complaint, which set out the facts summarised above, they were given notices of dismissal purporting to be by way of redundancy to take effect on 18th April 1993. They claimed that -
(i) What was formerly identified as two separate units, the Infants School and the Junior School, was now one unit under single management. In reality there had been no significant change and no defined substantial reason for dismissal.
(ii) The amalgamation of the two schools by reason of the closure of the Infants School and the Junior School and the simultaneous establishment of the New School constituted a transfer of an undertaking within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("the 1981 Regulations") and/or the Directive.
(iii) In dismissing them the Respondents had acted in breach of paragraph 8 of the 1981 Regulations and Article 3 of the Directive.
(iv) Even if there was a redundancy situation, the dismissal was unfair due to procedural unfairness, including a failure to consider whether there was an alternative to dismissal, such as whether other work was available.
(4) By Notice of Appearance dated 11th June 1993 the Governing Body of the Junior School and the temporary Governing Body of the New School disputed liability. The case put forward was that the Applicants were made redundant by the KCC. The Notice of Appearance was attached to a document which set out the facts summarised above and various points were taken by way of defence. In particular it was alleged that there was no amalgamation of the old schools. They ceased to exist as a result of statutory procedures and the New school was created in their place. It was denied that there was any transfer of an undertaking from the old schools to the New School. There was no transfer from the old governing bodies to the New. It was denied that the 1981 Regulations applied in any event, because the schools and any undertaking in relation to them were not in the nature of a commercial venture. It was denied that there was any breach of paragraph 8 of the 1981 Regulations because the Applicants were not dismissed by reason of any transfer. They were made redundant as the school at which they were employed ceased to exist. It was denied that the Applicants were entitled to rely on the Directive. The Notice of Appearance stated:
"It is denied that the Directive is directly effective, or that either respondent is an emanation of the State against whom a directly effective directive can be relied upon or that there was any relevant transfer."
(5) By a letter dated 26th July 1993, the parties were notified that the Chairman of the Tribunals had considered requests of the parties in relation to the conduct of the hearing and decided that the issue whether or not there was a transfer of an undertaking would be heard first. It was stated that -
"...the case can then continue (or not as the case may be) in the light of the Tribunal's finding in that issue."
(6) According to paragraph 5 of the Full Reasons of the Tribunal it heard legal argument covering the following issues:
(i) Do the 1981 Regulations apply to the exercise of the procedures under Sections 12 and 13 of the Education Act 1980?
(ii) Does the Directive have direct effect?
(iii) If the Directive has direct effect, can it be relied on against the governing body of a voluntary aided school?
(iv) Was there a transfer of undertaking in the present case?
The hearing lasted for two days and it appears from the decision that the Tribunal heard detailed arguments submitted on behalf of the NUT, and the individual Applicants, the governing bodies and the KCC.
The Decision of the Tribunal
Although the Tribunal heard argument on all the points set out above, it did not find it necessary to reach a decision on them all. The Tribunal dealt with the points in the following way:
(1) The 1981 Regulations, in their unamended form, had no application to the case because the definition of an undertaking in Regulation 2(1) did not include "any undertaking or part of an undertaking which is not in the nature of a commercial venture".
(2) The applications therefore had to be based on the Directive. The Tribunal assumed, without deciding, that the Directive was capable of having direct effect. If it had been necessary to make a decision on the point it would have decided that it was capable of having direct effect.
(3) The Directive was only capable of enforcement against the State or an organ or emanation of the State. The governing body of a voluntary aided school was not an emanation of the State. The governing body of a voluntary aided school was made responsible by statute for providing a public service. The Tribunal assumed, without deciding, that education was a public service under the control of the State. But the Tribunal came to the conclusion that the Applicants had not demonstrated that such a governing body had special powers beyond those which resulted from the normal rules applicable in relations between individuals.
(4) In those circumstances the criteria for identifying a State entity, as laid down in Foster's case (supra), had not been satisfied and the Applicants were not entitled to rely on the Directive as giving them rights.
