United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR S SYMONDS (of Counsel) Tameside Welfare Rights Unit 200 Market Street Hyde Cheshire SK14 1HB
For the Respondents	MR N GRUNDY (of Counsel) Messrs Hammond Suddards


 


JUDGE BUTTER QC: This is an appeal by Miss Haydock in respect of a decision of the Industrial Tribunal held at Manchester on 28 June 1996. The Tribunal gave its Extended Reasons on 23 September 1996. The Chairman sat alone in reaching her decision on a preliminary point.

Miss Haydock complained of unfair dismissal. The Tribunal decided that the Applicant did not have the requisite period of two years' continuous employment within the meaning of Section 64(1)(a) of the 1978 Act and accordingly, her application for unfair dismissal was dismissed.

The background can be stated quite shortly. The Applicant was employed by Murphy Ltd from October 1990 to 24 July 1995. On 17 July 1995 she gave notice to her employer to terminate her contract of employment on 24 July 1995 and on 25 July she started work for the Respondent, Dewsbury Civil Engineering Co Ltd. On 5 February 1996 she was dismissed by the Respondent.

The Applicant had worked as a Sales Administrator for Murphy Ltd almost entirely on the company's contract with Norweb. We are told that she typed some invoices in relation to other contracts, but that almost all of her work was indeed spent in relation to Norweb. The contract was put out to tender and the Respondent company was successful in obtaining it. Murphy Ltd lost the Norweb contract at the end of June 1995. There was no suggestion that the Applicant was to be made redundant, and in fact Murphy Ltd transferred another contract with the Yorkshire Electricity Company, to the Manchester office to enable the Manchester staff to be retained.

The Tribunal heard evidence in which the Applicant stated, and the Tribunal accepted, that about ten of the labourers from Murphys, had changed over. This evidence was accepted, but the Tribunal (that is to say the Chairman ) concluded that all the workers had transferred on their own initiative.

The Applicant gave evidence, which again the Tribunal accepted, that the job which she did for the Respondents was very similar to that which she did for Murphy Ltd. She was concerned with the Norweb contract, and liaised with the same Norweb staff as she had done before.

The Tribunal dealt with the law in this way. They said:

"7. The issue is whether the applicant can add her period of employment with Murphy Ltd to that with the respondent by showing that there is one period of continuous employment. The only way she can do this is by establishing that the Transfer of Undertakings (Protection of Employment) Regulations 1981, as amended, apply to her. If they do not, she does not have the requisite two years' continuous employment to complain of unfair dismissal."

In paragraph 8 the Chairman expressed the matter in this way:

"8. The first question which must be answered is whether the transfer of the Norweb contract to the respondent was theoretically capable of constituting a relevant transfer within Regulation 3. ..."

The use of the word "theoretically" is curious, but in the light of the fact that the Chairman went on to say that: "this case is on all fours with Dines v Initial Health Care Services [1994] IRLR 336" where the Court of Appeal had held that the transfer was within the Regulations, it is accepted before this Tribunal today that the Industrial Tribunal decided that there was a transfer.

We have been referred in particular to Regulation 3 which deals with a relevant transfer and more specifically to Regulation 5 which, in subparagraph (1) reads:

"(1) [Except where objection is made under paragraph 4(A) below,] a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee.

We were also referred to subsequent parts of that regulation including 4(A) and 4(B).

The Tribunal, having expressed itself in the way that I have already indicated, went on to say in paragraph 9 of their Reasons:

"9. However, in order for the Regulations to apply, it must be shown that the applicant was part of a 'stable economic entity'. She will have to prove that there was a group of employees within Murphy Ltd who were assigned to the Norweb contract and so closely connected to that contract that they were automatically transferred with it when the contract went to the respondent. ..."

In expressing herself in that way, the Chairman erred, as a matter of law. It is not clear whether she was referred to or had the opportunity of considering the decision of the case of Schmidt v Spar-Und Leihkasse Der Früheren Ämter Bordesholm, Kiel Und Cronshagen [1995] ICR 237, a decision of the Court of Justice of the European Communities, in which they considered the relevant Directive. I need refer only to one paragraph in the decision, paragraph 15:

"15. Nor is the fact that the activity in question was performed, prior to the transfer, by a single employee sufficient to preclude the application of the Directive since its application does not depend on the number of employees assigned to the part of the undertaking which is the subject of the transfer. It should be noted that one of the objectives of the Directive, as clearly stated in the second recital in the preamble thereto, is to protect employees in the event of a change of employer, in particular to ensure that their rights are safeguarded. That protection extends to all staff and must therefore be guaranteed even where only one employee is affected by the transfer."

