Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Bartlett & Anor v Maypark Precision Castings (In Liquidation) & Anor [1995] UKEAT 425_94_1205 (12 May 1995)
URL: http://www.bailii.org/uk/cases/UKEAT/1995/425_94_1205.html
Cite as: [1995] UKEAT 425_94_1205
[New search] [Printable RTF version] [Help]
- He submitted that following the Decision in Abels, we should not follow those decisions in domestic law which purported to give effect to the 1977 Directive. It was said that Abels decided that the 1977 Directive did not apply to a situation like the present one, where the alleged transferor was insolvent.
- He submitted that in Kenmir Ltd v Frizzell and Melon v Hector Powe Ltd the Court, including the House of Lords, have held that the test as to whether there has been a transfer, was to be determined by asking whether there was a transfer of a going concern. He submitted that Maypark was not a going concern, because it was insolvent.
- He submitted that there was no factual basis for saying that there had been an agreement between Maypark and Grant as to the disposition of assets and therefore the Industrial Tribunal was right to conclude that there was no transfer.
- That it was purely an act of kindness that Grant ever employed any of the employees who were formerly employed by Maypark and that their employment could not indicate that there was a transfer, when otherwise there was not, and reliance was placed on the case of Curling.
- It was argued that Maypark owned no equipment, premises or materials. They were all supplied by Grant and therefore Maypark never carried on a business which was capable of being transferred.
- It seems to us, first, that the decision of Abels is not to the effect suggested. Abels was dealing with a case where a transfer took place during liquidation proceedings by a liquidator, in circumstances where domestic insolvency rules may apply. This is not such a case.
- The going concern test is no longer as it seems to us, the proper test to apply, having regard to more recent decisions. The proper test is whether the economic unit or business, remained the same before and after transfer, even if the transferee carries on a new business. So one is looking to see whether the business has retained its identity.
- For reasons which we have developed, there may be a transfer even where there has been no direct contact between transferor and transferee.
- While we understand that there is an issue as to whether the whole arrangements were pre-planned, so as to enable Grant to resume business with lower paid workers, even were it to be the fact that the employees were taken on by Mr Mayo in the belief that he was not obliged to take them on, has no bearing on the outcome in law.
- The submission made as to Maypark's lack of assets and that it had no business capable of being transferred, is in our view unsustainable, in the light of Rask, Dines, and the Scilly Isles cases.
At the Tribunal
THE HONOURABLE MR JUSTICE MORISON
MR J H GALBRAITH
MR E HAMMOND OBE
(2) MR A ROGERSON
(2) GRANT DIE CASTINGS (1966) LTD
JUDGMENT
Revised
APPEARANCES
For the Appellants MS T GILL
(Of Counsel)
Messrs Owen White
Senate House
62-70 Bath Road
Slough
Berks.
SL1 3SR
For the 2nd Respondents MR C R MAYO
(Director)
MR JUSTICE MORISON: This is an appeal against the unanimous decision of an Industrial Tribunal held at Reading, which decided that there had not been a transfer of an undertaking within the meaning of the regulations in the circumstances which we will describe.
The Respondents to this appeal are two companies whom we shall call "Maypark" and "Grant" respectively. The Appellants are two individuals who had been employed by Maypark, immediately prior to their dismissal in August 1993. After their dismissal, they complained to the Industrial Tribunal of `unfair selection for redundancy' and the terms of their applications are these: in relation to that put in by Mr Bartlett, he said `On the 26th August the company that I was employed by Maypark Precision Casting, stopped trading and I was subsequently made redundant. I have since found that only the name Maypark Precision Casting went into liquidation. The sand foundry which I worked in, did not stop producing casting at any time or in fact stop trading and my position was taken over by another moulder who was also working overtime. I have since found out bearing in mind the facts I have just stated, that the redundancy law was not adhered to correctly.' In his application Mr Rogerson says `On the 26th August 1993, I was made redundant along with the whole workforce of "Maypark Precision Castings". The Company went into liquidation on the 30th September 1993. The following day everybody was taken back but under the name of "Grant Die Castings". (Everybody that is except myself and three other people.) The Company carried on as normal. Everybody that qualified was given redundancy money (payable by the Government), including all the work force that was taken back. The following day I was not offered alternative employment in the new Company, although there is a 70 year old man doing the equivalent job to me in this Company. No adequate warning was given of redundancy (we were told on the 26th August). This is the second time in about 18 months that this Company has gone into liquidation, operating previously under the name of "Grant Castings".' Although Maypark only was named as a Respondent by the unrepresented Applicants in their I.T.1, in view of the terms of their applications, the Industrial Tribunal Chairman very properly considered that it would be appropriate to join Grant as a second Respondent and that was done. Because Grant were unhappy about being involved, they communicated with the Industrial Tribunal by letters, which set out the background facts more fully than the Decision itself, which we must say is not entirely easy to follow.
