United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR K BRYANT (Of Counsel) ELAAS


 


JUDGE C SMITH: This is an application for leave to proceed to a full hearing of an appeal by Mr J Lloyd t/a Daily Office Cleaning, who was the first Respondent in the proceedings before the Industrial Tribunal, against the decision of an Industrial Tribunal held at Bristol on 3 July 1998, of which extended reasons were sent to the parties on 5 August 1998, whereby the Industrial Tribunal held that the Applicant before them, Mr Wheadon's contract of employment, which had been with the first Respondent, had not been transferred to the second Respondents, D Freeguard t/a Western Property Services, with the result that it was the order of the Industrial Tribunal that the second Respondents should be dismissed from the suit. It is against that ruling, that there was no transfer under TUPE, that the appeal is now being lodged.

We remind ourselves that the Appellant, Mr Lloyd, only has to show an arguable ground of appeal to be allowed to proceed to a full hearing of his appeal. The Industrial Tribunal, which was a full Industrial Tribunal, a Chairman sitting with two Members, gave extended reasons which, in our judgment, are clearly set out and self-explanatory. It appears from those extended reasons that the Industrial Tribunal correctly set out the issue which they had to decide at paragraph 2 of their decision and they made important findings of fact in paragraph 3 of their decision. They found, that Transom House was owned by Land Securities Ltd and they found as a fact that between 1995 and 20 February 1998 the first Respondent, Mr Lloyd - the Appellant before us - had the contract to provide what the Industrial Tribunal described as 'the caretaking and cleaning services for that property' and they found as a fact, in the last sentence of paragraph 3, that the operation which the Appellant was performing for Land Securities Ltd was part of the Appellant's larger business, as the Industrial Tribunal described it, of providing 'caretaking and cleaning services for a number of properties'. So there are findings of fact that the services which were being provided to the customer company were caretaking and cleaning services.

The Industrial Tribunal found that Mr Wheadon had been employed by Mr Lloyd as a caretaker and that he had been given notice on 3 February 1998 to take effect on 1 March 1998. That appears from paragraph 4 of the Industrial Tribunal's decision. The Industrial Tribunal went on to find as a fact that on 18 February 1998, Land Securities Ltd terminated the contract with the Appellant, Mr Lloyd, with effect from 20 February 1998 because they had been dissatisfied with the performance they had received under the contract.

The Industrial Tribunal then made a series of findings of fact, which are of importance, as set out in paragraph 5 of the decision. Those findings are self-explanatory. Importantly, included within those findings is the finding that when the second Respondent, Mr Freeguard t/a Western Property Services, took over the contract that he delivered the service with temporary staff but then engaged sub-contract cleaners to do the cleaning, that he did take on the Applicant before the Industrial Tribunal, Mr Wheadon, as caretaker, but that he did not engage the other caretaker or any of the cleaners. We should note in passing that the Industrial Tribunal found that there were four cleaners as well as a second caretaker.

Those were the findings of fact by the Industrial Tribunal by which we intend to incorporate all the facts found by the Industrial Tribunal in paragraph 5 in addition to the matters which we have already summarised. The Industrial Tribunal then correctly referred themselves to Regulation 3 of the Transfer of Undertaking Regulations 1981 and to the well known series of cases both in the European Court of Justice and in the English Courts relating to whether a relevant transfer occurs and, in particular, the Industrial Tribunal referred themselves to the case of Suzen v Zehnacker [1997] IRLR 255 and identified the issue before them as to whether there was an economic entity which retained its identity on the transfer..

The Industrial Tribunal then set out a citation from Suzen and correctly set out the principles laid down by that important authority. In the final paragraph of the extract from the judgment which they cited in Suzen it is clear from that judgment that

"In labour-intensive sectors, a group of workers... may constitute an economic entity and such an entity is capable of maintaining its identity after it has been transferred where the new employer does not merely pursue the activity in question but also takes over a major part, in terms of their numbers and skills, of the employees specially assigned to his predecessor to that task. In those circumstances the new employer takes over a body of asset[s] enabling him to carry on activities of the transfer or undertaking on a regular basis."

This is an extract from Suzen which the Industrial Tribunal cited and which they clearly had very well in mind.

