United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR DANIEL BARNETT (of Counsel) Messrs Berwin Leighton Paisner Solicitors Adelaide House London Bridge London EC4R 9HA
For the Respondent	MISS CHRISTINE COX (Representative) Southwark Law Centre Hanover Park House 14-16 Hanover Park Peckham London SE15 5HG


 


HIS HONOUR JUDGE J MCMULLEN QC

1. This case is about the application of the TUPE Regulations where the transferor and the employee did not intend the contract of employment to be transferred. The judgment represents the views of all three members. We will refer to the parties as Applicant and Respondent.

Introduction

2. It is an appeal by the Respondent in those proceedings against the decision of an Employment Tribunal sitting at London Central, Chairman, Mr H Purse, registered with Extended Reasons on 9 September 2002. The Applicant was represented there, and here, by Miss Christine Cox, of Southwark Law Centre. The Respondent was represented by its HR Manager, Ms Rogers, who has given Mr Daniel Barnett, of Counsel, who appears today, assistance in his presentation of new material which was not known to him. We are grateful to her for eventually drawing this matter to our attention.
3. The Applicant claimed unfair constructive dismissal, breach of contract relating to shortfalls in pay and holiday pay, and cuts in his hours, and that a fundamental breach of the contractual term of trust and confidence had occurred. The Respondent contended simply that the Applicant's contract of employment was transferred by operation of TUPE.
4. The essential issue, as defined by the Employment Tribunal at a Preliminary Hearing, was to decide whether the Applicant's right against the Respondent was transferred.

The Legislation

5. The relevant provisions of the legislation are the Transfer of Undertakings (Protection of Employment) Regulations 1981, Regulations 5(1), 5(2), 5(3), 5(4), 5(4)(A), 5(4)(B) and 5(5) as follow:

"5 Effect of relevant transfer on contracts of employment, etc

(1) [Except where objection is made under paragraph (4A) below,] a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee.

(2) Without prejudice to paragraph (1) above, [but subject to paragraph (4A) below,] on the completion of a relevant transfer –

(a) all the transferor's rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this Regulation to the transferee; and

(b) anything done before the transfer is completed by or in relation to the transferor in respect of that contract or a person employed in that undertaking or part shall be deemed to have been done by or in relation to the transferee.

(3) Any reference in paragraph (1) or (2) above to a person employed in an undertaking or part of one transferred by a relevant transfer is a reference to a person so employed immediately before the transfer, including, where the transfer is effected by a series of two or more transactions, a person so employed immediately before the transfer, including, where the transfer is effected by a series of two or more transactions, a person so employed immediately before any of those transactions.

(4) Paragraph (2) above shall not transfer or otherwise affect the liability of any person to be prosecuted for, convicted of and sentenced for any offence.

[(4A) Paragraphs (1) and (2) above shall not operate to transfer his contract of employment and the rights, powers, duties and liabilities under or in connection with it if the employee informs the transferor or the transferee that he objects to becoming employed by the transferee.

(4B) Where an employee so objects the transfer of the undertaking or part in which he is employed shall operate so as to terminate his contract of employment with the transferor but he shall not be treated, for any purpose, as having been dismissed by the transferor.]

(5) [Paragraphs (1) and (4A) above are] without prejudice to any right of an employee arising apart from these Regulations to terminate his contract of employment without notice if a substantial change is made in his working conditions to his detriment; but no such right shall arise by reason only that, under that paragraph, the identity of his employer changes unless the employee shows that, in all the circumstances, the change is a significant change and is to his detriment."

These regulations give effect to the Acquired Rights Directive 1977, now found in Council Directives 2001/23/EC:

"Article 3

1 The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of transfer shall, by reason of such transfer, be transferred to the transferee.

Member States may provide that, after the date of transfer, the transferor and the transferee shall be jointly and severally liable in respect of obligations which arose before the date of transfer from a contract of employment or an employment relationship existing on the date of the transfer."

The Decision

6. The Employment Tribunal found that the Applicant's rights were not transferred under TUPE. It then went on to hold a hearing of the substantive issue and determined that the Applicant had been unfairly dismissed and that the Respondent was in breach of contract in a number of respects in failing to make proper payments to him. Certain aspects of the breach of contract claim were dismissed. At a remedies hearing on 16 January 2003 the Tribunal made a number of other findings and in due course a sum of £11,000 was agreed to be paid by the Respondent to the Applicant. We have not seen that decision.

