United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	IN PERSON
For the Respondents	NO APPEARANCE BY OR REPRESENTATION ON BEHALF OF FIRST OR SECOND RESPONDENT


 


JUDGE J HULL QC: This is an appeal to us by Mr Robert Anthony Norris of Bristol. The Respondents to the appeal are two gentlemen, Mr Jeans and Mr Pascoe, who used to work as lorry drivers for Mr Norris in his business and also a firm called Danzas which, says Mr Norris, has taken over an identifiable part of his business.

The story requires me to go back a little way. Mr Norris founded his business in 1979. He bought lorries. There were two at the material time, but at earlier times there may have been more than that. He also, I think, had one or two to spare. His business was from the start wholly dependent on a firm, which is apparently a national firm which is fairly well known called Danzas (UK) Ltd. It trades under various names. It has apparently a nation-wide business and the way in which Mr Norris' business worked was this. He provided the lorries, which he owned, and the two drivers, Mr Jeans and Mr Pascoe, to work at all times for Danzas.

Mr Jeans was first employed in 1986, Mr Pascoe from June 1987 and they drove these lorries, which we were owned by Mr Norris, on Danzas' business. Every day Danzas said where the drivers were to drive and they did so. Mr Norris would, occasionally and incidentally, carry on driving himself. He regarded his business as split into two. There was this business for Danzas, which was essentially long-haul, and then there was an express business which he operated himself. He said that they were identifiable separately.

There came a time when the contract with Danzas fell to be renewed. Danzas was saying that they wanted Mr Norris to put new trucks into the business; that they did not want his older ones to continue to operate. That led Mr Norris to put in a quotation for the future, which included what he thought was an appropriate contribution to the capital cost of renewing his vehicles. The price that he charged for his services in previous years had not changed for some time and he felt therefore justified, in the circumstances, in raising his tender. That was not acceptable and in November 1995 Danzas said that they did not wish to renew the contract.

The contract not being renewed, Mr Norris thought it right to give notice of redundancy, notice of dismissal, to Mr Jeans and Mr Pascoe. In fact, what those two gentlemen did was to apply (they knew that Danzas would still wish to carry on deliveries of course) to Danzas and Danzas took both of them on. That was a very sensible solution from the point of view of Mr Jeans and Mr Pascoe, provided the terms were satisfactory; and from the point of view of Danzas, because of course these men were very familiar with the work that Danzas wanted done. So very shortly after the notice had been given on 24 January 1996, the employment came to an end on 2 February and thereafter on 5 February they started work with Danzas.

We must now turn to the decision of the Industrial Tribunal. What happened was that Mr Jeans and Mr Pascoe applied to Mr Norris for their redundancy payments. He did not pay them because he said what had happened was that there had been a transfer of the undertaking and therefore their employment continued. He said:

"My undertaking was a separate identifiable entity and it was transferred to Danzas and the two drivers went with it. So they are entitled to regard themselves as continuously employed, indeed, bound to. There has been no redundancy in spite of what I told them and their employment continues. I owe no redundancy payment."

Needless to say, the proper Respondents to that, as well as Mr Jeans and Mr Pascoe, were the new employers, Danzas.

So the case was, in form, an application by Mr Jeans and Mr Pascoe for redundancy payments, with Mr Norris being the First Respondent and Danzas being the other Respondent. The case was heard by Mr Sara, a Chairman of considerable experience, at Bristol, with his two industrial members on 16 August 1996. They gave their Summary Reasons. Very shortly thereafter they were asked for Extended Reasons and they have given those.

The Tribunal set out the facts which I have already referred to and they said, at paragraph 5:

"The reason why Danzas terminated the agreement [with Mr Norris] was because they had asked him to quote for a new contract with new vehicles and his quotation was unacceptable to them. They were looking around for an alternative way of providing vehicles for their depot and they made enquiries of other contractors. By December they had discovered that company owned vehicles were available which could be moved down from their Manchester depot and they decided to use their own vehicles and to employ drivers to drive those vehicles. In December both of the applicants decided to apply for the jobs."

And they say how they were accepted. They were told they had got the jobs, but on 24 January 1996 they say that Mr Norris sent them both formal letters saying:

" ... it is with much regret that I have to make you redundant. Your employment will terminate on Friday 2nd February 1996."

And they say Mr Norris told them, the Tribunal:

" ... the reason for the delay between 1 November 1995 when he received notice from Danzas and 24 January 1996 was that he was not sure what was happening and that he still did not know that the applicants had been taken on by Danzas. "

He told us also that, unhappily, there was a family tragedy at this time when he lost his father.

Then the Tribunal turned to consider the law. They quoted from the Transfer of Undertakings (Protection of Employment) Regulations 1981. They say:

" ... these Regulations apply to a transfer from one person to another of an undertaking situated immediately before the transfer in the United Kingdom or a part of one which is so situated."

The position there is that if there has been a transfer of an undertaking there is what, in legal terms, is a statutory novation. The contracts of the employees, in particular, continue so that they are not dismissed. They continue with the new employer and the undertaking has been transferred. So of course the effect of that is that there is no redundancy and, indeed, if there is a dismissal simply because of the transfer, that is automatically an unfair dismissal.

The Tribunal continued. They considered the authorities, which helped to construe the Regulations, at paragraph 7:

" ... it is clear that we have to decide whether the part of the undertaking alleged to have been transferred is a separate economic entity."

