United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR MARTYN WEST (Senior Advocate) Peninsula Business Services Ltd 361-365 Chapel Street Manchester M3 5JY
For the Respondents	MR MATTHEW GINGELL (Solicitor) Messrs Preuveneers & Co Solicitors 113-115 London Road Mitcham Surrey CR4 2JA MR JONATHON SWIFT (Counsel) Messrs Wilkins Solicitors 25 Walton Street Bucks HP21 7QH


 


JUDGE J HULL QC: This is an appeal to us by Carisway Cleaning Consultants Ltd represented by Mr West against a decision of the Industrial Tribunal sitting at London North under the Chairmanship of Mr Roose on 24 February 1997.

Mr Richards who is the first Respondent to the appeal and who was a long-standing employee of Carisway Cleaning Consultants Ltd had applied to the Industrial Tribunal on 16 January 1996 complaining of unfair dismissal and wrongful dismissal and claiming a redundancy payment. He added to his application a second respondent, Cooper Cleaning Services who are represented by Mr Swift, and his essentially alternative claims are set out in his IT1 and arise in this way:

In August 1978 Mr Richards, who is now 37 and was then of course a very young man, left school and started work employed by his father in the family business. In due course that became a company and later, much later, in 1994, the business of the company being cleaning and in particular cleaning for Sainsburys, the well-known stores, Sainsburys persuaded something like a dozen of their cleaning contractors to join together under the name of Carisway Cleaning Consultants Ltd which of course turned out to be a much enlarged concern. Through all this Mr Richards continued in their employment. From time to time he held posts which were more than mere operative posts but at the time we are speaking of he was apparently again an operative.

In February 1995 Mr Richards, in the course of his duties, worked for Carisway cleaning Sainsburys Ladbroke Grove store. There was apparently some difficulty there. Sainsburys were dissatisfied with the service which was being offered and there was a suspension. In due course, though, Mr Richards was offered a transfer of his job to one of two places, the correspondence has been shown to us now and is attached to the skeleton argument of Mr Swift.

On 10 October Carisway wrote, by their general manager:

"Dear Mr Richards

We would like to confirm that you are suspended on full pay pending our investigation.

I have written to our clients store manager to confirm in writing his reasons for carrying you from his store.

Subject to the result of our investigation you will be requested to attend a disciplinary hearing concerning alleged poor performance and alleged falsification of clock cards.

You may bring a work colleague with you to the hearing should you wish to do so."

The next day another letter was written to Mr Richards on behalf of Mr Booth,

"Further to my letter of 10 October 1995 and our telephone conversations in which you first declined, then accepted the temporary job at Golders Green and our subsequent offer of employment at the Chesham, which I am pleased that you accepted.

I would like to point out however that this alternative employment will be monitored whilst you are under investigation."

Apparently what had been said to Mr Richards was that there was this temporary job at Golders Green but the job at Chesham would be a permanent one, in so far as any employment is permanent, that would be employment on a permanent basis. By now he was an employee of something like 19 years status.

Then or very shortly thereafter Mr Richards duly took himself off to Chesham and began work there cleaning on behalf of Carisway. There followed a letter very shortly after that, which is the third letter which we have been shown. It says:

"Dear Paul

As you are aware, this company's contract for the cleaning of the Chesham 731 store has been terminated with effect from Sunday 15th October 1995.

The contract is to be taken over by Cooper Cleaning with effect from Sunday 15th October 1995.

You may also be aware that the change in contractor should have no effect on your employment. The change in contractor operates what is known as a Transfer of an Undertaking. All your employment rights and liabilities will transfer automatically from Carisway to Cooper Cleaning."

[Then thanks Mr Richards for his service.]

The date of transfer appears to have been actually 16 October but that does not matter very much, it may have been the 15th. On 22 October Carisway's contract at Chesham ended and thereafter there was a period of confusion and embarrassment. Apparently Mr Richards did work for a week or two, perhaps four or five weeks, for the new company Cooper Cleaning Services but it did not work out. He left them and, as I say, on 16 January of the next year he presented his IT1 against both Carisway and Cooper and I have set out the complaints which he made there in the Alternative against Carisway for whom he had worked for so many years and against Cooper for whom he has ostensibly only worked for a few weeks.

So far as the Respondents Cooper were concerned they admitted that there had been a relevant transfer for the purpose of the transfer regulations but they denied that the Applicant, Mr Richards, was employed by the first Respondent, Carisway, in the part of its undertaking which was transferred. That is a slightly stilted way of putting it and to understand the way in which it is put one has to look at the Regulations.

If an employer says to an employee: "I am transferring part of my business to a quite different person, a third party, and I am transferring you with it," as if he were dealing with perhaps a slave or somebody who could be told to go to any employer then that, at Common Law, would mean that the employee was entitled to say: "No you do not, unless I agree. A contract of service is a contract of personal service both as regards the employer and regards the employee and if you are threatening or promising to transfer me with part of your business to another employer then I am entitled to say 'I am not having this' and your letter is a repudiation of my contract. You are threatening to break my contract. It is an anticipatory breach. I am not accepting it." Or of course he may say and often will if it is sensible to do so: "very well, I am quite prepared to be transferred to the new company as long as I have continuity of employment then that is fine."

