United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	Mrs S Stark, Advocate Instructed by- A T Kearney Solicitors White Lion Court Swan Street ISLEWORTH TW7 6RN
For the 1st Respondents For the 2nd Respondents	No Appearance Nor Representation Mr G Pennel, Solicitor Of- Messrs Maclay Murray & Spens Solicitors 3 Glenfinlas Street EDINBURGH EH3 6AQ


 


LORD JOHNSTON:

1. This is an appeal at the instance of the employer respondent in respect of a finding by the Employment Tribunal that, in relation to what is now accepted to be a transfer of undertaking as between the appellants and Falkirk Council, now second respondents, one of the original applicants, Mr R J King, had not been assigned to that particular undertaking as a matter of employment, and, accordingly, was not deemed to be transferred to the Council in respect of the accepted transfer of undertaking.
2. The background to the matter is that the local authority decided some time ago to employ the now, appellants, to manage what had been their local repair teams (LRT) as employees of the appellants. In other words, the local authority consolidated its LRT teams into a contract let to the appellants.
3. Thereafter the Council decided to terminate that arrangement and take matters back in hand.
4. Against that background the Tribunal made the following findings in fact:-

"The housing maintenance contract was originally put out to tender in about 1997 and was won by Mowlem. Mowlem underwent some changes and became the second respondents. For all practical purposes the second respondents can be treated as having been the same organisation throughout.

At the time of the transfer out in 1997, tradesmen and staff were taken by the second respondents as both functions were required for the running of the contract.

The mode of executing the contract evolved somewhat over the years but the functions essentially remained the same. The main function was to provide building maintenance to a portion of the first respondents' council housing stock. This involved work being executed by a variety of trades.

One material change made was that the second respondents scrapped the pool bonus system under which the tradesmen had previously worked and introduced a bonus based on individual productivity.

The second respondents operated a similar bonus scheme on the other contracts which they held. The purpose of introducing the scheme was primarily to benefit the second respondents profit levels.

The housing general maintenance contract was worth several million pounds per annum to the second respondents and involved as many as 3000 orders per month.

In order to carry out the contract, the second respondents had sixty people and about 50 vehicles plus some other assets. The other assets included some premises which were made available to them by the first respondents on a rent free basis. It was a condition of the contract that the second respondents delivered the service through local repair teams (LRT's) out of the premises with which they were provided.

The housing general maintenance contract was a substantially larger contract than any of the others held by the second respondents. Nevertheless, the second respondents did have other contracts and these were administered out of their Grangemouth depot which had existed before the housing general maintenance contract was won by them.

Among the staff based at the Grangemouth depot was a branch manager who was responsible for managing all the contracts supervised out of that branch. In essence, central functions were carried out through the Grangemouth depot and service delivery was carried out through the LRT's.

Mr King was appointed as the branch manager at the Grangemouth depot some months after the contract was won. Production R12 is an organisation chart showing the overall structure of what was then known as the "Central Branch". The three LRT's at Braes, Bo'ness and Grangemouth all fell under the umbrella of the central branch management.

In terms of executing the maintenance work, the administration processes were broadly the same before and after the transfer to the second respondents 1997. In short, the work orders came from the housing offices to the LRT's and these were then handed out to the tradesman who executed the work. The paperwork was then handed back to the appropriate personnel after the works were completed for checking and pricing.

Some larger pieces of work required pre-inspection and pre-pricing but most of the work was fixed price. A small proportion of the completed work was post-inspected on an audit basis.

The concept behind the creation of the LRT's was to have settled teams of staff and tradesmen in each LRT to provide the best service to the local community and continuity. This was largely achieved.

In turnover terms, about 80% of the central branch turnover emanated from the maintenance contract in the period immediately preceding the 2002 transfer. The turnover emanating from other contracts had diminished over time.

In addition to the trades who were carrying out work, staff were also required to organise the tradesmen and materials; to administer the 3000 orders per month; to check jobs; to deal with invoicing and recovery of payments from the first respondents and as far as the SOR surveyors were concerned to deal with the bonus system which the second respondents had introduced.

