United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	Ms P M R Walsh Solicitor Messrs Binghams & Co Solicitors Chancery House 53-64 Chancery Lane London WC2A 1QU


 


HIS HONOUR JUDGE J BURKE QC

1. This is the preliminary hearing of the appeal of Mr Allen and twenty six other employees, who were, until the events we are about briefly to describe, employees of Dresdner Kleinwort Benson ("Dresdners") in the City of London. They all worked in their employer's mail rooms or messenger centres.
2. In 2000, Dresdners decided to contract out their mail room and messenger centres operations to the Second Respondents, Williams Lea Facilities Management Ltd. Eventually, a formal agreement was entered into, said to be operative from July 2000, although not signed till much later; but before it actually was signed up and before it began to operate, both Dresdners and the contractors who were going to take on the operations, Williams Lea Facilities Management Ltd, assured the employees that the Transfer of Undertakings (Protection of Employment) Regulations ("TUPE") would apply to the employees in the mail room and messenger operations, and they were promised they would be employed after the change on the same terms and conditions of employment as before.
3. It is said, and there is as yet no finding upon this, that those promises were not adhered to, and, in any event, because obligations as to pensions do not transfer under the law as it now is, or was at the relevant time, pursuant to TUPE, the employees, on transfer on, were to be on different pension terms. We were told that many of the employees have since been dismissed. Of course, if there was no transfer within the meaning of the TUPE Regulations, then all of those who were purportedly transferred would have been dismissed by Dresdners; and there would have been no transfer of any of the obligations of their contracts of employment.
4. For those reasons the employees, or at least those employees who are now Appellants, preferred to take the view that they were not transferred; Dresdners and the contractors said that they were. The Tribunal ordered that that issue be decided as a preliminary point, in relation to various claims, including claims for breach of contract and unfair dismissal, which the employees had made.
5. That preliminary point came before the Tribunal in July 2001. The Tribunal sitting at London Central, chaired by Mr Solomons, in a Decision sent to the parties on 16 August 2001 with Extended Reasons, unanimously decided that there had been a transfer of undertakings from Dresdners to the contractors. It is against that Decision that these employees now appeal.
6. It is important to point out in this judgment, because some of the employees are here and no doubt they are here as representing all of the employees concerned, that this Employment Appeal Tribunal does not have the power to reconsider the facts of a case which was decided on facts before the Tribunal or to review the evidence and substitute its own view for the conclusions as to facts of the Tribunal themselves.
7. The Employment Appeal Tribunal will, and should, interfere with the decision of a Tribunal if that decision contains an error of law or if a finding of fact was perverse, in the sense that it was a decision which no reasonable Tribunal could reach, or if it was perverse in the sense that it was reached on the basis of consideration of factors which were irrelevant, or failure to consider factors which were relevant.
8. At the present preliminary stage, we have to consider whether any points of law or perversity are arguable, and in looking at that it is necessary first to see how the Tribunal directed themselves as to the law. They directed themselves, after making extensive findings of fact, to consider whether the operations relinquished by Dresdners and taken up by Williams Lea were an undertaking or part of an undertaking (and clearly here it was the latter) which was a stable economic entity capable of being transferred and then to consider whether there was indeed a transfer on the facts of the individual case.
9. Both of those questions were essentially factual questions. The Tribunal directed themselves to follow the guidance set out by the Employment Appeal Tribunal in the case of Cheeseman [2001] IRLR 144, from which there can be derived a series of factors which Tribunals should look at in considering first of all whether there is a stable economic entity which can be the subject of a TUPE transfer and, secondly, whether there has been any transfer of that entity.
10. In her submissions to us on behalf of the employees, Ms Walsh has not suggested that the Tribunal's direction to itself, either as to the law or as to the factors which are to be taken into account by a Tribunal in considering the answers to the two essential questions, was in any way in error. Those factors are set out in great detail in paragraph 12 of the Tribunal's Decision; in paragraph 13 the Tribunal set out the rival submissions of the parties and then proceeded in paragraph 14 to their conclusions. The Tribunal said, having considered the facts, the law and the submissions of the parties, that they concluded that the operations, at which they were looking did constitute a discrete, stable economic entity the activity of which was not limited to performing one specific works contract. They found that the entity was an organised grouping of persons and facilities enabling the exercise of an economic activity, namely the provision of mail room and messenger services to the various departments of Dresdners. The employees were organised into an autonomous group, responsible only for the particular services of that operation and for nothing else; and no other employees were responsible for that operation. They recognised in paragraph 14(ii) that the operation did not have significant assets apart from its labour force, although they referred to the use of Dresdners' premises and to a certain amount of equipment which they had referred to in more detail in paragraph 9 of their Decision, where they were finding the facts.
11. They recorded that the activity, at its most basic, was essentially based on manpower. They pointed out that the mail room was a separate costs centre, the employees were provided with specific uniforms which were not provided to anybody else and, on the basis of looking at all the factors, they concluded that there was a stable economic entity, capable of being transferred.
12. Turning to the second question, they looked at the factors; they set out the reasons why they came to the conclusion that this case was as classic a transfer of an undertaking case as there could be; and they concluded that there was a transfer, of what they had already concluded was a distinct economic entity which could be transferred. They directed themselves specifically to the important question as to whether there was a transfer or not, namely whether the entity in question retained its identity in the hands of the new operators, and found that it did.
13. Ms Walsh has, on behalf of the employees, taken a number of points which we were careful to note as she made them and which we have recognised as amounting to eight points. The first is that the Tribunal did not take into account the factor that no tangible assets were transferred. We do not regard that as giving rise to an arguable ground of appeal. The Tribunal, at paragraph 14)(ii) has expressly considered that the operation which was transferred did not have significant assets which were transferred, and while we agree with Ms Walsh that no one factor is decisive, and everything has to be looked at in the round, as this Tribunal, in our judgment, manifestly did, we do not see how this particular point can be singled out as the subject of an attack, when the Tribunal expressly directed their attention to it. What they made of it, what weight they gave to it, was a matter for them, not a matter for us.
