United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR F MALONE (Solicitor) The Appellant In Person
For the Respondent	MR M HARDYMAN (Of Counsel) Instructed by Messrs Edward Hayes Solicitors 22 West Street Chichester West Sussex PO19 1HZ

MR RECORDER UNDERHILL

1. The Appellant, Mr Matthews, was the proprietor of a car body shop business known as Anton Motors. He employed the three Respondents, to whom we shall refer as the employees. The business became unviable and on 14 May 1999 Mr Matthews wrote to each of the employees in the following terms:

"I regretfully have to inform you that as from 28 May 1999 this business will be discontinued and therefore I have to issue you with two weeks' official notice as from 14 May 1999".

On 28 May the employees were paid their wages up to that date, together with certain holiday pay, and were issued with P45s.

2. The employees each brought proceedings in the Employment Tribunal claiming redundancy payments and damages for wrongful dismissal on the basis that they had received inadequate notice. Those claims were heard together by the Tribunal on 14 October 1999. The Tribunal found for the employees and ordered payment of various sums by way of redundancy payments and damages for wrongful dismissal which we need not set out here.
3. The Appellant's defence before the Employment Tribunal depended on the fact that on 2 June (that is five days after their dismissal had taken effect) the employees had taken over the premises of Anton Motors, including the equipment, from him under what was described as a licence arrangement, paying a rental of £350 per week, and had started their own business doing essentially what they had done before when they had been his employees. He contended that this amounted to the transfer of an undertaking within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981 and that this meant that he was not under any liability to them in relation to the dismissals.
4. The legal analysis lying behind that submission is not very clearly articulated by the Tribunal, perhaps reflecting the submissions before it; but it has been common ground before the parties on this appeal and it can summarised as follows. If the arrangements between Mr Matthews and the employees constituted the transfer of an undertaking within the meaning of the Regulations any liabilities which Mr Matthews might have owed to them arising out of the dismissal would have transferred to them under regulation 5 and thus effectively have been extinguished - provided that either (a) they had been employed at the moment of transfer (that is to say on 2 June) or (b) they could be in effect deemed to have been in employment on that date, though not in fact, because they had been dismissed for a "transfer-related reason" contrary to regulation 8 (see the decision of the House of Lords in Litster v Forth Drydock v Engineering Co Ltd [1991] AC 546).
5. The former - (a) - was not the case because a five day interval had occurred between the termination of employment and the transfer of the undertaking (if that is what it was) - see the decision of the Court of Appeal, approved in Litster, in Secretary of State for Employment v Spence [1986] ICR 651. But Mr Matthews says that the case focus within (b), that is to say that the principal reason for the dismissals was the impending transfer. The Tribunal found explicitly that that was not the case: see paragraph 14 of its Reasons. But Mr Matthews' submission, powerfully and clearly argued on his behalf today by Mr Malone (who did not appear in the Tribunal), is that that conclusion was wrong in law.
6. That is how the issue arises. We approach it as follows:

(1) Mr Matthews issued notices of dismissal to the employees and those notices took effect on 28 May. There can therefore be no doubt that the employees were dismissed with effect from that date. Mr Mathews told the Tribunal that the issuing of those notices was a mistake, and that he had issued them on legal advice obtained via his secretary (see paragraph 13 of the Reasons): that may be so, but it cannot alter the legal effect of what he did.

(2) On the face of it, Mr Matthews' reason for serving notice was that he was intending to cease to carry on the business for the purpose of which the employees were employed, that is the business of Anton Motors. That clearly falls within the definition of redundancy in section 139(1) of the Employment Rights Act 1996. In the Tribunal Mr Matthews alleged that at the time that the notices were served he was already in negotiation with one of the employees, acting on behalf of all of them, to transfer the business to them. The Tribunal carefully considered whether that was so as a matter of fact and rejected Mr Matthews' evidence on that point. That finding could not be and is not challenged. But we would observe that even if he had been in negotiation with the employees at that time we do not believe that that would have meant that the reason for giving notice was not redundancy. As we have observed, it is quite plain that his immediate reason was that he intended to cease to carry on the business himself, and that is a purpose falling within the definition of redundancy. Transferring the business did not necessitate dismissals: if anything, it made dismissals unnecessary - that may well be why Mr Matthews now says that serving the notices was a mistake.

(3) Although the Tribunal found that negotiations for the new arrangements had not occurred before the notice was given, those negotiations did plainly start at some point in the next two weeks, and before the dismissals finally took effect, because the Tribunal recites that an agreement (though apparently only an informal and preliminary agreement) was reached on 27 or 28 May. Mr Malone says that that fact must, or in any event may, have altered the reason for the dismissal as it was at the time that the notice was given so that it became a transfer-related reason, that is to say a reason falling within regulation 8 of the Regulations. We do not see how this can be so. As indicated above, the fact that the business would or might now be transferred was not in any way a reason for dismissing the employees. If anything, it was a reason for not doing so. One way of testing whether an actual or contemplated transfer is the reason for a dismissal is to ask whether that dismissal would have proceeded but for the transfer. It seems to us that on the facts of this case the conclusion is inevitable that the dismissals would have proceeded even if there had been no transfer. The notices had been given on 28 May unconditionally and could not be withdrawn unilaterally.

(4) We therefore reach the conclusion, first, that these were dismissals for redundancy within the meaning of the 1996 Act; and secondly, that the liability for those dismissals remained with Mr Matthews, as the employer who had carried out the dismissals, and did not transfer to the employees under the Regulations.

(5) We have not needed in reaching that conclusion to rely on the presumption as to redundancy in section 163(2) of the 1996 Act; but that would afford further support if it were necessary.

7. Mr Malone says that the Tribunal did not approach the case in quite that way. In particular, having held that the transfer had nothing to do with the giving of the notices, the Tribunal did not go on to ask whether the position changed between 14 May and 28 May, when they took effect. He says that that is an error of law because the reason for a dismissal has to be judged ultimately as at the time that it takes effect, even though the starting point in making that judgment may be the reason why the notice is given. We accept that the Tribunal did not explicitly consider the position between 14 May and 28 May in the way that Mr Malone says that it should have done. However, we do not believe that this justifies overturning the decision. For the reasons already given, we do not see that the impending transfer could have constituted the, or a, reason for the dismissal whether judged at the time the notice was given or at the time that it took effect. Whether that is categorised as saying that the Tribunal did not deal with the matter because it did not need to, or as a case where a technical misdirection has made no difference because the result would have certainly been the same in any event, does not matter. The fact remains that the decision of the Tribunal was fundamentally correct in law and should stand.
8. It also follows that the Tribunal was entirely justified in deciding that it did not need to proceed to consider whether the arrangements between Mr Matthews and the employees amounted to the transfer of an undertaking (see paragraph 14 of the Reasons).
9. We should briefly mention one other point. Mr Malone raised in oral argument the possibility that in entering into the arrangements which they did with Mr Matthews the employees were to be taken to have agreed to the withdrawal of the notice of dismissal. As a proposition of law, that must with respect be wrong. Of course, they could have so agreed, but there is no reason why they should be presumed to have done so. As a proposition of fact, it is clear that the question of such agreement was not raised or considered in the Employment Tribunal. Even if evidence to support it would have been available, which we frankly doubt, it is in any event in our judgment clearly too late to allow such a point to be raised now.
10. We accordingly dismiss the appeal.