United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr A Clarke QC (of Counsel) Messrs Langley & Co Solicitors Sun Court 66 Cornhill London EC3V 3NB
For the 1st Respondents For the 2nd Respondents	Mr A Hillier (of Counsel) Messrs Lewis Silkin Solicitors Windsor House 50 Victoria Street London SW1H 0NW Mr A Hillier (of Counsel) Messrs Eversheds Solicitors Senator House 85 Queen Victoria Street London EC4V 4JL


 


JUDGE PETER CLARK: The parties to this application before the Ashford Employment Tribunal were (1) the Applicant, Mr Rowe, (2) the First Respondent, Debitek Holdings Limited, formerly GiroVend Holdings Limited (GiroVend), (3) the Second Respondent, GiroVend Cashless Systems Ltd. We shall use the same descriptive titles in this judgment.

The principal issue at a hearing before a Chairman, Mrs Valerie Cooney, sitting alone over 5 days in October/November 1997 was whether the Applicant was employed in that part of the undertaking of the First Respondent which was, by common agreement, transferred to the Second Respondent on 6 September 1996. The nature of the extant complaint before the Employment Tribunal was a reference under section 11 of the Employment Rights Act 1996 to determine whether the Applicant's statement of terms and conditions of employment ought to be altered to show that from 6 September 19996 he was employed by the Second Respondent.

The facts as found are set out in detail in the Chairman's extended reasons dated 28 November 1997. They may be summarised as follows.

The Applicant commenced employment with the First Respondent as Group Chief Executive officer on 31 October 1995 under the terms of a written contract of employment. At that time GiroVend was, as its name suggests, a holding company. It had a number of wholly-owned subsidiaries. Five were based in Europe, of which three were UK companies, one French and one German. There was one further subsidiary company based in Canada and another in the United States.

The business of all subsidiaries of GiroVend prior to the sale was that of cashless payment systems. The system operated by the European subsidiaries was the GiroVend Cashless Payment System. The system operated by the American subsidiaries was the Debitek Cashless System. The two systems were distinct, the first being a stand alone payment system for in-house catering and vending services, and the second having been designed for similar application but intended, in addition, to interface with banking systems. It appears to have been generally accepted by the Directors of GiroVend Holdings Ltd that the GiroVend product was limited and outdated and that the Debitek product had greater potential because of its multi-face user. The American Research and Development Department was working on what was known as the Platypus Project, which was planning to create a new micro computer which would operate the full range of the combined systems worldwide.

The Applicant's job description, which formed part of his terms and conditions of employment, provided as follows:

"1. Job Specification

Your job title is Group Chief Executive, and you will report to and take instructions from the Company's Board of Directors. At the commencement of your employment you will be based at the Company offices which are at present at 6 Progress Business Center, Whittle Park Way, Bath Road, Slough SL1 6DQ. In this role your duties will include, but not by way of limitation:-

Day to day management of the Company, its subsidiaries, investments and employees (hereafter referred to as the 'company's affairs'), to implement business plans and achieve their objectives as approved by the Board of Directors.

Ensuring the Company complies with decisions of the Board of Directors, the Company articles of association, agreements, contracts and commitments entered into by the Company, and compliance with any relevant legislation relating to the 'Company's affairs'.

It is understood that such circumstances so require, you may be called upon to perform as a temporary measure any suitable additional duties within your capabilities at the discretion of the Company."

Following the Applicant's appointment he in turn appointed Mr Peter Clair to be Managing Director of the European subsidiaries. Mr Ron Farmer was the General Manager of Debitek, the North American operation.

The reason for the Applicant's appointment by directors of GiroVend was their perception that the group needed re-financing and that the European subsidiaries' business was ailing and needed to be turned round. It was the Applicant's function as Chief Executive of the group to advise on strategy regarding the re-financing and restructuring of the group's businesses and to bring the businesses of the subsidiaries back into profit. That required him to become involved in the management of the subsidiaries. The Chairman found that his duties were mainly strategic rather than operational.

In March 1996, at the directors request, the Applicant produced a business plan, setting out specific goals for each of the European managers. On 13 March 1996 he sent a memorandum to the directors headed "Fundraising". It read:

"As you know, I see the development of recurring revenue and the commitment to Platypus to be two of our key success factors .... It may be that there is an opportunity here at a proper price to sell the 'ugly' baby with the bath water and focus our remaining resources and energy on developing the new operation (Platypus) and bringing the product to marked under the Debitek banner."