The role of the branch manager was to supervise the Grangemouth branch. He was responsible for all of the contracts which were managed out of central branch. He did have contact with the second respondents at periodic liaison meetings. However, on a day to day basis, the contract was carried out by his assistant John Don who supervised the LRT's directly. Mr King was not significantly involved in the operational side of the housing contract.

The second applicant, Mr Small, and the third applicant, Mr Gray, were the SOR surveyors.

Mr Small spent nearly all his time dealing with work out of Bo'ness and Braes LRT's. He spen more or less 100% of his time on the Falkirk contract. He did occasional pricing and post-inspection but otherwise his primary function was to check the lines when the jobs were completed, deal with bonus payments to the men and deal with recovery of the agreed purchase price from the first respondents.

Mr Gray worked primarily out of Grangemouth and Abbotsinch. His functions were similar to those of Mr Small but he spent about 80% of his time on the Falkirk Council contract. The other 20% was doing other (similar) work on other contracts.

Neither Mr Small nor Mr Gray had any contact to speak of with the second respondents' personnel. Mr Small and Mr Gray did not need to spend much of their time physically present at the LRT's since the information which they required could be readily made available to them at the Grangemouth branch.

In 2001 the first respondents carried out a best value review of their housing maintenance function. The result of that review was that it was decided that the contract was to be brought back in-house.

The second respondents were notified of the decision by letter dated 23 October 2001. Discussions then began amongst the parties (including the applicants' trade union) as to how the matter was to be handled.

In particular, there was discussion as to the impact of TUPE on the transfer e.g. was it a relevant transfer and if so, who was to be transferred.

The second respondents expectation was that they would transfer employees back out on the same basis as they had been transferred to them in 1997.

The second respondents provided a list of employees on that basis.

The other assets used by the second respondents were some specialised stock and offices. The latter were owned by the first respondents and occupied rent free as part of the contract. They were simply transferred back to the control of the first respondents.

The second respondents were somewhat surprised when an issue arose as to who was in fact to be transferred back. A more detailed dialogue then developed as to who should be on the transfer list.

The first respondents requested information about who did what to enable them to evaluate the position. The list of proposed transferring employees was dynamic and did change from time to time as the date of transfer as the 2002 transfer date approached.

In the event, there was no dispute over which trades people should transfer – principally because the first respondents had need of them. There remained a dispute over the staff numbers which led to the present applications.

Relations between the first and second respondents deteriorated in their lead up to the 2002 transfer. Each suspected the other's motives. The first respondents suspected that the list was being "loaded" with administration or staff personnel in order to reduce the second respondents' prospective redundancy bill, since they were closing the central branch. The second respondents thought that the first respondents were refusing to take the surveyors (Mr Small and Mr Gray) because they had no comparable post to put them in and had a problem because they had a "no redundancy" policy. As matters went on, the first respondents thought that the delay in providing information about the roles and functions of the transferring staff made its reliability doubtful. The second respondents thought that the first respondents were concentrating too much on the issue of the lack of similar roles.

In the event, a lot of the information that was passed back and forward – for example, the generic job descriptions – did not help to resolve matters."

5. Thereafter, the Tribunal considered whether or not an undertaking, in the sense of The Transfer of Undertaking Regulations existed and confirmed that it did and that furthermore there had been a transfer of such as between the appellants and the local authority.
6. Thereafter, the Tribunal proceeded to deal with the particular position of the three relevant employees who were subject to this preliminary hearing.
7. In this respect their findings were as follows:-

"At the outset of his submissions Mr Pennel indicated that he was no conceding that if the Tribunal found that there was a relevant transfer, he was not now arguing that Mr Small was not assigned to it. We think that that concession was properly made and accordingly we find that Mr Small was wholly or mainly assigned to the undertaking which was the subject of the relevant transfer.

