United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ANTHONY HOWARD (of Counsel) Instructed By: Wilkinson Woodward 11 Fountain Street Halifax HX1 1LU
For the Respondent	MISS C GRUNDY (of Counsel) Instructed By: Watsons 33/39 Railway Road Darwen Lancashire BB3 2RL


 


MR JUSTICE BELL:

1. These are appeals by David Hodgson, the First Appellant, and Arthur Rudd, the Second Appellant, against the decision of the Employment Tribunal dated the 30 August 2000 after a hearing on the 9 August 2000 that the Tribunal did not have jurisdiction to hear their complaints of unfair dismissal by Ashworth Products Ltd, the First Respondent.
2. Both appellants were originally employed as drivers by JDT Foods Ltd, the Second Respondent. The First Appellant's employment began on the 1 December 1997. The Second Appellant's employment began on the 20^th April 1998. Their work, or the main part of it, involved collecting fats and oils from Asda. In 1999, the Second Respondent got into financial difficulties and it terminated the employment of the First Appellant and the Second Appellant on the grounds of redundancy on Friday 9^th October 1999, at or about the time that it went into liquidation.
3. On Monday, 11^th October 1999, the Appellants and another employee of the Second Respondent, John Cameron, started employment with the First Respondent, again collecting oils and fats from Asda. As we understand the position, helped by counsel this morning, the position was that the contract with Asda for the collection of oils and fats from Asda was originally held by the Second Respondent. After the 9^th October, it was held by a firm called FM Collections, the partners in which Miss Warrington and Mr Wallbank, had been two of the three Directors in the Second Respondent. Asda originally paid the Second Respondent and then later FM Collections for taking away the oils and fats. FM Collection sold the oils and fats to the First Respondent which in turn invoiced FM Collections for the cost of transport, the payment of the drivers, including the First and Second Appellants and expenses in relation to the use and running of the vehicles concerned. A licence is required to transport waste foodstuffs. FM Collections did not have such a licence but the First Respondent did.
4. The Second Appellant's employment was terminated by the First Respondent on the 19^th November 1999. The First Appellants' employment was terminated on the 7^th January 2000. Happily both were re-employed by a company, Brocklesby, which took over the Asda contract.
5. Both Appellants brought claims for unfair dismissal against the First Respondent. Of course they had only been employed by the First Respondent for a few weeks but they contended that there had been a transfer of undertaking for the purposes of Regulations 3 and 5 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE") from the Second Respondent to the First Respondent so that they had the necessary 12 months continuous employment to bring their claims for unfair dismissal against the First Respondent.
6. It was the First Respondent's case that there had been no transfer of undertaking for the purposes of TUPE. The Tribunal decided that the business of the Second Respondent had been transferred, not to the First Respondent, but to the trading partnership, FM Collections. So, as the First Respondent contended, the qualifying employment of the Appellants to bring claims against the First Respondent fell well short of the necessary 12 months. The Second Respondent, being in liquidation, took no part in the Tribunal proceedings.
7. The essence of the appeal put forward by Mr Anthony Howard, counsel for the Appellants, is that the Tribunal's decision that there was no relevant transfer of the Second Respondent's undertaking, or part of its undertaking in which the Appellants were concerned, to the First Respondent, was perverse; that the Tribunal failed to address the relevant questions concerning transfer of undertaking, identified and well established by authority; that the Tribunal failed to give proper explanatory reasons for its decision, and that the Chairman, by his own conduct, deprived the Appellants of a fair hearing.
8. Miss Clare Grundy, on behalf of the First Respondent, submits that the Tribunal directed itself properly in law and reached a permissible and indeed proper conclusion on the evidence after a hearing which was conducted robustly but not unfairly by the Chairman, who in any event sat with two other Members with whom the decision was jointly shared.
9. To understand the submissions made on each side, it is necessary to relate the essence of the Tribunals' Extended Reasons for its decision.
