United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR P MEAD (of Counsel) Messrs E Sheridans 14 Red Lion Square London WC1R 4QL
For the Respondents	WRITTEN SUBMISSIONS BY 1st RESPONDENT MR TOMS Representative 2nd Respondent


 


JUDGE PETER CLARK: Mr Stephen Chapman, the Applicant, commenced employment with Gristwood & Toms (G & T) as a groundsman on 15 February 1993. G & T carried on the business of tree surgeons. It is a nation-wide organization employing some 90 employees.

He worked with his brother, Mr Kevin Chapman. They were a two-man team working on a contract entered into between Hastings Borough Council (Hastings) and G & T in March 1993.

Kevin Chapman had formerly been employed by Hastings. He was a qualified climber and a tree surgeon. When the contract was obtained by G & T he transferred to that Company. Kevin acted as foreman; the Applicant was effectively his mate, working from the ground whilst his brother carried out the necessary tree work.

In Autumn 1996 Hastings again put out the work to tender. G & T lost out; CONNICK Tree Care (Connick) won the contract.

The Applicant and his brother attended Connick's offices on 20 November 1996 for interview. On 10 December Mr Connick wrote to the Applicant saying that the would not be required to work on the new contract; at the same time Kevin was informed that his services would be required by Connick.

Both men continued working for G & T until 31 December 1996. On 6 January 1997 the Applicant attended for work and was again told that he was not required. Kevin carried on working, but with a new groundsman, Mr Kettle, an existing employee of Connick.

The Applicant's complaint of unfair dismissal against both Connick and G & T came before an Industrial Tribunal sitting at Ashford, chaired by Miss V G Wallis, on 19 and 20 May 1997. The first issue before the Tribunal was whether or not a relevant transfer had taken place between G & T and Connick. The Tribunal found that it had and that Connick had unfairly dismissed the Applicant.

The Tribunal were referred to the relevant authorities up to and including the European Court of Justice decision in Suzen v Zehnacker Gebaudereinigung GmbH Kranken-hausservice [1997] IRLR 255 and Betts v Brintel Helicopters Ltd and KLM Era Helicopters (UK) Ltd [1997] IRLR 361. They found that there was here a stable economic entity capable of maintaining its identity after the change in contractors. Their basis for so finding is set out within paragraph 42 of their extended reasons dated 10 June 1997 as follows:

"The new employer did not merely pursue the activity in question but also took over a major part in terms of the skills of the employees specially assigned to the task. Whilst 50% of the staff is not a major part precisely, we were satisfied that the major part of the skills and knowledge of the sites in Hastings in the form of Kevin Chapman and his greater qualifications than the Applicant, would constitute a major part in the terms of the skills of the employees allocated to the contract. Following the judgment in Suzen therefore we were satisfied that in these circumstances the new employer had taken over a body of assets enabling him to carry on the activities or certain of the activities of the transferee ie., the Second Respondent, on a regular basis."

In support of Connick's appeal against that decision, Mr Mead has taken us carefully through the relevant passages in the European Court of Justice judgments in Rygaard v Stro Molle Akustik [1996] ICR 333 and Suzen, as well as the judgment of the Court of Appeal in Betts delivered by Kennedy LJ.

From those judgments the following principles emerge:

(1) For the acquired rights Directive (77/187/EC) to be applicable the transfer must relate to a stable economic entity whose activity is not limited to performing one specific works contract.

(2) An economic entity in an organized grouping of persons and assets; it is not enough that merely an activity is transferred; the mere loss of a service contract will not of itself indicate the existence of a transfer.

(3) The new employer must take over a major part, in terms of their numbers and skills, of the employees specifically assigned to the task by the outgoing contractor.

(4) The above principles apply equally to determining the question of whether or not a transfer has taken place under the domestic TUPE regulations.

Applying that reasoning, submits Mr Mead, it is clear that the Tribunal misapplied the law, as explained in Suzen and Betts, to the facts as found in this case. The Appellant was employed on a single contract with one other employee. The contract was lost by G & T. The incoming contractor, Connick, took on one out of the two employees assigned by G & T to that contract; they took over none of the equipment or organizational functions formerly owned or operated by G & T. There was no transfer.

For G & T Mr Toms has addressed us with the common sense of a businessman operating in the real world. He contends that the Directive and the domestic legislation was designed to protect the jobs of employees; if so, and Mr Mead is right, it has failed Mr Stephen Chapman. Further, G & T did what they believed was right at the time in the light of the law as it was then understood. The Tribunal were referred to Suzen and Betts and took those cases into account when reaching their decision, which he asks us to uphold.

The Applicant did not appear and was not represented before us today. However, we have taken into account the written submissions put before us on his behalf.

With little enthusiasm we have concluded that Mr Mead is correct in his submissions; the Industrial Tribunal, with whom we have considerable sympathy, deciding this case shortly after the judgments in Suzen and Betts were published, and perhaps not fully appreciating the impact of those cases on the previous perception, failed to apply the regulations in accordance with those judgments and in so doing fell into error in our judgment.

Accordingly, we shall allow the appeal; reverse the finding of the Industrial Tribunal and declare that no relevant transfer took place between G & T and Connick. We therefore set aside the finding of unfair dismissal against Connick and remit the case to a fresh Industrial Tribunal to determine the Applicant's alternative complaint of unfair dismissal, entitlement to a redundancy payment and pay in lieu of notice against G & T in accordance with our declaration.