They then proceeded, in paragraph 7, to apply the principles from the case of Suzen to the facts that they had found. They held that they were concerned with a labour-intensive sector, namely the provision of caretaking and cleaning services, and that the determining factor for their decision was whether the second Respondent had taken over a major part, in terms of their number and skills, of the employees assigned to perform that activity, namely, the activity of providing caretaking and cleaning services. They then went on to find that, although the services were carried out on the same premises by the second Respondents and for the same owner, Land Securities Ltd, they were not performed by essentially the same labour force because of the relevant employees, i.e. two caretakers and what they held to be four cleaners, the second Respondent only took on one caretaker, namely, Mr Wheadon, the Applicant before the Industrial Tribunal. Accordingly, they concluded, applying the principles in Suzen, that it could not be said the economic entity had retained its identity, because it was now delivered by different people. So they held that there was no transfer, accordingly. That is a summary of their decision.

The first point that is taken, by way of arguable ground of appeal, is the submission that the Industrial Tribunal ought to have divided out and to have severed the caretaking and the cleaning services, the one from the other, since there was evidence before them that there were two separate invoices in relation to the caretaking and the cleaning services. There were separate quotations shown separately on invoices submitted for payment. But in our judgment that argument is totally foreclosed by the findings of fact of the Industrial Tribunal. It is quite clear from the findings of fact of the Industrial Tribunal to which we have referred that they found that the entity with which they were concerned and the trading activity constituting that entity were the global provision of both caretaking and cleaning services. In our judgment that is a finding of fact by the Industrial Tribunal which, in any event, is not inconsistent with there having been separate quotations in the way we have described which may well be needed in order to establish the appropriate breakdown for the overall figure to be paid for the contract. So we must reject that submission as being one that does not give rise to any arguable point of law on the basis that there was some kind of total misunderstanding by the Industrial Tribunal of the way in which the matter was being put before them.

Then it is submitted that, even assuming, contrary to the first submission, that the Industrial Tribunal were correct in dealing with the matter on the basis that the relevant economic entity comprised the provision of caretaking and cleaning services together, there was still a misapplication of the test in Suzen. There is no argument to the effect that the Industrial Tribunal had not correctly cited Suzen, of course they had, but the submission is made to us that they misapplied the criteria laid down by Suzen in regard to a labour-intensive sector by failing to take into account the proportion of hours worked by the Applicant before them, Mr Wheadon, as against the hours worked by the cleaners and the second caretaker. It is pointed out in addition, by way of a subsidiary argument in relation to this point, that there were in fact only three cleaners rather than four. It is submitted in the skeleton argument that if one goes through the exercise of working out how many hours Mr Wheadon had worked and how important his position was as the sole caretaker - accumulating a great deal of experience and knowledge of the duties of caretaker and having built up a rapport with the tenants of the building and so on - then, it is submitted, the Industrial Tribunal erred in law in not taking these matters into account when they were applying the test in Suzen. But in our judgment the Industrial Tribunal here did faithfully and correctly, in what is a difficult area, apply the test laid down in the leading case of Suzen.

The question for the Industrial Tribunal was whether the alleged transferee employer took over a major part, in terms of their numbers and skills, of the employees specially assigned by his predecessor to that task. In our judgment it is a question, to some extent, of counting heads, as the Chairman indeed did. Here, none of the cleaners was taken over and only one of the caretakers. Assuming that there were only three cleaners and two caretakers, the effect is that of five employees only one was taken over. Of course we accept that this can give rise to a situation where the whole underlying purpose of the transfer regulations can, in certain circumstances, be evaded. This was the kind of argument which was put forward successfully in the recent case of ECM Vehicle Delivery Service v Cox [1998] IRLR 416, where it was held by the Employment Appeal Tribunal that where an employer has decided not to take on employees in an attempt to avoid the operation of TUPE and where if he had taken them on there would have been a transfer, that is not a proper approach and in those circumstances there can nevertheless have been a transfer. But in our judgment there is no room for any such argument in the present case. There was no indication in the evidence before the Industrial Tribunal that there had been any reference in any of the negotiations relating to the transfer to the TUPE regulations or anything of that kind. The point simply did not arise for determination in this particular case.

For those reasons we find that there are no arguable grounds of appeal and, accordingly, this application must be dismissed.