United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR J B FARRELL (Representative)
For the Respondents	MR ANDREW T SANDER (of Counsel) Messrs Mace & Jones Grundy Kershaw Solicitors Drury House 19 Water Street Liverpool L2 0RP


 


MR JUSTICE MORISON (PRESIDENT): This is an appeal against the decision of an Industrial Tribunal Chairman, sitting alone at Liverpool. Following a two day hearing the learned Chairman decided that seven out of 40 applicants were employed by the respondents, Mersey Docks & Harbour Company ["MDHC"]; and that the remaining 33 applicants were not so employed. In relation to the 33 applications, their complaints were dismissed. All bar nine of the 33 unsuccessful applicants have managed to arrive at a compromise with the respondent company. By an order dated 17th February 1998, the Employment Appeal Tribunal, at a preliminary hearing, allowed their appeal to proceed to a full hearing which took place on 14th September 1998.

The question at issue before the Industrial Tribunal Chairman was whether the nine applicants were employed by MDHC between 2nd February 1991 and January 1995. The applicants alleged that they were so employed; the respondents contended that during that period they were employed by a company called Liverpool Cargo Handling Limited ["LCH"], a company in which MDHC at all material times held one half of the issued share capital. The learned Chairman concluded that in February 1991 approximately 120 former MDHC employees took up employment with LCH. Apparently of that number, 80 at some stage moved back to take up employment again with MDHC. The balance of 40 people who remained with LCH included the present applicants. The Industrial Tribunal found as a fact that on movement to LCH most of the 40 applicants were issued with P45s by MDHC but that seven of them were not. None of the nine appellants is one of the seven who were not given a P45. The tribunal also found as a fact that MDHC's records were amended to show that the employment of the 33 applicants were amended to show that their employment was terminated and their names were removed from their list of employees. The seven who were not issued with P45s remained on MDHC's books and continued to be paid be them. The dock work declined after 1991. Trade was poor. Negotiations took place between LCH and TGWU to see if economies could be effected and there was industrial dispute.

In support of his conclusions, the learned Chairman relied upon a letter dated 14th January 1991 written by a representative of MDHC to the TGWU. He said:

"It [the letter] records what was agreed at a meeting on 4 January 1991. The terms described are those of a move out of employment by the respondents into employment by LCH (see in particular paragraphs 1 and 3 on page 1). But certain valued rights were expressly preserved, in particular pension rights: it was important to the union that the move to LCH should not leave the employees financially worse off, hence the special provision as to pension."

Further, the Industrial Tribunal Chairman relied upon the events in 1995 to show that there was a transfer back from LCH to MDHC. The documents show that that MDHC was at all times asserting that the men concerned were employed by LCH and were transferring to employment with MDHC as a result of an offer of transfer. Negotiations with TGWU culminated in an agreement between the union and LCH by which the employees chose whether to take voluntary severance or employment with MDHC. Those who took up this option included the 31 who made new contracts. None of the nine surviving appellants made new contracts. The conclusions of the learned Chairman were expressed in paragraph 8 of his decision to this effect:

"8. I decided that in January 1991, each of the applicants made a new contract of employment with LCH; it ended a period of employment for the respondents. Here are my reasons:-

(a) The important question to decide was: what happened in January 1991 when each applicant moved from the respondents to LCH: Before the move, on 2 February 1991, there were negotiations and agreement. The evidence made it clear that what was being negotiated was a new contract for new employment with LCH, a distinct entity from the respondents. I could not understand Mr Cliff's letter of 14 January 1991 in any other way.

(b) Both at the time of the negotiations and transfer and later the understanding of the parties involved was that the applicants became employees of LCH. The respondents' records were altered to remove them. They were all (as I found) issued with forms P45. When they moved back from LCH to the respondents, there was irresistible evidence of everyone's understanding that this was a move from being employed by LCH. Acceptance forms were signed that signified as much. Contracts of employment embodying the offer and acceptance of employment (with continuity of service) were signed. Mr Furlong wrote the letter of 20 January 1995 with the same understanding, shared clearly by Mr Dempsey [an official of the TGWU]. Indeed, the professed belief that the applicant were between 1991 and 1995 employed by the respondents was, it appears, conceived only during the course of these proceedings and came after assertions that during that period, LCH was the employer.

(c) While the opinion of parties as to their legal relations need not be definitive, people's unanimity over a long period that LCH employed the applicants helped to persuade me where the truth lay. It confirmed what was indicated by the evidence of what happened at the relevant time, January 1991; and it suggested what the parties intended at that relevant time. The parties intended that the applicants should be employed by LCH and considered that they had achieved that end; and so they had.

(d) The applicants' retention of certain benefits such as pension rights did not alter the effect of what happened in January 1991. The transfer was agreed after negotiations in which the union was anxious to protect its members financially. Thus there were special conditions affording such protection."

Mr Farrell, on behalf of the appellants, in a forceful submission which was fairly made, contended that the decision of the Industrial Tribunal Chairman could not be supported. His first point was that there can be no doubt from the documentation that before the alleged transfer to LCH all the people concerned were employed by MDHC. They had been issued with contracts of employment in 1989. MDHC was a large and efficient organisation and if there had been a transfer of employment it is incredible that there was no documentation generated to show that the employees were now employed by LCH. He contended that if there had been a change of employer there would have been a new contract of employment issued.