(5) In those circumstances it was not necessary for the Tribunal to decide whether there had in fact been a transfer of an undertaking.
For all those reasons the Tribunal dismissed the applications of the NUT and the individual Applicants against the governing bodies.
The Preliminary Issue Procedure
Before we deal with the arguments advanced on this appeal, we wish to say a few words about the procedure for determination of a preliminary issue adopted in this case. The preliminary issue was identified in the letter of 26th July 1993 as whether or not there was a transfer of undertakings. It is not in dispute that an Industrial Tribunal has power to order the trial of a preliminary issue or question. Care must, however, be taken in acceding to such a procedure, even if all the parties favour it. In deciding whether or not to order the trial of a preliminary question or issue of law, Industrial Tribunals would be well advised to follow the guidance in decisions on Order 33, Rule 3 of the Supreme Court. Under that Rule the court may order any question or issue, whether of fact or law, or partly of law to be tried before the trial of the matter. There are, however, dangers in taking what looks at first sight to be a shortcut but turns out in fact to be productive of more delay and costs than if the dispute had been tried in its entirety and the questions of law then decided in the context of the facts found. The isolation of what appears to be a discrete issue for preliminary determination may have the unfortunate effect of isolating a question for argument and decision which is inextricably bound up with all the other aspects of the legal and factual dispute.
With the benefit of hindsight, it might be thought that it would have been preferable in this case if all the questions of law and fact had been heard and decided together. The position which now exists is far from satisfactory. Although the Tribunal directed that the issue of a transfer of undertaking should be heard first, the Tribunal has not decided all the aspects of that issue. The Tribunal did not decide whether there was in fact a "transfer"; or whether the provisions of the Directive were sufficiently clear, precise and unconditional to be enforceable against the State or an emanation of the State at the instance of the NUT and the Applicants. The ultimate decision of the Tribunal was confined to the only issue argued on this appeal, namely whether the Directive had direct effect as against the Respondent governing bodies. There is an air of unreality about deciding the dispute simply on one ground. The issues as to whether there was a transfer within the meaning of the Directive, whether the terms of the Directive are sufficiently clear and precise to be enforceable and the question against whom they are enforceable are all to some degree interconnected questions. We would have preferred to decide the issue on whether the governing bodies of the schools were emanations of the State in the full context of the whole dispute rather than as a single issue or sub-issue isolated from the context of the whole case.
Common ground on the Appeal
On the hearing of the appeal, at which very detailed submissions were made on behalf of the NUT, the governing bodies and the KCC, certain points of common ground emerged.
(1) There was no "undertaking" within the meaning of the 1981 Regulations before they were amended as from 30th August 1993 by the Trade Union Reform and Employment Rights Act 1993.
(2) The amendment to Regulation 2(1) of the Regulations affecting the scope of "undertaking" in the Regulations did not have retrospective effect and therefore does not affect this case. In future cases it might not be necessary, in view of that amendment, for persons in the position of the Applicants to rely on the Directive, as distinct from the 1981 Regulations.
(3) There was, on the facts of this case, an "undertaking" within the meaning of the Directive.
The dispute remains, as argued in the Industrial Tribunal, whether the governing bodies of the Junior School and the New School are an emanation of the State or a State entity against whom the provisions of a Directive may have effect. On this point it is common ground that the proper test whether a body is an emanation of the State is as laid down by the ECJ and applied by the House of Lords in Foster v. British Gas Plc (supra). It is common ground that in the following passage of that decision the requirements or criteria for determining that question are cumulative and not alternative. The crucial passage at p.313A reads as follows:
"... A body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service under the control of the State and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals is included among the bodies against which the provisions of a Directive capable of having direct effect may be relied upon."
On that question we have reached the conclusion that the NUT and the individual Applicants have not identified an error of law in the decision of the Industrial Tribunal. We shall, therefore, dismiss this appeal. Before stating our reasons for that decision, we shall summarise the submissions made on that point on behalf of each of the parties.