Turning now to consider the question of Mr King, we have no real difficulty in holding that Mr King was not wholly or mainly assigned to the contract. Mr King had only infrequent contact with the respondents (evidence of Mr Don and Ms Letts); he was not directly involved in the operational aspect of the contract on a day to day basis (Mr Don) and we think that he was, as Mr Don said, more of a figurehead in relation to this matter. There were other contracts being administered out of the Grangemouth or central depot and Mr King was the branch manager for that depot. He accepted that he had responsibility for those other contracts.

In these circumstances we consider that it is not possible to say that he was assigned in any way to this contract. The fact that he may have been spending more time on it latterly is simply indicative of change in the relative proportions of turnover being generated. He had no particular responsibilities in relation to this contract other than those which went with his role as branch manager.

We therefore hold that Mr King was not wholly or mainly assigned to the undertaking which was the subject of transfer."

8. Mrs Stark, Advocate, appearing for the appellants, sought to argue under reference to the authorities that we list below, that the Tribunal had applied the wrong test in determining the issue of whether or not Mr King had been assigned to the relevant undertaking by using the phrase "wholly and mainly". She recognised that the test could be enunciated as "substantial" but her main submission was, having regard to the facts that the Tribunal found proved, the only alternative open to the Tribunal was to hold that the relevant employee had been assigned to the undertaking that was transferred.
9. Mr Pennel, appearing for the Council, submitted that the issue was one of fact which had been properly determined by the Tribunal under reference to the relevant authorities and in particular on the question of link. There was no basis upon which this Tribunal could interfere with the decisions of the Tribunal below.
10. The authorities to which we were referred are as follows:-

Arie Botzen & Ors v Rotterdamsche Droogdok Maatschaapij BV [1986] 2 CMLR 50

Jones & Kingston v Darlows Estate Agency EATRF 97/1246/3 CA

Oco Mechanical Engineering Ltd v Bissett & Ors (Unrep) EAT/6/98

Buchanan-Smith v Schleicher & Co International Ltd [1996] ICR 613

Duncan Web Offset (Maidstone) Ltd v Cooper & ors [1995] IRLR 633

Compass Services UK Ltd v Patrick EAT/1264/99

ECM (Vehicle Delivery Service) Ltd v Cox [1999] IRLR 1162

11. The law is relatively settled, particularly in the European context, on the issue of assignment of an employee to a particular undertaking which is held to have been established and transferred and it may be that the phrase "wholly or mainly" has been superseded by a broader test of involvement. However, there is no doubt that Botzen supra remains the leading authority. The issue in each case is essentially a question of fact to be determined by reference to all the evidence and we consider that Mr Pennel was correct in arguing that for this appeal to succeed it must be shown that the Tribunal below reached a perverse decision.
12. At the end of the day, Mrs Stark did not really shrink from that position, maintaining that the Tribunal had left out of account matters it should have taken into account, not least that very large percentage of the workload of the appellants in relation to their Grangemouth branch related to the relevant contract with the local authority.
13. In passing, however, we would suggest that there is a distinction between someone working exclusively on a particular contract and a person employed in an executive capacity managing a branch, such as the position of Mr King, here.
14. We also have to recognise that the role of this Tribunal in this type of issue, namely, questions of fact, is very limited and we would endorse the decision of this Tribunal in Compass Services supra, which, in turn, followed the reasoning of the then President in the case cited therein. Put simply, this Tribunal will not interfere unless the Tribunal below had, on the evidence, plainly gone wrong.
15. Whatever may be the views that we might have taken on the evidence as to whether or not Mr King was assigned wholly or substantially to the particular undertaking, we recognise at once that the Tribunal considered the background of the evidence and have given sufficient reasons for holding that in their opinion he was not. We are entirely satisfied that this is a decision they were entitled to reach from the facts and do not consider that their approach could be regarded as perverse or unsound in law. The reasoning of the Tribunal which we have quoted is cogent.
16. In these circumstances we consider this case represents the type of case with which this Tribunal should not interfere having regard to the limited extent of its jurisdiction on matters of fact. The appeal is therefore refused.