The facts appear to be as follows: Maypark was incorporated in 1992, in order to take over the employees of Grant Castings Ltd which went into liquidation at that time. That Company had owned a sand foundry business and it would appear that some of the assets and goodwill of that business was transferred to Grant, and the employees were transferred to Maypark. It was accepted that the employees on becoming employed by Maypark, had continuity of service, so that their service with Grant Castings Ltd counted. Thus the Appellants had several years of continuous employment with Maypark at the date of their dismissal in August 1993. Maypark is a small private limited Company which has no tangible assets. It owns no equipment, it owned no premises, it had no formal rights to the use of premises. All the work which Maypark's employees did was done wholly for and on account of Grant's sand foundry business. The Industrial Tribunal described the position as Maypark working on purely sub-contractual work; but it is clear that the work was wholly done for Grant. The arrangements under which the sub-contracts were made is not entirely clear, but for present purposes we do not need to explore them further. Grant was Maypark's sole source of funds. Productivity was low, and the Directors of Grant determined not to continue to fund Maypark. In other words, Grant had decided not to continue to employ anyone through Maypark, but Grant's business was not disposed of. Thus without warning on 26 August 1993, all of Maypark's employees were dismissed by reason of redundancy, and all were made redundancy payments by the Department of Employment, as the Secretary of State accepted that Maypark was insolvent and that the provisions of Section 106(1)(b) of the 1978 Act were satisfied.
On 14 September 1993, about three weeks after the dismissals, most of the workforce of Maypark, that is, all but five, previously employed by Maypark, were re-engaged by Grant, albeit apparently as if the business was a new one. Grant continued thereafter to make castings at the same place as it had done before, but now employed the labour force itself, instead of using Maypark as either a service company and/or a sub-contractor. The reasoning of the Industrial Tribunal is short, they find in paragraph 18 of the Decision:
"... there was no transfer of any good will or any financial consideration. Moreover, the equipment and the place of work of Maypark had been supplied by the second respondent and was owned by the second respondent in the first place. We find, therefore, that we agree with the decision of the Department of Employment that there was no relevant transfer here."
If we might say so, on behalf of Grant, Mr Mayo has argued with considerable skill a number of points. I may summarise them I hope in this way:
In those circumstances, it was argued that the appeal was vexatious and frivolous, because it was without merit. It was said that this was a matter of fact entirely for the Industrial Tribunal and that in effect no point of law was raised on the appeal. We shall return to those arguments in due course.
On behalf of the Appellants, Ms Gill in a substantially written submission, although amplified by her orally, relies in particular upon a case decided by this Tribunal, after the decision in the instant case, namely Scilly Isles Council v Brintel Ltd [1995] ICR249.
