United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR R HAWKER (Consultant) 34 Primrose Drive Foxholes Hertford SG13 7TG


 


THE HONOURABLE MR JUSTICE WALL

1. This is the Preliminary Hearing of an appeal by Rosam Heims PLC against the unanimous decision of the Employment Tribunal sitting at London South on various dates between 6 December 2000 and 18 July 2001 with Extended Reasons sent to the parties on
   16 August.
2. The Tribunal had before it a preliminary issue in relation to the claims by the first two Appellants, Ms Duke and Mr Lennie. Ms Duke asserted that she had been employed by a company called Jefferies and Pennicott Ltd (J&P) which had gone into administration. Her claim against that company for a redundancy payment had been rejected on the grounds that the business of J&P had been transferred to the Appellant. The Appellant had not offered her employment and as a consequence she applied to the Tribunal for relief on the basis that the transfer of J&P to the Appellant was a TUPE transfer and that the Appellant was liable under TUPE. Mr Lennie made a claim on similar grounds for unfair dismissal. Both claims were resisted by the Appellant which denied it was the employer of the two Applicants. The Tribunal directed a preliminary issue on the issue of whether or not TUPE applied and the unanimous decision of the Tribunal was that TUPE did apply and that there was a relevant transfer of the undertaking of the business on 22 February 2000 to the Appellants. The Appellants now seek to appeal against that finding.
3. In summary, the essence of the case is that the Jefferies and Pennicott Group of companies was the supplier of bailiff services, principally to Local Authorities. There were a number of subsidiary companies, including the company with which the Tribunal was particularly concerned, Jefferies and Pennicott Eastern Limited. On 9 February the group went into administration and Panel Kerr Forster were appointed joint administrators of the group, which apparently owed some £2 million to creditors, principally to clients for whom money had been collected but not passed on. The administrators were able to sell two of the companies in the group, J&P Northern and J&P Southern, and as between the administrator and the purchaser of those companies there was an agreement that TUPE applied. In deciding whether or not TUPE applied to the sale to the Appellant of the two companies concerned, including J&P Eastern Ltd, the Tribunal went into some detail and set out the negotiating documentation and the Heads of Agreement which were finally signed on 22 February 2000 and which formed the basis of the Tribunal's finding that TUPE applied. For the purposes of this judgment I think it is unnecessary to go into that, or indeed, into the terms of the Heads of Agreement in any detail.
4. The issues before the Tribunal were whether there was an economic entity which could be transferred, and if so, what was it? Secondly, if there was an economic entity, had it been transferred? The sole point taken on this appeal in relation to TUPE is that the business previously carried on by the J&P Group was in fact operating illegally. Mr Hawker, who appeared for the Appellants below, submitted to the Tribunal that there was no economic entity because J&P had been operating illegally as only one of its bailiffs was certified; that its management of the J&P group was in the hands of administrators, and the workforce remaining no longer had the same identity. The Tribunal was not impressed with that argument and rejected it.
5. In considering the question of transfer, the Tribunal dealt with a substantial number of issues relating to the nature of the assets and personnel transferred, including goodwill or lack of it. They also took into account, in paragraph 11(iv) and (v) of their reasoning, that the bailiffs employed by the Appellants needed substantial re-training and certification before they could lawfully undertake bailiff business and that there was, necessarily, a suspension of their activity during that period. The Tribunal also took into account the fact that a number of bailiff staff who had been taken on by the Appellant left after a short interval.
6. Having dealt with the matter in the round the Tribunal concluded unanimously that there was a transfer of an economic entity; that the entity in question retained its identity by actually continuing its operation providing bailiff services and the majority in terms of their numbers and skills of the employees were specifically assigned by J&P Eastern and JPL for the task of providing bailiff services transferred to the Appellant. The Tribunal also took into account that in the event only a few of the J&P clients were taken on by the Appellant, albeit with a turnover in excess of £100,000, and that the bailiff staff were under trained and uncertified and that a number had left the Appellant's employ after a short interval. They therefore concluded that the transaction met the decisive criteria for a relevant transfer and having regard to the purpose of TUPE, taking all factors together, there was a relevant transfer. We also, of course, bear in mind that the purpose of TUPE is to protect the employment rights of otherwise vulnerable employees.
7. This morning Mr Hawker has renewed the argument which was unsuccessful before the Tribunal. His submission is that the fact that a number of the contracts of service which were taken over were tainted with illegality not only undermined, or could be said to undermine, the individual protection rights of the individual employees, but taken together was of such a nature as to result in an absence of an entity to be transferred. In other words, if there were so many illegal contracts in the transfer the removal of those contracts from the equation effectively meant that the Tribunal was left with a shell which could not constitute an entity capable of being transferred. We invited Mr Hawker to advise us if there was any authority on this particular point, namely, that the illegality of the contracts of employment, or the illegality of the activity being undertaken by the company was sufficient to render it not an entity capable of being transferred under TUPE. He told us (this is not a criticism of him) there is no authority on that point. This is a point therefore of some importance which at the moment appears to be open and undecided.
8. We also put to Mr Hawker the alternative proposition, that if this appeal was unarguable and fell to be dismissed he would nonetheless have the right in the Tribunal to argue that the individual contracts of the two Applicants were themselves tainted with illegality and that they therefore should not have such relief. Mr Hawker accepted that this argument may be open to him but nonetheless maintained his stance that the degree of illegality in the instant case was sufficient to render the entity one which could not properly be transferred under TUPE.
9. Whilst we do not regard this as an altogether happy point, we have decided, after discussion, that it is arguable. There is no authority on the point and it was not the subject, it would seem, of detailed argument from the submissions from the Department of Trade and Industry which were put before the Tribunal; indeed, the Department does not appear to have dealt with the point at all. In these circumstances we take the view that it is a point of some public interest and importance. Whether it will ultimately succeed in this particular case is, of course, a matter for the Employment Appeal Tribunal which hears the case. We have decided, for the reasons I have given, that the point is arguable and therefore should be argued. We will therefore allow the appeal to proceed to a Full Hearing. Category B, half a day.