United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MS A RUSSELL (of Counsel) Messrs Stonehams Solicitors 17 Scarbrook House Croydon Surrey CRO 1SQ
For the Respondents	MS JENNIFER EADY (of Counsel)


 


MR JUSTICE CHARLES: We have two appeals before us today. The Appellant in both appeals is the London Borough of Croydon.

1. The Respondents in one of the appeals which is EAT/133/96 are a Miss Fuller and five other ladies, and the Respondents to the other appeal EAT/289/96 are a Mr Samuels and a Mr Ford. In respect of the Fuller Appeal a Consent Order has been placed before us for our approval. I shall however deal with both appeals in this judgment.
2. The Fuller Appeal is against an Order of an Employment Tribunal sitting at Brighton, the Extended Reasons for which were sent to the parties on 21 December 1995. In fact Miss Fuller's claim was dismissed on withdrawal and the Employment Tribunal's decision relates to the other five Applicants who are the Respondents to the Fuller Appeal. The decision was that unlawful deductions had been made from their wages.
3. The Samuels Appeal is against a decision of an Employment Tribunal sitting at London (South), the Extended Reasons for which were sent to the parties on 30 January 1996. That decision was again that deductions contrary to Section 1 of the Wages Act had been made in respect of the wages of the Respondents to that appeal.
4. The factual background to both appeals was not disputed before the respective Employment Tribunals and was that, as a result of compulsory competitive tendering, the Appellant Borough transferred a number of its recreational activities to a company called Contemporary Leisure Plc. The Respondents in the Fuller Appeal were employed as swimming pool attendants and the Respondents in the Samuels Appeal were employed as park keepers.
5. Paragraph 2 of the Extended Reasons of the decision of the Employment Tribunal in the Samuels case is in the following terms:

"2. As a result of compulsory competitive tendering, the Borough transferred a number of its recreational activities, including park keeping, to Contemporary Leisure plc on 2 February 1993. It was not then appreciated that the transfer constituted a transfer of an undertaking within the Transfer of Undertakings Regulations. At that time, although it was known that the United Kingdom was in breach of its Treaty obligations by reason of its failure to extend these Regulations to non-commercial undertakings, it was believed that it was necessary for this defect to be remedied by legislative provision. Such legislative provision was made but did not become effective until later in 1993. The Borough, therefore, dismissed the employees affected by the transfer and paid them compensation for redundancy.

The equivalent paragraph in the Fuller case is paragraph 4:

"4. The undisputed facts are as follows. Prior to July 1992 Mesdames Davis, Gillam and Kingham were employed by the Respondents at New Addington Swimming Pool as swimming pool attendants. Prior to January 1993 Mesdames Hatley and Smith were similarly employed by the Respondents at South Norwood Swimming Pool. In 1992, pursuant to the Local Government Act 1988, the Respondents put out to compulsory competitive tender the management of the two swimming pools. The tender was won by Contemporary Leisure plc, hereinafter call 'Contemporary'. The Respondents terminated the contracts of employment of all five employees and made them enhanced redundancy payments. In July 1992 Contemporary commenced the management of New Addington Pool and took on as employees Mesdames Davis, Gillam and Kingham and in January 1993 the management of the South Norwood Pool taking on as employees Mesdames Hatley and Smith. In all cases there was no interruption in the employees periods of service and the Respondents now concede that there was then a relevant transfer from the Respondents to Contemporary of two undertakings (within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations SI 1981 No.1794 hereinafter referred to as the Regulations) although at the time that was not the generally held view for the reason that what was transferred were two non-commercial ventures. In Dr Sophie Redmond Stichting v Bartol 1992 IRLR 366 ECJ the European Court held that the exclusion of non-commercial ventures from the effect of the national equivalent of the Regulations violated the intent of the European Community Directive 77/187."