Secondly, he submitted that the Industrial Tribunal Chairman was prepared to accept that a distinction could be drawn between seven of the 40 and the 33. Effectively, the Industrial Tribunal accepted that those seven had remained employed by MDHC but that their services had been seconded to LCH. There was no evidence to support a distinction between the seven and other 33. In the first place until the hearing began it was not the contention in the witness statements filed on behalf of the respondents that there was such a distinction to be drawn. The alleged distinction related to the pension position of the seven as opposed to the pension position of the 33. The employers made a concession in relation to the seven because it was their assertion to the Industrial Tribunal that they had been members of the MDHC pension scheme and their pension entitlement would have been adversely affected by a transfer to LCH which was not a participating employer in MDHC's pension scheme; whereas the other 33 were members of the dockworkers or former dockworkers' pension scheme and remained eligible during their employment with LCH. Mr Farrell contended that there was no factual basis for drawing a distinction between the two groups. He asserted that in order to participate in the dockworkers' pension scheme the employer had to be a relevant employer, that is one who was in existence as at the date when the scheme was introduced. LCH were formed after the relevant date and therefore were not entitled to make pension contributions to the dockworkers' pension fund. He accepted that during the course of their employment 1991 and 1995 deductions were made in respect of the employees' contributions to the pension scheme, but he contended that either those contributions were paid into the MDHC pension fund or, for pension purposes, it was represented to the trustees of the dockworkers' pension scheme that MDHC were the employers. The other alleged distinction between the group of seven and the group of 33 relied upon by the Industrial Tribunal Chairman was that the 33 received their PAYE certificates in 1991 showing that their employment with MDHC had terminated, whereas the seven did not receive such documents. Mr Farrell pointed out that there was a remarkable lacuna in the evidence. Mr Price was not responsible for issuing the P45s and gave evidence; Mr Jones was not there and apparently was not responsible for issuing them. There were two or three copy P45s included within the bundle handed to the Industrial Tribunal. But there was no indication in the documents that a P45 had been issued, and the applicants said that no such P45s were issued. Accordingly there was no satisfactory foundation for the Industrial Tribunal's finding that the two groups could be distinguished on PAYE grounds.

Mr Farrell stressed the linkage between LCH and MDHC. Quite apart from the shareholding, it transpired that the management function of LCH was performed by managers employed by MDHC personnel; at least towards the end of its existence LCH shared banking facilities with MDHC; MDHC performed LCH's payroll function; MDHC's bonus scheme for MDHC employees continued to apply; and the redundancy payments made to those who took that option were paid by MDHC.

Accordingly, on that basis, Mr Farrell submitted that the learned Chairman had completely misunderstood the facts. Mr Farrell indicated that there was nothing in the tribunal's decision to show that he had weighed in the balance the evidence given on behalf of the applicants and had not indicated that he taken into account any of the submissions made to us which he said were made to the Industrial Tribunal.

For the employers, Mr Sander of Counsel submitted that the Industrial Tribunal Chairman was faced with conflicting evidence and he had to make the relevant findings of fact. He emphasised that it was not for the Employment Appeal Tribunal to substitute its own view of the credibility of the evidence presented to the Industrial Tribunal. He submitted that the Industrial Tribunal decision was not to be criticised for things not contained within it. It was fallacious to suggest that because a point was not referred to in the decision it was not taken into account by the Industrial Tribunal. We invited him to assist us on the pension argument raised by Mr Farrell but regrettably he was unable to do so. We were provided with a guidance booklet to the dockworkers' pension scheme. But that did not deal with the question at issue, namely whether LCH were entitled to participate as employers in that scheme.

We have to confess that each member of the EAT has been troubled by the decision of the Industrial Tribunal, having regard to the submissions which Mr Farrell made to it. But at the end of the day we felt unable to intervene. We are unable to say that the learned Chairman has misdirected himself in law or has arrived at a perverse conclusion.

The history of these proceedings is instructive. Firstly, when the Originating Applications were originally filed in April 1995, each of the applicants was contending that he had been employed by LCH and had been dismissed by LCH on 27th January 1995. Secondly, on 23rd October 1995 each of the applicants then alleged that there had been a transfer of an undertaking from LCH to MDHC in January 1995 which had resulted in the dismissal of the applicants by LCH. Thirdly, in April 1996, it was then alleged on behalf of the applicants that there had been a relevant transfer from LCH to another entity. That contention led to an Industrial Tribunal hearing in September 1996. The Industrial Tribunal on that occasion concluded that there had not been a relevant transfer. At that hearing the contention was that the applicants had been employed by LCH at the relevant date. It was only 20th May 1997, more than two years after the events complained of had taken place, that the applicants for the first time alleged that MDHC were the employers during the period January 1991 to January 1995. We consider that this history is highly pertinent to the question at issue.

This is not a case where the individual applicants did not have access to advice as to their position through their trade union. Indeed, some of the applicants were actively involved in trade union affairs. During the relevant period, the payslips of the individuals indicated that they were employed by LCH. In our judgment the Industrial Tribunal was entitled to conclude that P45s were issued to 33 out of the 40 individuals. Despite the lacuna in the evidence as to the issuing of the P45s, MDHC's records showed that P45s had been issued to certain people and that the applicants and all of them had ceased to be employed by MDHC in 1991. The explanation for the lack of documentation may lie in the fact that it was convenient both to the trade union officials involved in the arrangements at that time and to the company to deal with the matter in a less than formal manner. We were troubled about the pension position arising from the parties' submissions. But it seems to us that it would be going beyond our remit to seek to explore arguments which may not have been fully developed before the Industrial Tribunal. Although a witness gave evidence to the effect that LCH was not and could not have been a participating employer, the Industrial Tribunal was not obliged to accept that evidence in the absence of being provided with the pension scheme rules which would have clarified the point. Had the trade union wished to refer to those rules then it would have been open to them to have done so because the rules were available to the trade union and could be inspected by members of the scheme at the trade union premises.

On balance, therefore, we have come to the conclusion that the appeal should be dismissed. But we would like to pay tribute to the forceful but careful way in which the appellants' case was presented to us by Mr Farrell.