United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	SHANTANU MAJUMDAR (of Counsel) Instructed by: Darbys Mallam Lewis Solicitors 52 New Inn Hall Street Oxford OX1 2QA


 


MR RECORDER BURKE QC

1. This is the preliminary hearing of an appeal by Key Communications against the Decision that was reached on a preliminary issue by the Employment Tribunal at London North, chaired by Mr Menon and sent to the parties with Extended Reasons on 24 August 2000.
2. There were originally six Applicants, but the present appeal is concerned only with three of them: Mrs Rose, Mr McKeone and Dr Walker. They claimed unfair dismissal, redundancy payments and contractual remedies. There were as many as five Respondents; we will describe them in this way: the Second and Third Respondents were two sister companies who shared accommodation in London EC4. The Second Respondents were in the business of public relations, the Third Respondents were media analysts. The First Respondents, the present Appellants, are a sizeable company carrying on business also in the field of public relations, but are not interested in, or concerned with media analysis. The Fifth Respondent was a subsidiary of the Second Respondents.
3. Mr McKeone and Dr Walker were Directors of the Third Respondents. Prior to the Third Respondents and the Second Respondents going into receivership, on 23 December 1998, the Third Respondents, it seems, actually traded under the tradename of "Impact" or "Impact Evaluation" or some such name.
4. In December 1998, as the Tribunal found, the three employees were employed by the Third Respondents. Both the Third and the Second Respondents went into receivership on the date that we have described. Elements of the Second Respondents' business were sold by the receivers to the First Respondents on 24 December.
5. There was an issue as to whether there was a transfer of undertakings of the Second Respondents' business to the First Respondents. The business of the Third Respondents was sold on the same day, nominally to the First Respondents; but the First Respondents contended that it was buying that business on behalf of Mr McKeone or any company which he formed to run that business. There were issues as to whether there was a transfer of undertakings at all, in respect of the Third Respondents' business, and if so, whether it was to the First Respondents or to the Fifth Respondents; it is not clear whether it was ever considered that it might have been transferred to Mr McKeone himself, although that does seem to us to have been at least something more than a theoretical possibility.
6. There were issues as to whether, at the time when these transfers were going on, there was a series of transfers, or more than one transfer, ending up with the business of the Third Respondents being in the hands of Mr McKeone, or Impact. Those were not the only issues which the Tribunal had to decide, there was an issue as to who was, before the receivership, the employer of the three Applicants, which the Tribunal resolved in the manner which we have described, and which is no longer in dispute; and there was also an issue as to whether the apparent dismissal by the receivers of all the employees of the Second and Third Respondents on 24 December was effective and valid, so as to prevent any of those employees being transferred under the Transfer of Undertakings Regulations at all. That issue was determined by the Tribunal on the basis that the dismissal was ineffective, and that also is not presently under attack.
7. Finally, there were issues as to whether, in the case of four of the employees, except Mrs Rose, some of their claims were out of time, that decision, too, does not arise for our consideration today. The Tribunal decided that in the case of Mr McKeone and Dr Walker, all their claims were out of time, except their claims to redundancy payments, but that Mrs Rose's claims were all in time.
8. Having decided that the dismissal by the receivers was ineffective, then of course, the Tribunal's focus was directed upon the effects, in law, of the transactions which occurred on 24 December and thereafter. The Tribunal had to embark on the perilous waters of the Transfer of Undertakings Regulations, analysing firstly what had happened, and then, secondly, how what had happened affected the positions of the employees and the various companies to which we have referred, between themselves. It decided firstly that there was, on 24 December, a transfer of the business of the Second Respondents, and the Third Respondents to the First Respondents, and that therefore the employees' contracts of employment were transferred, pursuant to the Regulations, to the First Respondents.
9. The Tribunal then decided that there was a further transfer of the Third Respondents' business, now in the hands of the First Respondents, to the Fifth Respondents, but that that did not take place until 19 April 1999. By that time, concluded the Tribunal, the employees transferred to the First Respondents, as we have described, had somehow or other terminated their contracts of employment, or those contracts of employment had ceased to exist; and therefore they did not pass to the Fifth Respondents on the subsequent 19 April transfer. Thus the employees' claims arising from termination of their employment lay against the First Respondents, the present Appellants. Accordingly the Tribunal ordered a hearing on the merits of those claims as against the First Respondents alone.
