United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR D. Berry, solicitor BERRY & WALTON Solicitors Chancery House 8 King Street King's Lynn Norfolk PE30 1ES


 


JUDGE COLLINS

1. This is the preliminary hearing of an appeal against the decision of an employment tribunal

sitting at Norwich, their extended reasons having been given on 21 October 1999. The tribunal dismissed the applications for unfair dismissal of all three appellants who are members of the same family, Mr & Mrs Bunting and their son. Since we are unanimously of the view that this is a case where points in the case are reasonably arguable, I shall give our reasons briefly.

2. Mr & Mrs Bunting were respectively Director and Secretary of a company called Petrochemical Maintenance Service Limited (PMS). 95% of the business of that company was maintenance work at Dow Chemicals at King's Lynn. It happened that Dow Chemicals decided that they were going to have the maintenance work done by another company and accordingly gave notice to terminate the PMS contract on 5 March 1999. PMS having no other significant business, its operations effectively terminated. The respondent company, Hertel UK Ltd now carry on business doing the same work for Dow as PMS were doing beforehand. There is no connection between PMS and Hertel and there was no transaction between them. There are a number of differences in the way Hertel does the work and in other aspects of their business ; those differences are set out in detail in the reasons of the tribunal.
3. There were two questions which the tribunal had to decide. First, was there a relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981. Second, if there had been a relevant transfer, were Mr & Mrs Bunting employees of PMS, it having been accepted that Mr S Bunting was indeed an employee. He had been a general labourer and occasional driver. The reasoning of the tribunal is set out and culminates in paragraph 21 of their decision. They defined economic entity as the management of PMS, its employees, its assets in the way of equipment, its premises and the right to carry out the Dow Chemical contract at their factory site in King's Lynn. The fact that the economic entity consisted of the elements which we have listed, made it different in nature from the mere service contract which the tribunal had found to constitute a economic entity in ECM(Vehicle Delivery Service) Ltd v Cox 1999 IRLR 559..
4. For the purposes of this judgment, I do not propose to refer to any of the authorities. It is simply sufficient to say that it is clearly arguable as to whether or not the tribunal was correct in defining economic entity in a way which effectively pre-empted their decision as to whether or not the entity was transferred. Defining it as including the management of PMS inevitably attracted the decision that there was no transfer. Further, in paragraph 23, when they decided whether or not the economic entity was transferred, they proceeded to answer that question by applying what they described as an observant visitor test. Whether the observant visitor test was the correct test to apply when deciding whether or not a physical economic entity was the same as that which existed previously is an interesting concept but it is plainly one which is capable of being questioned. For both these reasons we think that there is a reasonably arguable case that the tribunal were wrong in their decision that the undertaking had not been transferred.
5. Turning to the other aspect of the matter, the tribunal decided that Mr & Mrs Bunting were not employees. The facts are a little complicated and it is not necessary to go into detail. Suffice it to say that Mr Bunting, in his capacity as trustee of a discretionary settlement was also the majority shareholder of PMS. The tribunal took the view, after looking at the authorities, that since his position involved his having control of the company, (and his wife was included in this approach) he could not possibly be an employee, even though they recognised the recent decisions of the Court of Appeal reiterating the position at common law. There is nothing to prevent somebody from being the majority shareholder in a one man company and also an employee in the capacity of Managing Director. A difficulty in the tribunal's reasoning is that in the same paragraph in which they drew that conclusion they also concluded that Mr & Mrs Bunting did provide services to PMS for reward. It seems to us it is at least arguable that those findings were inconsistent. The question of whether or not Mr & Mrs Bunting were employees was reasonably arguable. For those reasons we shall direct that this case proceeds to a full hearing.