But that situation, which is the Common Law situation, is not the one which applies now, in the field of employment, under the Transfer of Undertakings (Protection of Employment) Regulations 1981. They say, subject to exceptions, in Article 5:

"A relevant transfer" that is the transfer of an undertaking "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."

As has been pointed in a number of authorities that amounts to a statutory novation of the contract. It is as if, for legal purposes, the old employer and the new employer had got together with the employee and said: "do you agree to your contract being transferred with all its terms, advantages and liabilities to the new employer?" and the employee had said to both them: "yes, I do agree." That would be a novation of the contract, as it would be called legally. Article 5 has that effect where there is a relevant transfer.

The person (or on many occasions, there may be dozens or hundreds or even thousands of employees) affected by such a transfer, they have to be a person or persons employed by the transferor in the undertaking or the part of the undertaking transferred.

What was said in the paragraph which I have just read (at p28) was that it was denied by Coopers that the Applicant, Mr Richards, was employed by Carisway in the part of its undertaking which was transferred. On its face that might be thought to be a dark saying. He was at the store in question and Carisway had employed him there, on the face of it, and Coopers were taking over the cleaning services at that store, so if it was admitted that there was a transfer of the undertaking, how could it be said that Mr Richards was not part of it? But that was made very plain to the Tribunal.

What was said was this, as is plain from the second of the letters which I have read, that Mr Richards was being transferred on the basis that this was a permanent employment, so far as anybody in good faith could say that it was. There was no prospect of an end to his employment or of a radical alteration that was known to the employer or employee. That was the basis on which it was put forward. But in fact what happened was that when Mr Booth, the general manager, gave evidence, it was put to him on behalf of Mr Richards that he had treated Mr Richards in bad faith. "He had known perfectly well", when he wrote the letter which I have read, "that in fact the business was to be transferred in a few days. The undertaking, the cleaning services, was to be transferred to Coopers. So, far from explaining that, he had kept dark about it and the motive was, it was suggested, that in that way they would unload an employee, Mr Richards, against whom there were some complaints (which they had not at that stage gone into and ascertained) thus by a neat sleight of hand transferring him to Coopers and leaving them to deal with any situation which might arise complete with his long service and the advantage of continuity of employment and it was with that improper and fraudulent motive, deceiving Mr Richards, that he was invited to take up the work at Chesham, and did so." Was that very serious and unpleasant suggestion true?

It was admitted by Mr Booth there and then, apparently, for the first time, in cross-examination. What did the Tribunal find as a result of this important and unpleasant suggestion? They found first and foremost that while the Applicant was employed in the part of an undertaking which was transferred from Blitz, that was the name of the company, to the First Respondent, he was not employed in the part of the undertaking that had passed from the first respondent to the Second Respondent, Coopers.

They go on about that in giving their reasons. They say:

"In September he " Mr Richards "was suspended because of a problem between supermarket manager and himself. In early October in an effort to get him back to work he was offered a transfer to either a supermarket in Chesham or one in Golders Green. As it was pointed out that the Golders Green job was only temporary he took the Chesham job as the only viable alternative.

In the event Sainsbury was so dissatisfied with the performance of the First Respondent at Chesham, a supermarket which was smaller than Ladbroke Grove and at which the First Respondent who had only one part-time worker, that the Applicant was to find out in his first week that steps had already been taken to replace the First Respondent at that Supermarket.

The First Respondent did not notify the Applicant of any transfer nor did it include his name on any list of employees which might have been supplied to"Coopers." As it was"Coopers"tried to occupy the Applicant for some five weeks after it took over but could not do so beyond that date.

At no time did Carisway consult with the Applicant nor give him in any information on his move to Chesham. It increased his pay to persuade him to go and that sum was equivalent to the total remuneration from Sainsbury for providing the service but once there left him to sort out the problem for himself."

As Mr Swift points out this was, on those findings, ostensibly a fraud not only against the employee, Richards, but also against Coopers because by increasing the salary of Mr Richards to the total reward which they received they would guarantee that Coopers would not only have to take over this troublesome employee, as he was no doubt perceived to be, but would find it a totally profitless contract. Then, as Mr Swift points out (I am afraid at my prompting) one could imagine an even more ludicrous case, in which an employer persuaded a quite unnecessary number of employees over to the part of his undertaking which he was transferring two or three days before and get rid of them at a stroke.

The tribunal went on like this:

"We were particularly unimpressed by the evidence of Mr Booth and found that the Applicant was gulled into going to Chesham on a higher salary in full knowledge that the contract was already coming to an end."

So they found that the unpleasant suggestion which Mr Swift had to make was indeed a true one and that the Applicant had been gulled, deceived: it was a sham. He was persuaded to go to Chesham by fraud and what is fraudulent is void.

