United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR GORDON KELLY (Managing Director)


 


JUDGE PETER CLARK: We have before us today preliminary hearings in two separate appeals brought by Computer Insight Ltd ["CIL"] against decisions of two Industrial Tribunals sitting at London (South). In the first appeal, EAT/1216/97, a full Industrial Tribunal chaired by Mrs T J Mason ["the Mason tribunal"] heard a complaint on unfair dismissal and for a redundancy payment by Mr Stewart against (1) CIL and (2) Instant Muscle Ltd ["IML"], on 20th June 1997. Following a meeting in Chambers held on 30th June 1997, by a reserved decision promulgated on 17th July 1997, the Mason tribunal held that no relevant transfer of an undertaking (or part of an undertaking) had taken place between CIL and IML, and that CIL had unfairly dismissed Mr Stewart, the applicant.

In the second appeal, EAT/1217/97, a Chairman, Mr B A Kelly, sitting alone on 27th February, 20th March and 22nd May 1997, decided as a preliminary issue in a complaint of unfair dismissal by Mr Shokunbi against (1) Personnel Consultancy Services Ltd ["PCSL"] and (2) CIL that there was no relevant transfer between CIL and PCSL. A third respondent, Training for Jobs Ltd, was dismissed from the proceedings. That reserved decision, with extended reasons, was promulgated on 4th July 1997.

The principal issue, whether or not a relevant transfer took place, is the same in each case. There are factual similarities. The appellant is the same in each case. We have heard argument in relation to each appeal consecutively. It is therefore convenient to give a single judgment in relation to both appeals.

Relevant transfer

The Transfer of Undertakings (Protection of Employment) Regulations 1981 ["TUPE"] were designed to implement the Acquired Rights Directive (77/187/EEC). That the initial attempt failed to do so is illustrated by the various amendments to TUPE effected by the Trade Union Reform and Employment Rights Act 1993 and the enforcement proceedings taken before the European Court of Justice in E C Commission v United Kingdom of Great Britain and Northern Ireland [1994] IRLR 412.

A principle of United Kingdom law has developed whereby domestic legislation passed to implement European law should, so far as possible, be interpreted so as to accord with the relevant European law.

As a result the application of TUPE has been subject to the changes of emphasis provided by decisions of the European Court. Nowhere has this been more marked than in relation to cases where a party terminates one contract for outside services and then awards the new contract to a fresh supplier. That is the position in these cases.

Little purpose will be served in reviewing the various twists and turns in the cases of this topic. Suffice it to say that the high water mark of effective transfers may be found in the Court of Appeal decision in Dines v Initial Health Care Services [1995] ICR 11 and the European Court of Justice decision of Schmidt [1995] ICR 237, a case in which the transfer of the cleaning duties of a single employee under her employer's contract to provide cleaning services at a branch of a Bank, following termination of that contract and the awarding of a fresh contract to a competitor, was held to constitute a relevant transfer.

Then came the European Court of Justice decision in Suzen [1997] IRLR 255, closely followed by the Court of Appeal decision in Betts v Brintel [1997] IRLR 361. In our view those decisions introduced a sea-change in which this appellant was caught. They introduce an unfortunate level of uncertainty. For businesses which, like this appellant, have entered into fixed term contracts which may or may not be renewed by their customer, the position appears to be different from that which applied when the contract was first entered into. Liabilities which they believed, not unreasonably on the earlier state of the law, would transfer to a successful tenderer, now remain with them. Employees, for whose protection the Directive and Regulations were designed, are left to take their chances in Court. Professional advisers cannot advise their clients with confidence. It is an unhappy state of affairs.

Nevertheless, our hands are tied. We must apply the law as it currently stands on the basis of precedents binding on us. So too must Industrial Tribunals. We turn then to the instant appeals; bearing in mind that our jurisdiction is limited to correcting errors of law. Only if an arguable point of law is made out will we allow these appeals to proceed to a full appeal hearing.

The facts

A Job Club is a service arranged and paid for by the Employment Service, an arm of the Employment Department, to help unemployed people find work. The Employment Service contracts out the running of local Job Clubs to private companies under a competitive tendering procedure.

CIL is a private business which provides a range of training to government and private companies and runs a number of Job Clubs.

In relation to the first appeal the Mason tribunal found that in 1992 CIL successfully tendered to run the Wimbledon Job Club. Having won that contract CIL acquired premises in Wimbledon and fitted them with office equipment. The Employment Service provided training manuals and materials for use on courses for unemployed participants.

On 29th November 1993 Mr Stewart commenced employment with CIL as the Job Club leader at Wimbledon.