And they quoted from various authorities where courts have said what is or is not a separate entity. They said, after reviewing authorities in the European Court and elsewhere:

"Finally, on the authorities, we have the case which is close to the second respondents' heart [Mr Norris] of Farmer v Danzas (UK) Ltd [the same Danzas] heard by the Employment Appeal Tribunal on 6 October 1994 which is unreported but is summarised in IDS Brief of December 1994 at page 5. There, although it has superficial similarities, there were differences because the company was running a service which they called the Eurapid service by means of a company called F Ltd which was run by Mr F and which operated the whole service and, again, the company decided to take this in-house. They terminated the arrangement, required F Ltd to cease trading and took on F and other people from his business taking on F as manager. It was held that there was a relevant transfer. Clearly, the Eurapid service was an identifiable and separate undertaking as, indeed, was F Ltd's business and the Employment Appeal Tribunal held that the fact that shortly after the transfer it was absorbed into the respondents' general business did not prevent it from being a transfer of a relevant transfer [they must mean a relevant transfer of a business] despite the clear statements in Brintel that the economic entity had to retain its separate existence after the transfer."

Pausing there, certainly those are differences of great importance. The principal was taken on with his men and his company was required to cease trading; clear indications that whether it was an entity or not, that business was to come to an end in Farmer's hands and to be transferred as a whole to Danzas.

Then the Tribunal reached their decision. They say, at paragraph 8:

"That is the law as we understand it and in trying to apply that to the facts we have to look at whether these two contracts which existed prior to their termination could be seen as a separate economic entity. They were not, as has been pointed out, the whole of Mr Norris's business and it is helpful to try and set out what they were."

Then they refer again to the decided cases. They asked: How would you describe the alleged undertaking in this case? Mr Norris said that it was his contract business, but it seems to us that that does not have any great separate identity, there was no separate route for either of these lorries. There was no continuation of the same vehicles. It seems to us that these two contracts never had any separate identity and that they were always part of the wider operation.

Again, pausing there, what happened to the lorries which Mr Norris had owned was that for a day or two they were used by the drivers when they were working for Danzas, but then they were returned to Mr Norris and he sold them and, of course, was free to carry on his business and did, to a limited extent, carry on part of his business.

The Tribunal then go on, at paragraph 9:

"Even if we are wrong about that it seems to us that following the termination of the one and the employment of the applicants by the second respondents that any such identity did not survive that transfer. All that happened as the applicants went over to this new business was that they were absorbed into the new system, driving vehicles provided by Danzas, different from the vehicles previously provided by Mr Norris and driving them as required by Danzas. In those circumstances we have come to the conclusion that there was no relevant transfer and that therefore the applicants were dismissed by reason of redundancy and are entitled to redundancy payments from the first respondent."

So that was their decision. Industrial Tribunals are, as it has been put by the highest courts, the industrial juries. Parliament has said that they alone are the judges of fact. We have a quite separate duty which is to consider whether the Industrial Tribunal has made any error of law. So we have read the decision, all of us, both before coming into our hearing today and, of course, with Mr Norris's assistance we have looked at it again.

We have to say, is there any error of law shown there? Quite clearly, the Tribunal has to look at all the facts and arrive at their decision on whether there has been the transfer of an undertaking. They did refer to the exact words of the Regulations. They referred to the decisions, the most important decisions and the ones which they thought were most helpful to Mr Norris and took the matter as far as they could, in Mr Norris's favour. They did not quote, but perhaps they might have quoted and we certainly will, from what is said in the textbook Harvey on Industrial Relations and Employment Law, volume 1, at paragraph 83 of section F. There the text book writers are referring to all the decisions which the Tribunal referred to in this case and they say in conclusion:

"In a way the essence of all this was probably captured by Lord Denning MR in Lloyd v Brassey: 'Does the business remain the same business but in different hands'. In the final analysis, this is a question of fact and degree for the industrial tribunal. It follows that cases in this area are indicators not precedents and there is plenty of scope for industrial tribunals to come to different decisions on similar facts."

We respectfully agree with what is said there and, of course, with what is said by Lord Denning. This Industrial Tribunal was, in our view, amply entitled to reach the decision which they did. We have noted certain factors which one might look for in a case of a transfer of an undertaking. Is there some sort of agreement between transferor and transferee? - probably with financial provisions, the price of the transfer, the price of the goodwill and so on - the price of any goods transferred; none here. There is usually some transfer of property of the undertaking, for example lorries or other articles; none here. There is usually some understanding and consultation. Certainly, there ought to be with the workers. "Do you agree to be transferred? Are you content with this arrangement?". The employer says, "I am making this arrangement to transfer the undertaking. Do you want to go with the transfer? You will want to talk to me about it perhaps. You will certainly want to talk to the new person about it". Nothing like that. No individual matter can be conclusive, but those are the sort of matters that the Tribunal might have looked for. They looked at other matters too here. They found that there was no transfer of an undertaking within the Regulations.

Mr Norris says that that is wrong. He has to say, of course, if he can possibly do so, that it represents an error of law. We have looked very carefully to see whether any of us can see any error of law here and we have failed, even with Mr Norris's assistance, to see any error of law. It will not do to say that this Tribunal might have reached a different decision and it certainly does not do to say, "well a different Tribunal might have reached a different decision". That is in the nature of all tribunals of fact, whether they are juries or industrial tribunals or, indeed, judges at first instance; one cannot say that on the same evidence they will always arrive at the same conclusions.

We simply have to say that since we cannot find any error of law here, we cannot allow the appeal and we have to dismiss it.