It is our unanimous view that the Chairman's error of law was a substantial one. She was there requiring the Applicant to prove something which she had no need to prove. It is true that in paragraph 9 the Chairman went on to refer to a number of authorities and set out extracts from one of those in particular, but nevertheless we consider that the error was sufficiently serious as to vitiate the conclusion which she reached on this issue.

She continued in paragraph 10:

"10. In this case the Tribunal finds as a fact that the applicant was employed by Murphy Ltd to act as sales administrator on any contract, though she was de facto working on the Norweb contract for some time. She was not transferred with the Norweb contract to the respondent, because she was redeployed by Murphy Ltd. The case can be distinguished on the facts from the recent decision of the EAT in Securicor v Fraser Security Services Ltd (350/95)."

The Tribunal, having made that finding of fact, do not however indicate the real basis upon which they found it. In fairness, the Chairman had, as I have already indicated, referred to a number of decisions and had referred to an extract from one of them in particular. It is not incumbent on an Industrial Tribunal to set out all the matters which lead them to reach a conclusion in any particular case, but in the circumstances of this case we consider that it is, at the very least, highly desirable that a Tribunal when expressing a conclusion of fact of this kind, should explain clearly why that decision has been reached.

We turn finally to look at the alternative way in which the case was considered. The Chairman said in paragraph 11:

"11. An alternative way of looking at this case may be derived from the decision of the EAT in Sunley Turriff Holdings v Thomson [1995] IRLR 184. ..."

She then set out the basic facts and referred to an extract from Lord Coulsfield's judgment at page 189 when he said:

"If a transfer takes place, but an employee continues to work for the trasferor thereafter, it seems to us that, in principle, that must have come about through a new agreement, or at least a variation of the previous agreement, between the transferor and the employee. Such an agreement might, perhaps, take several forms. It might be agreed that the employee should not be treated as an employee of the undertaking or part transferred: or it might be agreed that the employee's employment with the undertaking transferred should be treated as having come to an end and a new employment, with the transferor, should be taken to have commenced."

In paragraph 12 the Chairman said:

"12. If this analysis is accepted, the Tribunal considers that the applicant impliedly agreed with Murphy Ltd to switch from the Norweb contract to the Yorkshire Electricity Board contract. The facts are different from the Sunley Turriff case where the employee was uncertain about his position, and made enquiries about it. Also, the applicant was not threatened with redundancy. She said in evidence that she would have been happy to continue with Murphy Ltd, had she not been head-hunted by the respondent."

Again, the use of the words "if this analysis is accepted" are curious. It may well be the Chairman was saying that she did accept the analysis and, on that basis, made the finding which she did. A finding of an implied agreement in these circumstances is one that must be made with a good deal of care. Here, the Applicant was unaware of the transfer. Despite the efforts to uphold the finding made by Counsel for the Respondents in this case, we do not consider, on the information before us, that the Industrial Tribunal, if properly directing itself, could appropriately have reached the conclusion that it did on this issue.

In the result, it is our unanimous view that the appeal must be allowed. We have considered whether it would be appropriate or permissible for us to substitute our own view in relation to the preliminary application. We do not think it would be. We think that that must turn on the facts as presented before the Tribunal and, in the light of proper assessment of the law, on the basis of the arguments which have been presented to us today.

In the circumstances accordingly, we propose to direct that the matter be remitted to a differently constituted full Tribunal. We suggest, and recommend, that the preliminary issue should be determined by them and that if they determine it in favour of the Applicant, they should then proceed as soon as possible thereafter, with a hearing on the merits.

For these reasons and these circumstances the appeal is allowed.

Alan

Re: authority on page 3 of draft:

On page 237 of 1995 ICR this is shown as:

Schmidt v Spar-Und Leihkasse Der Früheren Ämter Bordesholm, Kiel Und Cronshagen [1995] ICR 237

On the top of pages 238 to 248 of ICR 1995 the above is shown as:

Schmidt v Sparkasse Bordesholm (E.C.J.) [1995] ICR 237

On the log the authority is shown as:

Schmidt v Spar-Und Leibkasse [1995] ICR 237.

Would you please let me know which version you wished typed.

Thanks

Iris (Typing)