10. In paragraph 2 of the Extended Reasons the Tribunal identified the preliminary issue as to whether there had been a transfer of undertaking. It said that the position was that prior to October 1999, the Respondent carried on business collecting waste cooking oils from various customers and processing those oils. Some time in 1999 the Second Respondent was unable to continue the processing and therefore arranged to deliver the oil to the First Respondent. The business that the Second Respondent was not successful and by October 1999 its business could no longer continue, it had become insolvent and the directors realised that if they were to continue in business they would be in breach of various legislative provisions.
11. In Paragraph 3 the Tribunal related that two directors of the Second Respondent, a Miss Warrington and a Mr Wallbank, decided that they would carry on the business in another guise. So they set up the trading partnership, FM Collections, and it was FM Collections who were to do the collecting of the waste oils from customers and the delivery of those waste oils to the First Respondent. The collection and delivery of the oils required two things; it required vehicles in which the oils could be transported and it required drivers to drive those vehicles. Before the 8^th October the two Appellants and a colleague, Mr Cameron, had been doing that collecting and delivering in vehicles that were either owned by the Second Respondent or at least available to it under financing arrangements. It was clear that the new business, FM Collections, would have to be set up in terms of its administration, including arrangements for PAYE tax deductions and VAT registration and, for example, the obtaining of the licence which was necessary to transport waste food products. That could not be done overnight. At a meeting on the 10^th October between representatives of the First Respondent and FM, an agreement was reached whereby FM would continue to carry on the business which had been carried on by the Second Respondent, that is the business of the collection and disposal of waste oil. The means of collecting and disposing of the waste oil, the physical means in terms of the vehicles and the drivers, would be provided for FM on a contract basis by the First Respondent and, with this in mind, either Mr Wallbank or Miss Warrington told the three drivers, that is the two Appellants and Mr Cameron, that although their employment with the Second Respondent had come to an end, the First Respondent would offer them employment if they reported to it on the following Monday.
12. In paragraph 4 the Tribunal related that that is what happened. On Monday morning the Appellants and Mr Cameron reported to the First Respondent and saw Mr Gibson, who was in charge of certain aspects of the First Respondent's business. Mr Gibson obtained confirmation from the two Appellants and Mr Cameron that they were aware of what was going on between the Second Respondent and FM and what was to go on in the future. He explained to them that they would be taken on a trial basis on the Second Respondent's normal terms and conditions, entirely new ones to those which they had enjoyed with the Second Respondent, subject to FM sorting out its relationship with its customers and in particular its relationship with Asda, which was the major customer. There was the possibility of continuing employment with the First Respondent.
13. The three men started work on that basis but as we have already indicated Mr Rudd did not continue very long and Mr Hodgson's employment lasted little longer.
14. In paragraph 5 the Tribunal reminded itself of the need for one year's continuous service to bring a complaint of unfair dismissal and recorded that it was the Appellants' case that they could count their service with the Second Respondent towards that qualifying employment.
15. In paragraph 6, the Tribunal referred to TUPE, saying that the regulations have certain presumptions and those presumptions are in favour of employees because that is why the regulations are there. They are there to protect employment and therefore to protect employees.
16. In Paragraph 7 the Tribunal said that it had to look at the facts as it established them in any particular case and to see whether the regulations applied. They worked on the presumption that the regulations did apply, so it was for the Respondents, in this case the First Respondent, to establish that the regulations did not apply.
17. The Extended Reasons of the Tribunal continued as follows:

"8. What are the facts in this case? First of all what was the business, what was the undertaking that JDT was carrying on? The undertaking that they were carrying on was the collection and disposal of waste oils. To carry on that undertaking they required a number of things and one of the items that was required were vehicles and a workforce. When JDT ceased to trade, the workforce were made redundant, the vehicles primarily belonged to finance companies. FM Collections, which set off on Monday to carry on collecting and disposal of the waste oils, did not have the wherewithal to collect and dispose. They had the contracts. They had the arrangements with Asda and the other customers but what they did not have were the means of fulfilling the contract. They made an arrangement with Mr Smith, the Managing Director of Ashworths, whereby they could have the means of carrying on the collection. They could have the vehicles. They could have the men.

9. Did that amount to a transfer of undertaking? The Regulations do say that the transfer does not have to be in one go. It can be a series of arrangements that relate to the transfer. We have to look at the reality of what happened on 11 November (October) and see whether there was a transfer under the terms of the Regulations as clarified, that is the intention at least, in many cases which have come before the Tribunals in this country and indeed the European Court.

10. As I have already said, the undertaking was clearly the collection and disposal of oil. Did that undertaking transfer and if so to whom? Yes it did transfer. It transferred to FM Collections. Did any part of the undertaking transfer to Ashworths? In our view it did not. The fact that three of the employees of JDT were subsequently employed by Ashworths to deliver a service to FM Collections is not in itself a transfer, nor is the transfer of one vehicle on a regular basis and another for a couple of days a transfer. That is a moving of assets. It is not a transfer of the business. A moving of assets might be indicative of a transfer of business in certain circumstances and this has been found on many occasions by the authorities to which I have just alluded.

11. The business that was transferred in this case was the collection of the oil and the disposal of the oil and that business was transferred not to Ashworths. It was transferred to FM Collections. All that happened so far as the employees were concerned was that they were told that they could have work and they could have work on Ashworths' terms on a temporary basis pending FM Collections sorting themselves out with their customers. In the view of the Tribunal that was not a transfer.

12. On the face of it we can understand why the Applicants, advised by Mr Dyson (their solicitor), commenced the proceedings which they did. So far as the Applicants were concerned on the Friday they were driving lorries to customers of JDT. They were collecting oil. They were delivering it to Ashworths. On Monday they were driving vehicles belonging to Ashworths, collecting oil and delivering it to Ashworths and on first sight I would not be at all surprised if in those circumstances the Applicants believed that there was a transfer and indeed Mr Dyson believed there was a transfer. However, when one looks at the facts as set out in the extensive bundle of documents which has been put before the Tribunal and the facts, largely unchallenged, as set out in the witness statements from Mr Smith and Mr Gibson, we would find it very hard for anybody to conclude that there had indeed been such a transfer.

13. Therefore the unanimous decision of the Tribunal is that the events which occurred between 8 and 11 October did not amount to a transfer of undertaking to Ashworths. As they did not amount to a transfer of undertaking to Ashworths, the two Applicants began their working life anew, as one might say, on 11 October. They entered into new contracts of employment with Ashworths on that date. Their continuity of service began on that date."

18. The Tribunal in paragraph 14 went on to conclude that it followed that the Appellants did not have the length of service with the First Respondent, which was necessary to bring a claim for unfair dismissal and accordingly their claims alleging unfair dismissal must fail.
19. Before us, Mr Howard made the following submissions. First he contended that the function which the First Respondent took from the Second Respondent was the collection and delivery for refining of oils and fats needing special lorries and requiring to be done under licence. The relevant part of that undertaking was that function executed in relation to Asda. That was a stable economic entity and therefore an undertaking or part of an undertaking for the purposes of TUPE. It was wrong for the Tribunal to approach the matter as Mr Howard contends it did on the basis that the whole undertaking was transferred to FM. The contract, as Mr Howard would have it, with Asda went to FM but FM did not retain it for long. It then went to Brocklesby, who as we have said, employed the two Appellants to do the same work. A licence was necessary, as we have said, to transport waste food products. It was the First Respondent which had that licence and could therefore employ the Appellants to perform that part of the function which FM could not, as it didn't have a licence. The case was not put, or not positively put, by Mr Dyson, the Appellants solicitor, to the Tribunal on the basis of transfer of part of an undertaking but the reason for that was the conduct of the hearing by the Chairman, which conduct inhibited Mr Dyson getting his point or points out. All parties, Mr Howard correctly submits, are entitled to have their case and the issues fully considered. There were four witnesses or potential witnesses, two on behalf of the First Respondent and the two Appellants, although the two Appellants were not in the event actually called because the Chairman deterred Mr Dyson from calling them. There were a hundred or so documents. Yet the whole hearing was conducted in a period of some 90 minutes. Mr Dyson's cross-examination, Mr Howard contends, of an important witness for the First Respondent was severely inhibited by the Chairman's interruptions.
20. Secondly, Mr Howard submits that it was incumbent upon the Tribunal to remind itself of the dual test in cases such as this. There have been a number of authorities on the test. Those authorities have been recently considered by the Employment Appeal Tribunal. In the case of Whitewater Leisure Management Ltd v. Barnes [2000] ICR 1049 the dual test was described as follows: first whether there was an identifiable business entity constituting an undertaking, the entity having been identifiable as a stable and discreet economic entity sufficiently structured and autonomous but not necessarily having assets; and, second, whether there has been a relevant transfer of that undertaking, relevant factors being similarity of activity before and after transfer, a transfer of assets, or of a brand name, or good will, or a licence to use equipment or assets and whether the majority of employees or significant employees in terms of skill had been engaged by the transferee.
21. Third, Mr Howard submits that the Tribunal did not give sufficient reasons for its decision. He reminds us of the well known authority of Meek v. City of Birmingham District Council [1987] IRLR 150, where Lord Justice Bingham, as he then was, said that the decision of any Tribunal:

"must contain an outline of the story which has given rise to the complaint and a summary of the tribunal's basic factual conclusions and a statement of the reasons which have led them to [their conclusion]. The parties are entitled to be told why they have won or lost".

22. Mr Howard contends that the Tribunal did not use the double test in Whitewater and did not give reasons related to the double test for the decision which it reached. If the Tribunal had addressed the double test on the findings which it itself expressed in its decision, certainly taken with what was effectively common ground between the parties, it would have been bound to have found that there was a transfer of the relevant undertaking or part of the undertaking from the Second Respondent to the First Respondent, taking the employment of the Appellants with it.
23. Finally, Mr Howard submitted that his contentions were supported by the fact that in its Answer to the Appeal, the Respondent was reduced, as he would have it, to suggesting that one could imply from the Tribunals' decision that it took account of certain matters which appeared from the bundle of documents, but which were not expressly referred to in the decision. That, he contended, was not a legitimate exercise. So we should remit the matter for reconsideration by a fresh tribunal.
24. Miss Grundy started her submissions by referring to a number of the matters which were referred to in the Answer, and which she contends were significant, and which she further contends the Tribunal clearly had it in mind if one looks at the terms of its Extended Reasons.
25. The first matter was that the Asda contract was not transferred to the First Respondent but to FM and that at all material times FM dealt with Asda and every other supplier to the Second Respondent after the 11October 1999. It is clear, she contends, that the Tribunal had that in mind. See paragraph 8 of the Tribunal's Extended Reasons where it said that:

"FM …. had the contracts, they had the arrangements with Asda and the other customers but what they did not have were the means of fulfilling the contract."

26. Second, Miss Grundy says that it was clear that the Appellants were made redundant by the Second Respondent and were asked to look to the liquidator for a redundancy payment for outstanding wages and that it was clear that the Tribunal had that in mind because at the end of paragraph 3 of its Extended Reasons the Tribunal said:

" Either Mr Wallbank or Miss Warrington told the three drivers (the two Applicants and Mr Cameron) that although their employment with JDT had come to an end ….."