In 1994 CIL successfully tendered again for the Wimbledon contract. However, in 1996, when the contract again came up for renewal, CIL lost out to a competitor, IML, which was then awarded the Wimbledon contract.

Thereafter IML acquired and equipped different business premises in Wimbledon and appointed a different Job Club leader.

Mr Stewart was told by Mr Gordon Kelly of CIL that CIL would not longer employ him after 29th September 1996. He was told that his employment had been automatically transferred under TUPE to IML. IML disagreed and would not take him into their employment.

Accordingly on 17th December 1996 Mr Stewart presented a complaint of unfair dismissal, breach of contract and for a redundancy payment against CIL. In March 1997 IML were joined as second respondents.

We should here refer to an exchange of correspondence between the applicant's advisers and the Industrial Tribunal in early 1997.

By letter dated 18th February a Chairman at London (South) informed the applicant that IML had been joined as a second respondent on the application of CIL. The applicant was directed to show cause within 14 days as to why CIL should not be dismissed from the proceedings. By letter dated 3rd March the applicant's advisers wrote indicating that the applicant wished to withdraw his claim against CIL. That letter, of course, was written before the decisions in Suzen and Betts. However, so far as we are aware, and that has been confirmed today by Mr Gordon Kelly, who appears on behalf of CIL, no formal step was taken by the Industrial Tribunal thereafter to dismiss the complaint against CIL on withdrawal by the applicant, nor was that complaint struck out by a decision of the tribunal under the provisions of r. 13(2) of the Industrial Tribunal Rules of Procedure 1993, at any time before the Mason tribunal hearing in June and its subsequent decision promulgated on 17th July 1997. We shall return to the significance of that fact later in this judgment.

Turning to the facts in the second appeal, as found by the Mr B A Kelly, the story is similar. This case concerned the contract for providing a New Restart programme and Workwise programme on behalf of the Department which CIL ran from premises which they had acquired and equipped in Lewisham, serving the south London areas of Lewisham, Catford, Forest Hill and Deptford.

Mr Shokunbi commenced employment with CIL on 17th June 1994. At the relevant time he spent the majority of his working day on the Lewisham New Restart Course and the balance of his time on the Workwise Course run from there.

In September 1996 CIL's Lewisham contract came up for renewal. They lost out to a competitor, PCSL.

PCSL subsequently performed the contract from different premises at Catford. It did not take on Mr Shokunbi or any other CIL employee.

The Industrial Tribunal decisions

Each tribunal decision in our judgment is a model of clarity. The tribunals set out the rival contentions; consider the law and reach the conclusion, looking at the matter overall, that there was no relevant transfer from CIL to IML or PCSL respectively.

The Appeals

We deal first with a preliminary point taken by Mr Gordon Kelly in the first appeal. He submits that he should have been informed, prior to the Mason tribunal hearing in June 1997, of the applicant's advisers letter of 3rd March withdrawing the complaint against CIL, and that failure to do so amounts to an error of law.

In our judgment that is not a good point. Unless or until the complaint is dismissed, either on withdrawal or by way of striking out the Originating Application under r. 13(2) a unilateral withdrawal by the applicant, or indeed a bilateral agreement to withdraw his complaint, is unenforceable as against the applicant by virtue of the provisions of s. 203 of the Employment Rights Act 1996.

As to the merits of the first appeal, CIL challenges the tribunal's assessment of the various factors identified in paragraph 14 of the European Court of Justice judgment in Suzen by reference to the earlier European Court of Justice cases of Spijkers and Redmond Stichting. The Mason tribunal found, having weighed those factors that there was no transfer of an economic entity from CIL to IML. In particular, whilst appreciating that no one factor is conclusive, they noted that there was no transfer of physical assets, premises, equipment or employees between CIL and IML. The goodwill they held was that of the Employment Service.

Having considered the various points made by Mr Gordon Kelly in relation to the seven factors identified in paragraph 14 of the judgment in Suzen, we are driven to conclude that ultimately this is an argument about the weight to be attached by the Industrial Tribunal to those individual factors dressed up as an appeal on perversity. Having considered the tribunal's findings of fact and their application of the law as it presently stands to those facts, we are quite unable to discern any arguable point of law to go to a full hearing appeal hearing.

As to the merits of the second appeal, similar comments apply. This again, in our judgment, is an attempt to reargue the issues which were properly considered and dealt with by Mr B A Kelly in his decision and reasons. Again there is no arguable point of law raised in this appeal. His decision and the reasons for that decision are unassailable on appeal.

Accordingly both these appeals are dismissed.