6. The common ground between both appeals is therefore that they both related to the transfer of recreational activities by the Appellant Borough and in both cases the Employment Tribunal found that the Borough dismissed the employees and made redundancy payments to them. It is also apparent from those paragraphs that it is now accepted that TUPE applied to the transfers, although it seems that this was not the case at the time that they took place.
7. The history of the litigation has been helpfully set out in a Skeleton Argument provided to us by Counsel who appears today for the Appellant Borough and is as follows. This history is related to the Samuels Appeal but there is a mirror image history in respect of the Fuller Appeal which we will not set out. The history is as follows.
8. In March 1995 the Respondents presented Originating Applications to the Employment Tribunal claiming that they had suffered unlawful deductions from their wages from the date that they had commenced employment with Contemporary Leisure Plc. Their claims were upheld. The Tribunal also found that deductions by Contemporary Leisure Plc prior to December 1994 and those made by the Appellant after that date were not part of the same series.
9. The Appellant lodged a Notice of Appeal dated 7 March 1996 against the decision of the Employment Tribunal. The Respondents lodged an Answer and a Cross-Appeal dated 4 April 1996. The case came before the Employment Appeal Tribunal on 28 October 1996. The decision of this Tribunal on that date, with the consent of the parties, was that the appeal be adjourned generally until the final resolution of Wilson v St Helens Borough Council, with liberty to the parties to restore. If restored the appeal to be listed before the same Employment Appeal Tribunal to be given priority listing.
10. The case of Wilson v St Helens Borough Council has now been decided by the House of Lords and is reported, for example, in 1998 IRLR 706. The submission of the Appellants is that the decision of the House of Lords in that case determines these two cases. We agree. It follows that the Employment Tribunal erred in law when they found, in both cases, that the Respondents were entitled to enjoy the same terms and conditions of employment with Contemporary Leisure Plc as they had with the Appellant and that no variation was permissible. This is because in the Wilson case the House of Lords decided that a dismissal prior to a transfer is not rendered a nullity by TUPE, nor is there any automatic obligation upon the transferee to continue to employ the employees who have been dismissed.
11. It follows that where an effective termination of the contracts of employment has taken place, even if it is unfair, that termination is effective and the question of variation does not arise. As I recollect Lord Slynn's speech in Wilson he indicated that the issue as to variation is something that should go to Europe by way of a reference.
12. It is against that background that the Respondents in the Fuller Appeal, with the benefit of advice from their Solicitors and their Union, invite us to make a Consent Order allowing the appeal of the Appellant Borough in terms of the Amended Notice of Appeal and dismissing the Cross-Appeal. We agree with that Order and we will make it. That Order provides, understandably, that there should be no Order as to costs.
13. The position so far as the Samuels Appeal is concerned is that we have been informed by Counsel for the Appellant Borough and accept from her that extensive efforts have been made, both by those that instruct her and by the Union, to contact the Respondents to that appeal. We have been shown a letter written by the Solicitors acting for the Appellant Borough to both the Respondents in that appeal, which is a letter copied to the Union, UNISON. That letter was sent to the last known addresses of the two gentlemen concerned and makes the point that the issues on the Appeal and Cross-Appeal in their case are effectively decided by the House of Lords in the Wilson case and that if they resist the Appeal and pursue their Cross-Appeal they would be at risk of an application for costs being made against them.
14. This Tribunal has issued a Practice Direction as to how appeals should be dealt with when there is consent between the parties and that is our Practice Direction (Employment Appeal Tribunal – Procedure) 1996. The relevant paragraph is paragraph 13. Paragraph 13 (4) addresses the problem as to what should be done when an appeal is to be allowed. The problem naturally occurs because the appeal can only be allowed when this Tribunal is satisfied that the Employment Tribunal have made an error of law. It is therefore necessary for parties, even though they agree with one another that an error of law has been made, to satisfy us that that is the case and it is then for us to allow the appeal with the effect that the order made by the Employment Tribunal no longer exists. Subparagraph (4) of that Practice Direction reads as follows:

"(4) If the parties reach an agreement that the appeal should be allowed by consent and that an order made by the Industrial Tribunal should be reversed or varied or the matter remitted to the Industrial Tribunal on the ground that the decision contains an error of law, it is usually necessary for the matter to be heard by the EAT to determine whether there is a good reason for making the order which both parties agree should be made. In order to save costs, it may be appropriate for the Appellant or a representative only to attend to argue the case for allowing the appeal and making the order that the parties wish the EAT to make."

15. That is what has happened in the Fuller Appeal. Counsel, in our view correctly, indicated that there might have been potential in this case if both sets of Respondents to the appeals had agreed that the appeals should be dismissed of the matter being dealt with on paper. It is not clear to us that this Tribunal would have taken that view. Speaking for myself it is likely that I would have required attendance by a representative of the Appellants simply to put the matter before a full Tribunal, to satisfy them that the decisions of the Employment Tribunal should be set aside. Other judges may, I accept, have taken a different view and dealt with the matter on paper after finding two Members to consult and agree with him or her.
16. The Appellant Borough through Counsel, in our judgment properly, make an application for costs against the Respondents to the Samuels Appeal. That application is naturally made pursuant to Rule 34 of our Rules and was put on the basis that part of the costs incurred of attendance were unnecessary and were brought about by the unreasonable conduct of the Respondents to the Samuels Appeal.
17. As the submission developed, in our judgment properly, Counsel for the Appellant Borough indicated that her application was for part of the costs of her attendance being her brief and preparation of a Skeleton Argument. She submitted, and we accept, that if there had been a response from the Respondents to the attempts that had been made to contact them, the likelihood is that more junior Counsel would have been instructed to attend and the costs of the Skeleton Argument would have been reduced.
18. We accept that there is force in those submissions. But we have concluded that it would not be right for us to classify the conduct of these Respondents as being unreasonable and therefore to conclude that because of that unreasonable conduct there was unnecessary expenditure. A problem that we have is that we do not know that these two gentlemen still live at the same addresses, but assuming that they do and assuming that they received the letters, given the history of this litigation it seems to us that two gentlemen in their position would be extremely tempted to put any of these letters into the wastepaper basket and it is not, we think, right in the circumstances to classify that conduct as unreasonable. The consideration by, and interest of, employment lawyers in the Wilson decision is, we suspect, something that does not consume much of their time and thinking and in all the circumstances we think it would be wrong to classify their conduct in this case as being unreasonable, that conduct being silence in response to requests by the Solicitors acting for the London Borough of Croydon and their Union as to what they should be doing on this appeal. We therefore refuse the application for costs.
19. However, we do make an Order in equivalent terms to the Order that has helpfully been put before us by Consent in the Fuller Appeal so that, in the Samuels case the Appeal will also be allowed in the terms of the Amended Notice of Appeal in that case and the Cross-Appeal by the Respondents in that case will be dismissed.
20. Finally, we would express our gratitude to Counsel for the London Borough of Croydon for providing us with an updated and helpful Skeleton which overtakes the first ones we got which were the 1996 ones.