27. Third, Miss Grundy says that it was clear that the Appellants agreed that they were employed by the First Respondent on a short-term basis for a four week trial period followed by a thirteen week trial period thereafter or until FM obtained a waste carrier licence and was able to organise collections itself. She contends that the Tribunal clearly had that in mind, as appears from paragraph 4 of its Extended Reasons referring to the trial basis of the Appellants' employment by the First Respondent.
28. Fourth, Miss Grundy contends that it is clear that from the 11^th October 1999 the First Respondent invoiced FM in respect of the Appellants' wages, motor repairs, diesel and on occasion vehicle rental. The Tribunal had that in mind because it in effect dealt with it in paragraph 3 of its Reasons where it referred to the collecting and disposing of the waste oil, the physical means in terms of the vehicle and the drivers being "provided on a contract basis by the First Respondent". Moreover, a number of the invoices were copied into the bundle before the Tribunal, which must have been well aware of them.
29. Fifth, Miss Grundy contends that it was clear that the licence to carry waste oils and fats, which was necessary by law, was held by the First Respondent; that FM, not yet being established, did not hold a licence, and that that was really behind the sub-contractual relationship between FM, which was carrying on the enterprise which the Second Respondent had carried on, and the First Respondent. The Tribunal, she points out, dealt with that in paragraph 3 of its Extended Reasons where it referred to FM not yet having obtained, but needing to obtain, the necessary licence.
30. Sixth, she points out that the First Respondent did not make any payment to the former directors of the Second Respondent or anyone else in respect of the goodwill of the Second Respondent. That much is clear from part of the affidavit of Mr Dyson, who asked a question about that and was answered by the production of a letter to that effect.
31. All those six matters, Miss Grundy contends, were important matters which the Tribunal clearly relied upon in reaching its decision. She accepts that the Tribunal took a broad brush approach to the question of identification of part undertaking and transfer but she contends that if one looks at the Extended Reasons as a whole it is clear that the Tribunal did address the appropriate questions. In paragraph 8 it asked what the business the undertaking which the Second Respondent had been carrying out was, and it looked at the intention of the parties. It went on to identify the collection and disposal of oil as the undertaking correctly and it then looked at the question of part of the undertaking in paragraph 10, which was to the same effect. So it identified the undertaking or the part undertaking and it then asked if it was transferred and concluded for the reasons which it gave that it was transferred to FM rather than to the First Respondent. What happened, Miss Grundy said, was not just a paper exercise. FM always had responsibility for the Asda contract making a sub-contract for part of its actual performance with the First Respondent. Miss Grundy went on to argue that in all the circumstances the decision of the Tribunal was not perverse. It was well within the compass of decisions available to it. She stressed, as we have already mentioned, that the Tribunal consisted of three people, not just the Chairman himself. We would not consider that was necessarily an answer to unfairness on the Chairman's part, particularly if the Chairman of a particular tribunal has a strong personality. Miss Grundy's instructions from her instructing solicitor, who appeared before the Tribunal, are that the Chairman did take a robust view and line but was not unfair. Miss Grundy contends that if one reads Mr Dyson's affidavit making various complaints against the Chairman, and takes it with the Chairman's letter in answer and a statement from one of the lay members, nothing occurred which crossed the bounds of necessary fairness.
32. We jointly and having discussed the matter, have come to the unanimous conclusion that we accept Miss Grundy's submissions in this case. We accept that Mr Dyson has a genuine concern that he did not fully make his main point as to transfer of the particular part of the undertaking which the Appellants were concerned. But we are satisfied, having reminded ourselves of the terms of the Tribunal's decision, that it did address the proper questions and answered them with sufficient reasons in a way in which they were entitled to do. The Tribunal did consider the question of transfer of part of the undertaking, identifying the part of the Second Respondent's undertaking in which the Appellants were concerned, the collection and delivery of oils and fats, and it came to a conclusion to which it was entitled to come.
33. Had we thought that this Tribunal hearing was conducted unfairly we would not hesitate to remit the matter for a further hearing. It is always difficult for this Appeal Tribunal to decide where the truth lies when an honourable and honest solicitor has a recollection of events at the hearing, and members of the Tribunal, in part at least, refute the allegations which are made against the Tribunal.
34. In this case we take the view that the question which we must ask ourselves is, for all the allegations which were made, is it apparent to us that the point which the Appellants or Mr Dyson on their behalf particularly wanted to make, that is transfer of part of the undertaking, the particular part in which the Appellants were employed, was transferred. In our view it is quite clear from the terms of the Tribunal's decision, its identification of the undertaking and its express question to itself related to part of the undertaking, that the point came home to the Tribunal. It was expressed in the forms IT1 and we consider that the Tribunal must have had it in mind.
35. As we have already said, in our view the Tribunal came to a view which it was entitled to come to on all the material before it. That material, in our view, included the statements of the Appellants, although they were not called to give evidence. Mr Dyson says in his affidavit that the chairman said that the Tribunal had taken an opportunity to read the Appellants statements. The lay member, who has made a statement, says he cannot actually recall reading the statements. We not see anything sinister in that lack of recall. We do consider that the terms of paragraph 12 of the Decision which refers to the view of the Appellants is really only consistent with the Tribunal having read their statements, in order to discover what their attitude and understanding, and indeed that of Mr Dyson, was.
36. For all these reasons these appeals are dismissed.