14. Secondly, Ms Walsh argues that the Tribunal held that the decisive factor was the transfer of staff. With respect to the argument, that is not in fact what the Tribunal said. The Tribunal said, at paragraph 14(v), correctly as a matter of law, that the decisive criterion for establishing the existence of a transfer is whether the entity in question retained its identity, as indicated by the fact that its operation continues, and they decided that on the facts in favour of there being a transfer.
15. The third point made to us was really rather the opposite point to point 1, because Ms Walsh said that the Tribunal had said that the assets used were insignificant, in paragraph 14(ii), although computers and x-ray machines, and the like, were used, but were not transferred. But that point is specifically referred to in paragraph 9 of the Tribunal's Decision; and we see no arguable basis on which it could be said that they ignored it.
16. Fourthly, Ms Walsh submitted that the messengers and mail room staff were not the subject of a profit and loss account of their own but came under the heading of the Facilities Department, who controlled what they did and how they did it; and she points out that none of the management transferred with the staff. The Tribunal expressly found, in paragraph 14(iii) that the mail room was a separate costs centre; it is not an essential prerequisite that it should be; nor is it an essential prerequisite that it should have its own profit and loss account, but the Tribunal found that it was a separate costs centre; they were plainly entitled to make that finding, indeed it has not been suggested that that was not a finding that they could make; and they were entitled to give such weight to that factor as they thought right. We do not see that the absence of a separate profit and loss account arguably undermines the Tribunal's general conclusions.
17. Next, it is pointed out that there were over three thousand employees and that the mail room and messenger operation had never been regarded as other than an ancillary or support service to the operation of Dresdners as a whole. There was, of course, no suggestion from either side that those facts were not absolutely correct. It was not in dispute that, in looking at mail rooms and messenger centres, the Tribunal was only looking at a small service provision which was one part of the whole operation of Dresdners; that did not need to be spelt out; that was not the issue. The issue was whether the mail rooms and messenger centres amounted to a discrete economic entity capable of being transferred. Ms Walsh submitted that in her view, they were not a discrete economic entity; but the problem with that is that the Tribunal found on the facts that they were, and we see no basis for arguing that that Decision on the facts was perverse.
18. In the passage from the European Court of Justice's decision in Oy Liikenne, to which Ms Walsh directed our attention, a number of factors which are or can be some of the factors to be considered in a TUPE case of this nature, were listed. Those factors seem to us to have been clearly referred to by the Tribunal, insofar as they arose in this case. Ms Walsh is quite correct, of course, to say, as Oy Liikenne and other decisions say, that an entity cannot be reduced to its activity, and it is clear to us beyond peradventure that this Tribunal did not approach this case on the basis of looking only at an activity. They took time to consider not just the activity but whether the context in which the activity took place established a stable economic entity capable of being transferred.
19. Next Ms Walsh referred us to the terms of the agreement between Dresdners and the contractors which provided that the terms of the contracting out would be one of three years, terminable after twelve months for whatever reason, and terminable earlier in the event of breach of certain contractual terms. Thus, Ms Walsh argued, that it was potentially a short-term contract; and one can well understand the anxieties of employees who are transferred (to use the word neutrally for the moment) from the employment of A to the employment of B, when B's contract with A for the provision of the relevant services, might go down the plughole after only one year, leaving them in a state of uncertainty as to what was then going to happen to them, although one would hope were that fate to fall, they would then be "TUPE'd", to use a colloquial expression, on to the next person who picked up the services.
20. It is right for Ms Walsh to submit to us that the transient nature of the contracting out is a relevant factor; but it is equally a factor which, in this case, the Tribunal expressly took into account. It did so at paragraph 14(vii), and it is not arguable that the Tribunal were not entitled, having taken that factor into account as a factor against the transfer, nevertheless to find, having looked at the factors as a whole, that there was a transfer. The same applies to the fact that the contract could be terminated earlier than after a year on breach; indeed, any contract for the provisions of services can be terminated, should the provider of the services commit a repudiatory breach in whatever the formal agreement, unless it excludes such a right (which would be a very rare bird indeed.)
21. Finally, we were directed to the fact that Dresdners would have the absolute right to withdraw the licence to the Second Respondents, the contractors to enter Dresdners' premises for the purpose of carrying out their services. We suspect that the intention of that provision was to enable Dresdners, should the contract have been terminated, to prevent the employees of the contractors coming on the premises, asserting that the contract had not been terminated, or had not been terminated properly; we so suspect that because, if the contract was still continuing, it would be strange if Dresdners wanted to exclude from their premises the very people who were those who carried out their mail room and messenger services; but whether our conjecture about that be right or wrong, the fact is that the Tribunal referred to that in paragraph 8 and plainly had it mind; and we do not see any arguable ground of appeal there.
22. We have taken great care in this case to go through the points that Ms Walsh has made to us in a little detail and indeed in more detail, perhaps, than is often the case at a preliminary hearing; and we have some sympathy for the position of these employees. Whereas TUPE usually is taken to be a set of provisions which operates in favour of employees who might otherwise find themselves without a job, we recognise that there are situations, and this case may well be one of them, when it does or may do to them what appears to be a disservice.
23. Having said that, and having expressed sympathy, which we do, we have to follow the principles on which the Employment Appeal Tribunal must operate. Having looked carefully at this case as we have, we regret to say that we cannot find any arguable ground of appeal; and for the reasons that we have set out, this appeal must be dismissed.