The Appeal

7. The Respondent appeals against the decision on the preliminary point and, if successful, the two subsequent decisions would be set aside, since the award agreed was subject to this appeal.
8. Directions were given in Chambers by Mr Justice Burton, President, sending this appeal to a Preliminary Hearing and thence to a Full Hearing by Judge Prophet and Members on
   15 January 2003.

The Facts

9. The facts have been succinctly stated by the Employment Tribunal:

"3 Mr Bademosi began work for the Respondent in 1979 and for 21 years worked as a security officer at a site owned by Cable & Wireless PLC at which the Respondent provided security.

4 On 1 July 2000 Mr Bademosi had an accident at work and, in consequence, was unfit for work until the beginning of November 2000. There was no vacancy for him to return to Cable & Wireless.

5 From January 2001 he worked as a security officer at Marylebone magistrates' court. He was unhappy about this and there were discussions with the Respondent about a move.

6 On 3 December 2001 Mr Bademosi was told that he was to go back to Cable & Wireless at the beginning of January 2002. He was on leave on 6 and 7 December and not rostered to work again until December 2001.

7 The Respondent in early December 2001 was in discussion with the representatives of the magistrates' court and on the night of 6 to 7 December 2001 the Respondents' contract to provide security at the courts was terminated abruptly.

8 The contract was awarded to Chubb Ltd who took over the existing organisation responsible for running the contract and most of the staff.

9 On 7 December 2001 Ms Rogers, on behalf of the Respondent, wrote to Mr Bademosi and said –

"Dear Rufus

Further to our recent telephone conversation I confirmation [sic] from our Communications Centre that a place has been found for you at Cable and Wireless.

This position will not be vacant until 5^th January 2002. In the meantime I will advise Harry Sharma Senior Communications Manager to assign any suitable work to you during the period leading up to this date.

The Communications Centre will have already contacted you to advise you of the situation with regards to the termination of GLMC contract with effect from the 6^th December 2001.

Marianne Ullman is dealing with the other queries you raised at our recent meeting and a response will be sent to you in due course."

10 Mr Bademosi did not get that letter until 13 December 2001. In the meantime, he received a telephone call from his supervisor on 7 December to say that staff had been told that the contract had ended and that Chubb Ltd might take it over. No-one gave more details at that time.

11 In consequence, Mr Bademosi did not go into work on 11 December because he had not been allocated a site. On 11 December he wrote to the Respondent to resign with immediate effect. The Tribunal accepted Mr Bademosi's evidence that he did not approach Chubb Ltd about a job until after he had resigned. …."

In addition to those facts the Tribunal, in its substantive decision, made reference to the assignment of the Applicant from 1978 to July 2002 to the Cable & Wireless site and noted that the Applicant worked there regularly and was very well regarded. Following his industrial injury he had hoped to return to Cable & Wireless but was assigned instead to the magistrates' court. He was at all times unhappy with that. The Tribunal recorded as follows:

"From 2 January 2001 Mr Bademosi worked at the magistrates' court although he did so on a temporary basis …. The Tribunal found that on a temporary basis Mr Bademosi agreed, albeit reluctantly, to work at the lower rate and it was not a breach of contract by the Respondent to enter into that arrangement with him."

The Tribunal directed itself by reference to relevant provisions of the TUPE.

The Respondent's Case

10. It is submitted, on behalf of the Respondent, that the Employment Tribunal erred in its approach to the regulations. It is contended that the Applicant was at all times assigned to the magistrate's court and that on the date of the transfer his contract of employment transferred, by operation of TUPE, to Chubb. It is contended that a purposive construction of TUPE Regulation 5(1) would require that the words 'otherwise have been terminated' conform to the wider approach of the Directive which does not include those words. It was submitted that the approach of the House of Lords in Litster v Forth Dry Dock & Engineering Co Ltd [1989] IRLR 161 per Lord Oliver should be adopted, where he said as follows:

