At the Tribunal | |
On 5 November 1999 | |
Before
HIS HONOUR JUDGE PETER CLARK
MRS R CHAPMAN
MR S M SPRINGER MBE
APPELLANT | |
2) SECRETARY OF STATE FOR TRADE AND INDUSTRY |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
Revised
For the Appellants | MR M BARKLEM (of Counsel) Fishers 6-8 Kilwardby Street Ashby-de-la-Zouch Leicestershire LE65 2FU |
For the First Respondents For the Second Respondent |
THE FIRST RESPONDENTS NEITHER BEING PRESENTED NOR REPRSENTED MR R H BRITTEN (Solicitor) Legal Services Directorate Department of Trade & Industry 10 Victoria Street London SW1H 0NN |
JUDGE PETER CLARK:
The facts
"The Administrator in turn made it clear immediately on his appointment that he would not allow [Hobbs Welch] to trade and would dismiss the staff because there were no assets to pay them at that stage and that is what he did on 27 January."
The Employment Tribunal decision
"10. In Litster –v- Forth Dry Dock & Engineering Co Ltd [1989] IRLR 161 the House of Lords held that, where an employee has been unfairly dismissed before a transfer for a reason connected with the transfer, he is to be deemed to have been employed in the undertaking "immediately before the transfer" and the employment is statutorily continued with the transferee. Regulation 5(3) must be read as if there were inserted after the words "immediately before the transfer" the words "or would have been so employed if he had not been unfairly dismissed in the circumstances described in Regulation 8(1)." The House of Lords held that such a construction was necessary for the Regulations effectively to fulfil the purpose for which they were made of giving effect to the provisions of EEC Directive 77/187. Further, UK courts are under a duty to give a purposive construction to directives and to regulations issued for the purpose of complying with directives."
"11. In the present case, for good commercial reasons, the directors of the first respondents decided to have an administrator appointed. It was throughout apparent that any sale which he effected would more probably than not be in favour of the directors, or some legal body which they set up. This was because of the way in which the ownership of the assets upon which the first respondents depended for their trading, was distributed. There was a possibility that the first respondents' manufacturing contractors might make a counter-bid, but in fact they did not respond to the administrator's approaches.
12. The administrator in turn made it clear immediately on his appointment that he would not allow the first respondents to trade and would dismiss the staff because there were no assets to pay them at that stage, and that is what he did on 27 January. By 30 January the first respondents acting through the administrator, and Honeycombe 78 had concluded a substantial agreement for sale of the assets. That agreement was conditional, in reality, only on the obtaining of a court order which was duly obtained, so that the agreement became unconditional and was concluded on 11 February. From the date of the appointment of Mr Hall as administrator to that date was 15 days.
13. In those circumstances we conclude that the applicants were dismissed by reason of the transfer which had been in the offing ever since Mr Hall made his first report prior to the court hearing. Accordingly, liability for the payments which the applicants seek as a result of the termination of their employment by the administrator of the first respondents, passes to Honeycombe 78, who are liable to make payments which would otherwise have been due to the applicants from the first respondents."
The Appeal
"(1) Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of Part V of the 1978 Act and Articles 20 to 41 of the 1976 Order (unfair dismissal) as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal.
(2) Where an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after a relevant transfer is the reason or the principal reason for dismissing an employee-
(a) paragraph (1) above shall not apply to his dismissal; but
(b) without prejudice to the application of section 57(3) of the 1978 Act or Article 22(10) of the 1976 Order (test of fair dismissal), the dismissal shall for the purposes of section 57(1)(b) of that Act and Article 22(1)(b) of that Order (substantial reason for dismissal) be regarded as having been for a substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."
"… It is worth noting that it was found as a fact by the Industrial Tribunal, first, that the sequence of events was the result of independent action by the receivers and the transferees and that there was no collusion between them and, secondly, that the reason why the receivers decided to dismiss the workforce was that, until a contract could be renegotiated with the company's principal customer, there was no prospect of any work for the business. It follows from these findings that the reason for the dismissal was not one connected with the transfer but was due to economic considerations, with the result that regulation 8(1) did not render the dismissals unfair. …"
"… In order to determine whether the only reason for dismissal was the transfer itself, account must be taken of the objective circumstances in which the dismissal occurred and, in particular, in a case like the present one, the fact that it took place on a date close to that of the transfer and that the workers concerned were re-engaged by the transferee."
Conclusion