10. That may seem to be an enormously lengthy description of the background to the grounds of appeal which have been put before us today, but without that explanation of the facts, as they appeared to us at this preliminary hearing, what we are about to say may not be readily understood. Most prominent in the First Respondent's attack upon the Tribunal's Decision is the finding that the Third Respondents' business did not transfer to either Mr McKeone, or Impact, the Fifth Respondents, and stayed in the hands of the First Respondents until 19 April.
11. The facts appear to have been, and indeed were found by the Tribunal to be, that the First Respondents were not interested in the Third Respondents' business, and only purchased it nominally, acting in reality on behalf of Mr McKeone, at his express request. Whether before the Tribunal the concept of agency was actually argued it is impossible to say from the Decision; but whether or not it was argued in that form, in substance, that is what the First Respondents were saying had occurred; and, of course, if the First Respondents were only agents for Mr McKeone or for some company which was in the immediate future going to take over the business from Mr McKeone then the First Respondents would never themselves have been the transferees of the business; or at least it is arguable that they never themselves became transferees of the business.
12. Another way of examining or analysing the history is, arguably, to suggest that there was more than one transfer, there having been up to three transfers, namely to the First Respondents and then to Mr McKeone, and then to the Fifth Respondents; or that what was happening was all one conglomeration of transactions which should have been taken together and regarded as one single transfer, in which the First Respondents played no part, save as a conduit.
13. The Decision of the Tribunal, it is said, does not have sufficient reasoning behind it for it to be unassailable, and we agree with Mr Majumdar who has appeared on behalf of the First Respondents, that the criticisms that he makes of the Tribunal's findings or lack thereof, are arguable. We agree too, that it is arguable that in concluding, albeit these matters are matters of fact, that there was a transfer to the First Respondents, substantively, rather than as agents or nominally, and secondly, no further transfer until April to the Fifth Respondents, that the Tribunal erred.
14. It appears that while the agreement between the receivers and the First Respondents took place on 24 December, by 29 December, on the Tribunal's own findings, Mr McKeone, not seemingly under the aegis of the First Respondents, and Dr Walker were carrying on the business of the Third Respondents in their own name, or in the name of the Fifth Respondents, without (bearing in mind the Christmas break) any discontinuity, and that they continued to do so up until April of the following year, and that all that happened in April of the following year was that there were some negotiations about payment by Mr McKeone, or on his behalf, of the purchase price for the Third Respondents' business of £2,500, which according to the findings of the Tribunal, Mr Kent, on behalf of the First Respondents had agreed, could be deferred for a year from the time when the transaction took place.
15. The Tribunal also appears arguably to have given no reasons, or no adequate reasons, for its decision that the employment of the employees somehow came to an end at the hands of the First Respondents, between 24 December 1998 and 19 April 1999, so that their employment were not transferred to the Fifth Respondents on that day (if indeed the transfer did occur on that day); and we think that there are arguable grounds for appeal there too.
16. This was obviously a complex case; and the Tribunal approached their Decision in detail, and no doubt with diligence. But having looked at the arguments set out in Mr Majumdar's Skeleton Argument, which develop the grounds of appeal we conclude that those grounds, all of them, do give rise to arguable grounds for an appeal; and therefore this appeal should go forward to a full hearing. Having considered with Mr Majumdar, who the right Respondents to the appeal should be, there being a separate appeal in the case of each of the employees we direct that in each appeal the Respondents should be the individual employee, and the Fifth Respondents, Impact.
17. The effect of those parts of the Decision which are not attacked by the First Respondents today, is that there can no longer be a suggestion that any liability rests on the Second or Third Respondents, or on the Fourth Respondent, the Secretary of State. If any of the Respondents, by way of cross-appeal raise any issue which might involve those Respondents, then the Tribunal may have to consider further directions; but at this stage, the 2^nd, 3^rd and 4^th Respondents are not parties upon whom these proceedings by way of appeal need to be served.