Submissions of the Applicants and the NUT
It was submitted on behalf of the Applicants and the NUT that the governing bodies are emanations of the State for the following reasons:
(1) The educational service they provide within the area served by the school is under the control of the State. The teachers in the schools, although employed by the governors, are paid out of public funds administered by the Local Education Authority. Public money is spent in the discharge of a public service.
(2) The governing bodies have powers conferred on them by statute, for the purpose of discharging the duty and responsibility of providing a public service of education. They are "special powers" within the meaning of the judgment in Foster.
(3) Voluntary Aided schools are not just regulated by the State. They are an integrated part of the State school service or system. Through them, as well as through County Schools, the State makes public service provision of education. They have a status in the State system and the powers conferred on them by the State are by reference to that status.
Submissions of the Governing Bodies
It was submitted by Mr McManus that the governing bodies are not emanations of the State for the following reasons.
(1) There is a fundamental distinction between County Schools, which are established by Local Authorities, and voluntary schools which, through maintained by the Local Authority, are not established by them.
(2) Like the governing bodies of independent schools, the governing bodies of voluntary schools are given powers by the Instrument and Articles of Government to conduct the government of the school. They are exclusive or special powers in the sense that only those governors can conduct the government of that school. The powers of management of the school are not, however, State powers or State-type powers and are therefore not "special powers" in the sense used in the decision in Foster, where, on the facts, only British Gas Corporation could supply gas. The powers of the governing body are not made "special" by the fact that the school is maintained financially by the Local Education Authority. Funding is a separate matter from "special powers". Independent schools derive financial benefits from public money (for example, under the Assisted Place Scheme under S.17 of the Education Act 1980), but that does not make them an emanation of the State.
(3) Although it is not disputed that education is a "public service", it is disputed that the governing body is under the control of the State in the sense used in the Foster case. It is control of the body, not of the service it provides, which determines whether a body is an emanation of the State. The fact that the Secretary of State may take action if the governors behave unlawfully (for example, under S.68 and 99 of the Education Act 1944) does not make the governing body an emanation of the State any more than any other body subject to legal control of the State in respect of its unlawful actions or its failure to observe the law.
(4) Even if control of the service, rather than of the body which provides it, is the test of a State entity, the service of education, even in the maintained sector, is not under the control of the State. State powers of intervention are limited to instances of illegality. The concept of partnership between the Secretary of State, Local Education Authorities, the governors and managers of individual schools and parents (as described in the Thameside case [1977] AC 1047 at 1063B) is more appropriate to describe the provision of the service of education than the concept of State control.
(5) The Directive does not have direct effect. The European Court of Justice has not ruled that it does. The terms of the Directive are not sufficiently precise and unconditional to be capable to be having direct effect. There is uncertainty as to the identity of the person liable eg. whether the transferor is liable after the transfer (Article 3(1)). The governing body of the old school is not a transferee nor is the governing body of the New School. All that has happened is that the old school has been closed by approval of the Secretary of State and the New school has been established by the approval of the Secretary of State of quite separate proposals.
Submissions of the KCC
The KCC made the following separate submissions:
(1) The KCC concedes that the governing body of a voluntary aided school is responsible, pursuant to a measure adopted by the State, for providing a public service.
(2) Neither the governance of the school nor the service of education provided is under the "control of the State".
(a) Control of the governing body
The control exercised by the State under sections 68 to 99 of the Education Act 1944 is essentially different from that control exercised by the State in relation, for example, to the British Gas Corporation. Those statutory provisions only apply where the governing body of a school has acted, or proposes to act, unreasonably.
(b) Control of the service of education
The main relevant control exercised by the state in relation to the service of education provided by the governing body of a voluntary aided school is that exercised in relation to the curriculum, via the national curriculum: see sections 4 and 10 of the Education Reform Act 1988. Control of the curriculum is, however, shared by the Secretary of State with the governors of the school, the Local Education Authority, the headteachers and the teachers of the school. The concept is one of partnership rather than State control of the service.