"38… To begin with, it is to be noted that the reference in regulation 5(1) to 'a contract which would otherwise have been terminated by the transfer' is, strictly speaking, a mis-description. The reason why a contract of employment is said to 'terminate' on a transfer of the employer's business is simply that such a transfer operates as a unilateral repudiation by the employer of his obligations under the contract and thus as a dismissal of the employee from his service. Because the relationship between employer and employee is of an essentially personal nature, the repudiation severs the factual relationship resulting from the contract, since the primary obligations on both sides are no longer capable of being performed. The contract itself, however, is not, strictly speaking, terminated but remains in being and undischarged so far as the enforcement of secondary obligations are concerned. This may seem a truism but it has, I believe, an importance in the analysis, in particular in relation to the meaning to be ascribed to the words 'terminated by the transfer' in regulation 5(1) and the words 'immediately before the transfer' in regulation 5(3). The necessary assumption in para.(1) of the regulation is that the contract of employment to which the consequence stated in the paragraph is to attach, is one which, apart from the transfer, would have continued in force and that what 'terminates' it, or would, apart from the regulation, have terminated it, is the repudiatory breach constituted by the transfer. That paragraph can, therefore, operate only upon a subsisting contract. There is nothing in the terms of para.(2), if it stood alone, which necessarily involves the same restriction. It is, however, clearly intended merely to supplement the provisions of para.(1), and para.(3) supplies the connection by expressly limiting the operation of both paras.(1) and (2) to the case where the relevant employee is employed in the undertaking 'immediately before the transfer', that is to say, to the circumstances envisaged in para.(1) in which, apart from the regulation, the event producing the termination is the transfer. The crucial question, therefore, is what is meant by the reference to a contract being terminated 'by' a transfer.

39 This could embrace a number of different possibilities. If nothing at all occurs to disturb the relationship of master and servant apart from the simply unannounced fact of the transfer of business by the employer, it is the transfer itself which constitutes the repudiatory breach which, apart from regulation 5(1), 'terminates' the contract.

It was contended that the Tribunal erred in taking into account the fact that the Applicant was due to move out of the magistrates' court duty in January 2001. As Mr Barnett engagingly put it, that was a red herring, since the central question is - was he employed in the undertaking transferred (that is the magistrates' court undertaking) at the date of the transfer? Secondly, it is contended that the Tribunal erred in taking into account the action of the Respondent after the transfer since this could not shed light on the central legal question.

The Applicant's Case

11. On behalf of the Applicant, it is contended that he was an integral part of the undertaking at Cable & Wireless since he had been promised a move back to his original posting there on 3 December and it was not correct to view him as being assigned to the magistrates' court. The correct approach to the decision on assignment would yield the result which the Tribunal came to.

The Legal Principles

12. The central question is whether or not the Applicant was assigned to the undertaking which consisted of the duties performed at the magistrates' court – see Botzon v Rotterdamshce Droogdok Maatshappj BV [1986] 2 CMLR 50. In a case where there is doubt about the assignment, the correct approach is to ask the question posed in Gale v Northern General Hospital NHS Trust [1994] IRLR 292, a case in which the position of a trainee doctor at a particular hospital was considered. Lord Bingham M.R. stated at paragraph 12:

"He was not, in my judgment, part of the human stock belonging to the Northern General Hospital, but was somebody who was at the behest of the health authority completing his training there. "

13. Applying those authorities to the findings made by the Employment Tribunal, we can well see, as Mr Barnett puts it, the opportunity for cherry picking certain employees, prior to a TUPE transfer, which would create an industrial mischief. For example, upon the eve of the transfer employees who were felt by an unsavoury employer to be less satisfactory could be moved to a part of the undertaking which was to be transferred, and those thought worth keeping would be moved out of the transferred part. There is also experience of the 'poison pill', particularly in cases where there is no consensual handover by way of TUPE, as sometimes occurs in the transfer of catering, security and cleaning, where contracts are let by, for example, a major public sector operator. Those circumstances certainly do not apply in the instant case.
14. This is a case where an employee of long standing had been deployed to one site which terminated simply because of his industrial injury. We are not able to interfere with the express finding, that upon his return from industrial injury the vacancy at Cable & Wireless no longer existed, but the Applicant was assigned on a temporary basis elsewhere. The judgment as to what is temporary and what is permanent is a matter for the Employment Tribunal. Without objection the findings of the Employment Tribunal in the substantive case have been relied on before us and we think that is correct. Thus, in the passage we cited, the Tribunal has indicated the Applicant was indeed assigned but the modification by way of it being a temporary assignment takes it out of the principle in Botzen, so that it is correct to say that the Applicant was not assigned to the magistrates' court contract at the time of the transfer. Looked at it realistically the Applicant had since 1978 been assigned to the Cable & Wireless site and that was not the subject of the transfer. His excursion to the magistrates' court was, as the Tribunal correctly recorded, merely temporary.
15. In our judgment, the employment of the Applicant would not otherwise terminate by reason of the transfer of the magistrates' court contract on 6/7 December since he would simply revert, as was disclosed to him on 3 December, to his duties either at Cable & Wireless or to other temporary assignments prior to being able to take up his position at the beginning January 2002. For those reasons the appeal is dismissed.