The ugly baby, we understand, was the GiroVend card system promoted by the European operation, the Debitek business was the North American operation. The Platypus operation was the system in course of development in the United States.

On 4 June 1996 GiroVend received an offer for the European businesses from Holywood Limited, later the Second Respondent company. The Applicant recommended rejection of that offer and attempted to put together a management buyout of the whole business. In the event the directors resolved to accept the Holywood offer. Accordingly the European subsidiaries, together with certain features of the GiroVend Cashless Payment Systems, were transferred to the Second Respondent under two agreements, the second of which, dated 6 September 1996, operated to transfer the employment of those employed in the European subsidiaries to the Second Respondent. Although not strictly material the Applicant was excluded from the list of employees shown to be transferring to the Second Respondent in a Schedule to the 6 September Agreement.

In determining whether or not the Applicant's employment was transferred to the Second Respondent on 6 September 1996 within the meaning of Article 5 of the Transfer of Undertakings Protection of Employment Regulations 1981 the Chairman directed herself in accordance with the judgment of the European Court of Justice in Botzen [1986] 2 CMLR 50 and the guidance of this Tribunal contained in the judgment of Mr Justice Morison in Duncan Web Offset (Maidstone) Ltd v Cooper [1995] IRLR 635.

Based on those decisions the self-direction upon which the Chairman proceeded is set out at paragraph 43 of her reasons in this way:

"It is clear from these decisions that my decision as to whether the Applicant was employed in the part of the First Respondent's business transferred to the Second Respondent, does not depend whether he worked exclusively in the part transferred. It is also apparent that a substantial part of his job must have been worked performed in the part transferred in order for Regulation 5 to apply. It is for me to decide whether the Applicant was assigned to the part of the First Respondent's business transferred to the Second Respondent, notwithstanding the other duties which he carried out."

Having considered the facts, she concluded that the Applicant was not employed in the part transferred to the Second Respondent. Accordingly the complaint failed, save as to the proper name of the First Respondent employer, by then Debitek Holdings Ltd. Against that decision the Applicant now appeals.

We remind ourselves, as Mr Justice Morison indicated in Duncan Web, that the question as to whether an employee was assigned to the part of the undertaking transferred is essentially a question of fact for the Employment Tribunal.

In support of the appeal Mr Andrew Clarke QC makes the following points. Whilst not quarrelling with the Chairman's self-direction contained in paragraph 43 of her reasons, he contends that she fell into fundamental error in applying that approach to the facts of the case. He submits, first that in paragraphs 54-56 of the reasons the Chairman made general observations about the role of the Chief Executive Officer which precluded her from considering properly the individual position of this Applicant. Secondly he argues that the Chairman fell into error in rejecting the contention that upon transfer of the European subsidiaries to the Second Respondent the First Respondent became a shell, not in the strict legal sense, because it still retained ownership of the North American subsidiaries and the business there engendered, but in a practical sense. There was nothing further for the Chief Executive Officer of the First Respondent to do. Looking at the evidence as a whole it is plain that having devoted the majority of his time and energies to the European subsidiaries prior to the transfer, the Applicant could only be found to have been assigned to that part of the undertaking.

He further criticises references by the Chairman to the subsidiary companies as the investment of the First Respondent holding company and reference to "tearing down the veil of incorporation" in paragraph 48 of the reasons.

In setting out those submissions we are conscious that in this judgment we have merely summarised them without doing justice to their ingenuity. However, having considered them we have reached the clear conclusion that no grounds for interfering with the Chairman's decision in law have been made out. We remind ourselves of the observation of Lord Justice Mustill in Campion and Hamworth Engineering Limited [1987] ICR 967, 972, when His Lordship identified the task of the Court of appeal, on appeal from this Tribunal, being that of deciding not whether the Employment Appeal Tribunal was right, but whether the Employment Tribunal was wrong. It follows that in upholding the Chairman's decision in this case nothing that we can add in this judgment will materially advance matters. The Employment Tribunal decision stands as it is.

We think that Mr Hillier has the short answer to this appeal. Having heard five days of evidence and argument the Chairman accepted Mr Hillier's principal submission below, repeated almost verbatim at paragraph 53 of the reasons. Having accepted that submission, which we need not repeat here, as in our judgment the Chairman was entitled to do on the material before her, the conclusion that the Applicant was not assigned to the part of the undertaking transferred is unassailable in law.

Accordingly this appeal must be dismissed.