It seems to us that the Industrial Tribunal misdirected themselves. In the first place, the Industrial Tribunal do not appear to have identified with any precision, the business or economic activities of Maypark and Grant before and after the alleged transfers. If as appears to be the case, Maypark was simply doing Grant's business at Grant's premises, using Grant's equipment, the fact that the premises and equipment were not transferred to Grant when Maypark went into liquidation, says nothing about whether there has been a transfer. Equally, Maypark's goodwill, if any, was the right to do Grant's work as a sub-contractor. When Maypark was declared insolvent, or ceased to carry on trade, the right to do Grant's work reverted to Grant. The absence of a transfer of goodwill, again says nothing on the facts of this case. Maypark was conducting an economic activity or business, namely either the provision of staff to service Grant's business or the carrying out of a sand-castings business at Grant's premises and using their equipment. Either is an identifiable business; capable of being transferred within the meaning of the regulations. The question is what happened to that business when Maypark ceased to carry on business and went into liquidation? Effectively, what has happened, is that the sand-castings business previously done by Maypark, has been taken directly back under Grant's control. Whether the part contracted out was just a provision of services or the doing of work under a sub-contract, in either event, Grant received it back after the contractual arrangement with Maypark came to an end on 26 August 1993.
The reason why Maypark did not have any assets was because they all belonged to Grant in the first place. This case is no different from `A' contracting out the running of its canteen to `B'. `B's employees work on A's premises and use `A's' equipment. So here, Maypark's employees worked at Grant's premises, using Grant's equipment. When `B's contract comes to an end, "the business", or "economic entity", carried on by `B' reverts to `A'. Both when the contracting out occurs and when it ceases, the "economic entity" namely the employment of canteen staff to service the canteen or the work carried out on the facts of this case by Maypark, remains the same. In each case there is a transfer of an undertaking. see Rask [1993] IRLR 133, Dines [1994] IRLR 336 Court of Appeal and the Scilly Isles Council v Brintel Ltd [1995] ICR 249. The fact that there was a break of some three weeks before the castings business came back into operation, does not affect the legal position. A transfer may occur in a number of stages; by a series of transactions over a period of time. In such a case, the dismissals may be effected at stage one. Yet under the regulations, the transferee becomes the new employer upon the completion of the transfer, which may be several stages down the line. In such a case, although the position is not entirely straightforward, during the inter regnum between dismissal and transfer, it would seem the transferor remains the employer, and that the dismissal is retrospectively deemed to have taken place when the transfer is completed. However, nothing is likely to turn on this point for present purposes, as the employees will be able to say that their Contracts of Employment were transferred to Grant, as from 14 September 1993.
It is to be noted that in Spikers [1986] European Cases Reports page 1119 the Court determined that even though the old slaughterhouse business had entirely ceased, so that there was no longer any goodwill in the business, nonetheless there was a relevant transfer when the alleged transferee started up an identical but new business. We drew attention to this in the Scilly Isles case page 256a-c and page 255b, and to the need for Tribunals to adopt "a realistic and robust view" as advocated in Spikers by Advocate General Sir Gordon Slynn. Grant argues that there can be no transfer, because all the employees were paid a redundancy payment and the terms and conditions upon which employees were recruited in September, were very different from those in force during their employment with Maypark. In our view, this argument is not sound. A company cannot contract out of the regulations, nor can it forestall their application, by acting as if they did not apply, whether through lack of proper advice or otherwise.
Whilst the Tribunal will always wish to consider whether any and if so, how many of the employees of the alleged transferor were taken on by the transferee, see the Scilly Isles case at page 256g, the fact that a transferee did not appreciate that the regulations applied, or sought to evade their application, cannot be relevant to the issue of their application. In very many of the reported cases, and this may be one of them, the transferee may well have been surprised to be told by a court, that by operation of law, he has inherited or acquired the responsibility for people he never intended to employ.
I now turn to the specific arguments which I have referred to, which were raised before us by Mr Mayo:
Finally, we wish to emphasis that the absence of any identifiable contract of transfer, does not exclude the operation of the regulations, Dines and Scilly Isles page 257e-258a. In conclusion therefore, we respectfully disagree with the Industrial Tribunal. Whilst not entirely clear, the facts are sufficiently identifiable, to enable us to substitute a finding that the regulations did apply, so as to transfer the Contracts of Employment of those people who were employed by Maypark as at 26 August, to Grant as from 14 September 1993. Therefore, on those grounds, we reject the submission that this was a frivolous and vexatious application and allow the appeal.