United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR I TEASDALE (The First Appellant in Person)


 


JUDGE PETER CLARK: Mr and Mrs Kaz were, until 19th January 1998, the owners of the Birdham Hotel, Bembridge, Isle of Wight. In that hotel business they employed the three applicants to the Southampton Employment Tribunal: Mrs Brocklehurst, Mrs Smedley and Mrs McGovern. They also employed a barman, Trevor Relf, and another employee, Anthea Fyrth.

The business ran into financial difficulties. The bankers, Barclays Bank, obtained an order for possession of the hotel premises. Mrs Kaz was looking for a buyer.

A sale took place. Completion was on 19th January 1998. The purchasers were Mr Teasdale and Mr Swain, the appellant before us, and a company Zurich Securities Limited.

Prior to completion the appellants wrote to Mrs Kaz, making it clear that they did not want the staff save for Mr Relf and Ms Fyrth. Ms Fyrth left before completion date; Mr Relf continued working at the hotel after that date and remains there.

That requirement appears in Clause 14 of the sale agreement. It was a term of that agreement, by Clause 14.1, that the seller should, prior to completion dismiss all employees save for Mr Relf and Ms Fyrth, and make all payments necessary to effect such dismissals. By Clause 14.3 the seller agreed to indemnify the buyer against any claims brought by the employees following dismissal.

Mrs Kaz duly dismissed the three applicants on or before the completion date.

The applicants then brought complaints of unfair dismissal and wrongful dismissal against Mr and Mrs Kaz and the appellants by Originating Applications presented to the Southampton Employment Tribunal on 16th March 1998. The claims were resisted.

On 3rd June 1998 a Chairman sitting at Southampton, held that a relevant transfer had taken place between Mr and Mrs Kaz and the appellants for the purposes of Regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ["TUPE"]. That decision was promulgated on 19th June 1998 ["the transfer decision"]. Mr Teasdale then wrote to the Employment Tribunal on 25th June 1998 and we shall return to that letter later in this judgment.

Following a further directions hearing held on 8th July 1998, the substantive hearing of the matter took place before a full tribunal chaired by Mr A M Snelson on 22nd July 1998.

That tribunal's decision with summary reasons was promulgated on 3rd September 1998. The appellants entered a Notice of Appeal against that decision enclosing the tribunal's summary reasons, that Notice is dated 9th September 1998. Subsequently, the Chairman produced extended reasons dated 16th November 1998.

In those extended reasons the tribunal identified the following issues for determination:

"a) Was there a relevant transfer of the business by the First Respondents to the Second Respondents? [They found that the issue had been decided by the Chairman in the transfer decision.]

b) Were the Applicant's dismissed?

c) If the Applicants were dismissed, what was the reason for their dismissal?

d) Depending on the answers to (b) and (c), what remedies (if any) should the Tribunal award?"

The tribunal dealt with those four issues as follows:

(a) the issue as to whether a relevant transfer had taken place between Mr and Mrs Kaz and the appellants had been determined by the earlier transfer decision. In so far as the appellants were seeking to re-open that question at the substantive hearing, by way of a review application, that application was without merit and out of time. No reason for extending time was advanced. The time limit is 14 days from the date of the transfer decision being promulgated.

(b) the three applicants were dismissed by Mrs Kaz at the request of the appellants. They were employed in the hotel undertaking immediately before the transfer on 19th January 1998 within the meaning of Regulation 5(3) of TUPE as explained by the House of Lords in the case of Litster v Forth Dry Dock & Engineering Co Ltd [1989] IRLR 161.

(c) the dismissal was automatically unfair by virtue of Regulations 8(1) of TUPE, no economic, technical or organisational defence having been pleaded or advanced by the appellants.

(d) the applicants had been dismissed unfairly and in breach of contract in that they had not received their contractual entitlement to notice or pay in lieu. Assessments of damages and compensation were then made in each case.

The Appeal

Mr Teasdale raises two issues in this appeal:

(1) the transfer decision was fundamentally flawed he submits because the appellants had not seen documents produced by Mrs Kaz until after the Chairman had made the transfer decision on 3rd June 1998.

Further, that his letter of 25th June 1998, received by the tribunal on 29th June 1998, was an application for review of the transfer decision within the 14 day time limit contrary to the Snelson tribunal's finding that review application at the 22nd July 1998 hearing was out of time. He says that this was a fundamental breach of natural justice that the appellants were required to defend themselves without having had proper access to the vendors' documents.

(2) whether the appellants have throughout, sought to advance an economic, technical or organisational argument under Regulation 8(2) of TUPE and if so, whether as Mr Teasdale submits, that argument is correct.

Dealing with the first issue, we are satisfied that Mr Teasdale's letter of 25th June 1998 cannot be viewed as an application for a review of the transfer decision. It was too late to seek a review of that decision by a different tribunal at the substantive hearing on 22nd July 1998. Further, there was no appeal in time against the transfer decision. We can see no grounds for extending time for appealing applying the principles in United Arab Emirates v Abdelghafar [1995] ICR 465. Accordingly it is not now open to the appellants to challenge the transfer decision in this appeal.

As to the second point, the finding of the tribunal was that Mrs Kaz's reason for dismissing the three applicants was that she was on the point of selling the hotel and transferring the business to the appellants and she knew from them that they would not take on the applicants. That finding, which was not disputed by the appellants as a matter of fact, particularly bearing in mind Clause 14 of the sale agreement, entitled the tribunal conclude that the dismissals were for a reason connected with the transfer and were automatically unfair under Regulation 8(1) of TUPE. Assuming in favour of the appellants that the economic, technical or organisational argument was raised below, in our judgment it was bound to fail on the facts as found. The economic, technical or organisational reason must relate to the conduct of the business and not merely be a reason designed to effect a sale. Wheeler v Patel [1987] ICR 631. This is so, even where the business will fold, as undoubtedly it would have done in this case, if the transfer had not taken place. See Michael Peters Ltd v Farnfield [1995] IRLR 190, per Tucker J, paragraphs 26-28.

In these circumstances, at this preliminary hearing, we are satisfied that this appeal raises no arguable point of law and it must be dismissed.