(3) Special powers
The governing body of a voluntary aided school has no "special powers" beyond those which result from the normal rules applicable in relations between individuals. The only power in education akin to the power of British Gas Corporation is that of requiring a pupil to attend school. That power is vested in the Local Education Authority which may prosecute the parent of a child of compulsory school age for failing to ensure attendance of the child at school. That power is not vested in the governing body of a voluntary aided school: see sections 198 to 201 of the Education Act 1993.
(4) The powers which a governing body has are specific, but not special: for example, collective worship in the school under S.6(3)(b) and S.6(5) of the Education Reform Act 1988. The powers are not beyond the normal rules applicable in relations between individuals.
Conclusions
We have considered all the different ways in which the arguments have been deployed by the three parties to the appeal. As already stated, we have reached the conclusion that the Applicants and the NUT have failed to establish an error of law on the part of the Industrial Tribunal in its decision that the Directive cannot be enforced by the Applicants, as private individuals, against the governing body of a voluntary aided school. Our reasons for this conclusion are as follows:-
(1) The rationale for the doctrine that provisions of a Directive, which are unconditional and sufficiently precise, may have vertical effect is that the State, to whom the directive is addressed, cannot properly rely, as against an applicant, on its own failure to implement the Directive addressed to it.
(2) The test of the ECJ for determining whether the body, against whom it is sought to enforce the Directive is an emanation of the State consists of a tripartite, cumulative set of criteria namely,
(a) Has the body been made responsible pursuant to a measure adopted by the State for providing a public service?
(b) Is that service under the control of the State?
(c) Does the body for that purpose have special powers beyond those which apply between individuals?
(3) The provision of education in voluntary aided schools is a "public service". But, at a voluntary aided school, that service is provided by the governing body, not by the State or pursuant to its measures or under its control. The governing body is not under the control of the State. It exists by virtue of the constitution in the form Articles of government made under the authority of legislation. The governing body does not have a monopoly of education. It is not an agency of the State. The provision of State funds is not determinative of control. The State has no right to require the governors to adopt an employment position (for example, as stated in the Directive) which is not incorporated into the general law by legislation of the Member State. It is for the governing body to adopt an employment position in conformity with the general law applicable as between individuals and non-State bodies. It has no special powers.
(4) The cases in which a body has been held to be an emanation of the State for the purposes of the doctrine of direct effect are far removed from the present case: see for example, the decision in Marshall [1986] ICR 335 in which an Area Health Authority was held to be an emanation of the State; and Foster (supra) in which the British Gas Corporation was held to be an emanation of the State cf. Rolls Royce Plc v. Doughty [1992] ICR 538 in which it was held that Rolls Royce Plc was not an emanation of the State.
(5) The State is the supreme civil power of a nation. Under its law and through its institutions, it is vested with ultimate effective political control of the organisation and machinery of the government of its affairs, both internal and external. The State and its agencies have special legal powers, exceptional in quality and degree and different from powers exercisable by individuals and non-State bodies. The powers exercised in the organisation and running of voluntary aided school are a far cry from State powers of this kind. Its Governors' powers are not exceptional in a relevant sense. They are only special in the sense that those who govern schools have powers which pupils, teachers and parents do not have. The governing body of a voluntary aided school exists within a State, providing a public service, but it is not an emanation or agency of the organisation of the State. It is under the control of the State only in the same sense that other citizens are. Like the Industrial Tribunal, we have been unable to find any "special powers" in the sense used in the case of Foster. So far as the Articles of government are concerned they provide that the conduct of the school, its internal organisation and management, should be under the direction of the governing body. The governing body, though financially maintained by the Local Education Authority, is not established or controlled by it. We have been unable to find any "special powers" of the governing body in the relevant education legislation ranging from the 1944 Act to the 1993 Act.
For all those reasons this appeal is dismissed.