United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A DAVIES (Of Counsel) Messrs Wilkinsons Solicitors 7 & 9 Queens Road Wimbledon London SW19 8NJ
For the lst Respondent	MR M LAMBE (Representative) Free Representation Unit 49-51 Bedford Row London WC1R 4LR


 


MR JUSTICE KIRKWOOD: This appeal concerns the Transfer of Undertaking Protection of Employment Regulations 1981 (TUPE). Those regulations were brought in to implement the European Council Directive 14 February 1977/187/EEC. It is recognised that it is important to interpret the regulations purposefully, so as to give effect to that direction and the decisions relating to it at the Court of Justice.

The Appellant in this case was found by the Industrial Tribunal - relying on the authority of decided cases - to be the transferee of an undertaking and to have unfairly dismissed Mr Douglas, one of the Respondents to the appeal, whom the Tribunal found to have been employed in the undertaking.

The background history was that Mr Douglas was employed by Eurochange Plc on 4 September 1993 as a cleaner at a number of money exchange bureaux and offices operated by Eurochange. (Eurochange is the second Respondent to the appeal.) On 10 December 1995 Eurochange contracted out its entire cleaning operation to the firm The Cleaning Co-operative. From 10 December 1995 Mr Douglas was employed by The Cleaning Co-operative. By a letter dated 18 April 1996 Eurochange terminated The Cleaning Co-operative's contract as from 4 May 1996. Mr Douglas worked from Monday to Saturday (inclusive). Eurochange contracted with Superclean Services, another firm, to carry out its cleaning services from 6 May 1996. Mr Douglas went to work as usual on 6 May. On 8 May he was told by one of Eurochange's cashiers to go home and wait to hear from them.

On or about 16 May 1996 Mr Douglas received his P45 from The Cleaning Co-operative, together with his pay up to 4 May. Eurochange and Superclean had been in negotiation for five or six weeks prior to 6 May. The Tribunal found that Superclean knew that the TUPE Regulations would apply to the former employees of The Cleaning Co-operative engaged on the cleaning contract.

The Industrial Tribunal made no findings at all about the other cleaning staff employed by The Cleaning Co-operative or what became of them, nor about any of the characteristics of either firm or what, beyond cleaning, the cleaning contract involved. The Industrial Tribunal directed itself by reference to three authorities: Schmidt v Sparkasse Bordesholm [1995] ICR 237 EC; Dines v Initial Health Care Services Ltd [1995] ICR 11 CA; and Kelman v Care Services Ltd [1995] ICR260. The Industrial Tribunal was referred to the opinion of the Advocate General in Süzen and noted it had an unofficial translation in French and was not evidently given assistance by it.

The decision of the Court of Appeal in Dines was reached after a consideration of a number of decisions of the European Court. It is not necessary for me, in the circumstances that have arisen, to cite particular passages from Dines because they are reflected sufficiently in the conclusion that the Industrial Tribunal eventually reached. That conclusion was in these terms:

"(i) that the cleaning services performed initially by the Cleaning Co-operative constituted an undertaking within the definition in TUPE;

(ii) that on 4 May 1996 there was a relevant transfer of that undertaking within TUPE from the Cleaning Co-operative to the Second Respondent [Eurochange] (the second phase referred to in Dines);

(iii) that on 6 May 1996 there was a further relevant transfer of that undertaking from the Second Respondent to the First Respondent (the second phase referred to in Dines);

(iv) that the effective date of termination of the Applicant's contract of employment was 6 May 1996;

(v) that the dismissal of the Applicant was a dismissal by the First Respondent [Superclean]; and that that dismissal was automatically unfair."

The basis of this appeal is the decision of the Court of Justice in the Süzen case of which only the Advocate General's untranslated opinion was available to the Industrial Tribunal.

The Industrial Tribunal refer to certain passages in the Süzen v Zehnacker Gebäudereinigung GmbH Krankenhausservice case [1997] IRLR 255 at pages 258 and 259:

"9 By its two questions, which it is appropriate to consider together; the national court asks whether the Directive also applies to a situation in which a person who had entrusted the cleaning of his premises to a first undertaking terminates his contract with the latter and, for the performance of similar work, enters into a new contract with a second undertaking without any concomitant transfer of tangible or intangible business assets from one undertaking to the other.

14 In order to determine whether the conditions for the transfer of an entity are met, it is necessary to consider all the facts characterising the transaction in question, including in particular the type of undertaking or business, whether or not its tangible assets, such as buildings and moveable property, are transferred, the value of its intangible at the time of the transfer, whether or not the majority of its employees are taken over by the new employer, whether or not its customers are transferred, the degree of similarity between the activities carried on before and after the transfer; and the period, if any, for which those activities were suspended. However, all those circumstances are merely single factors in the overall assessment which must be made and cannot therefore be considered in isolation (.......).

16 The mere loss of a service contract to a competitor cannot therefore by itself indicate the existence of a transfer within the meaning of the Directive. In those circumstances, the service undertaking previously entrusted with the contract does not, on losing a customer, thereby cease fully to exist, and a business or part of a business belonging to it cannot be considered to have been transferred to the new awardee of the contract.

17 It must also be noted that, although the transfer of assets is one of the criteria to be taken into account by the national court in deciding whether an undertaking has in fact been transferred, the absence of such assets does not necessarily preclude the existence of such a transfer (.....)."

The Court of Justice enlarged upon that in subsequent paragraphs in its judgment. It is sufficient for today's purpose that I read only the concluding paragraph:

"23 The answer to the questions from the national court must therefore be that Article 1(1) of the Directive is to be interpreted as meaning that the Directive does not apply to a situation in which a person who had entrusted the cleaning of his premises to a first undertaking terminates his contract with the latter and, for the performance of similar work, enters into a new contract with a second undertaking, if there is no concomitant transfer from one undertaking to the other of significant tangible or intangible assets or taking over by the new employer of a major part of the workforce, in terms of their numbers and skills, assigned to his predecessor to the performance of the contract."

That case was considered by the Employment Appeal Tribunal in Superclean Support Services Plc v (1) Lansana (2) Wetton Cleaning Services Ltd (unreported) which was a case very similar indeed to the case subject of this appeal. The Employment Appeal Tribunal made clear that the Süzen case had affected the understanding of the law as it had previously been and the Tribunal demonstrated that in such a case as that and as this, the Directive and the Regulations were not applicable.

It is for those reasons that the appeal comes before us today on the basis that neither of the Respondents to it, that is to say Mr Douglas and Eurochange, seek to oppose the appeal. That is for the obvious reason that the law being as it is now understood, they have no arguable opposition and the decision of the Industrial Tribunal must be seen to have been plainly wrong in law. In those circumstances a Consent Order has been lodged with the Employment Appeal Tribunal which shows the agreement that the decision and Order of the Tribunal is to be set aside, including the Order the Tribunal made in respect of costs. That agreement is an entirely proper, indeed inevitable one, in the circumstances that have arisen and we shall make the necessary Orders.