It is said by Mr West, for Carisway, "in those circumstances, the Industrial Tribunal should have gone into it and looked to see whether he had waived the fraud and said, 'very well, I will continue for Carisway and I will regard myself as employed for all purposes on this very temporary basis as it must be pending the transfer to Coopers. Coopers of course must be informed and they will be taking me over as their employee'" We do not regard that suggestion seriously. Here was an admission made for the first time, by Mr Booth in cross-examination, that they had defrauded the employee, "gulled him" as the Tribunal found and there was no evidence whatever of any such conversation which could possibly amount to waiving that fraud and saying "yes, I wish to continue on the new basis which I have now discovered." As Mr Swift says, it is nothing to the point to say that after that he did in fact continue to work for a few weeks for Coopers because the question is an objective one, "did the regulations apply, or not, at the moment of transfer?" The Tribunal has found as a fact that they did not apply to this man because he was not part of the business which was transferred. It is very hard to see how they could in the circumstances have reached any other conclusion and certainly there was no evidence that we can see, so far as we know, that was laid before them and no argument addressed to them to the effect that in the very short period after the fraud Mr Richards then agreed to work for Carisway on this quite new basis. I say nothing of course of Mr Swift's equally tenable contention that this was equally a fraud on Coopers who would have to be a party to waiving any such fraud and say "yes we do take on Mr Richards."

What is said by Mr West is that they should have looked more thoroughly and stated the reasons more fully. "They did not look into it adequately to see if he had accepted that a transfer had taken place." Well, they were assisted by Counsel, it seems to us that they did sufficiently indicate their reasons for saying that Mr Richards was not part of what was transferred as had been said from the start in Cooper's Notice of Appearance. In those circumstances, since we think that the reasons are sufficiently stated, we are unable to find any error of law. The circumstances we hope are wholly exceptional. In general if it is admitted that a relevant transfer has taken place of course the people who are working in the undertaking or part of the undertaking which is transferred will be transferred with it precisely as Article 5 of the Regulations says; but not in these circumstances. We think the Tribunal were well entitled to come to their conclusion. Indeed we think it is a conclusion we would have reached ourselves that, in the circumstances, this was a bold attempt to do the opposite of what happened in the ECM case so recently reported, a decision by our own President with, of course, his industrial members, in which he said, and we are sure this is the law, "that the mere refusal by those who take over an undertaking to employ the employees in that undertaking, if there is a relevant transfer, will not prevent them being transferred. They are transferred by operation of the Regulations and by operation of law. Therefore one looks at it objectively." Here also, it seems to us, you look at it objectively.

Was he indeed part of the undertaking which was being transferred? He was not. He was only there because he had been defrauded into going there. The Tribunal we think were well entitled to say that. So in those circumstances we accept the submissions which were made to us by Mr Swift. We uphold the decision of the Tribunal and we dismiss the appeal.

Under Rule 34 of The Employment Appeal Tribunal Rules:

"Where it appears to"us"that any proceedings were unnecessary, improper or vexatious or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings the Tribunal may order the party at fault to pay any other party the whole or such part as it thinks fit of the costs or expenses incurred by that other party in connection with the proceedings."

It is said to us that such an order is rare and certainly it is comparatively rare. We have regard of course to the fact that "unreasonable" does not simply mean that the appeal has been lost. We note in addition that this Tribunal, sitting under the Chairmanship of Mr Justice Kay, gave leave for this appeal to proceed. It is apparent however that that division of our Tribunal was seriously under a misapprehension, because Mr Justice Kay says, "the issue was whether there had been a transfer of an undertaking pursuant to the Transfer of Undertakings (Protection of Employment) Regulations." The issue was no such thing.

Mr West has submitted that there are points of law which are arguable and which he succinctly described as being related either to inadequate reasons being given by the Tribunal or to the Tribunal not having considered properly the matters required to be considered under the TUPE Regulations and the case law which exists under them.

In fact, as became apparent to us, this appeal has nothing to do with those matters. It was conceded and decided that there was a transfer of the undertaking and the question was whether the Appellants, Carisway, could escape from a finding, which was one of fact, that Mr Richards, having been defrauded, was not part of the undertaking which was transferred or to put it more in the language of the regulations: was not employed in the undertaking which was transferred. The Tribunal had so held on the basis of an admission made for the first time in cross-examination by Mr Booth. That having been the situation the Tribunal reached what appears to us to be a conclusion of fact against which there can be no complaint and to say that they gave inadequate reasons for their finding on that when they spelled it out, "there was fraud": what more embellishment is needed? "This man was gulled." In those circumstances it seems to us the appeal was and should obviously have been seen to be quite hopeless when it was analysed and we think, therefore, that it is right to order that the costs of the First and Second Respondents, Mr Richards and Cooper Cleaning Services, should be paid by the Appellant; those costs to be taxed if not agreed. Those of course are the costs of the appeal.