United Kingdom Employment Appeal Tribunal

APPEARANCES

 

 

For the Appellants	Mr I D Truscott, Queen's Counsel Instructed by- Messrs Simpson & Marwick Solicitors 48 Queen's Road ABERDEEN AB15 4YE
For the 1st Respondent	No Appearance Nor Representation
For the 2nd Respondent	Mr S Paterson, Solicitor Of- Messrs Cameron Macaulay Solicitors 80 Berkeley Street Charing Cross GLASGOW G3 7DS
For the 3rd Respondents For the 4th Respondents	Mr B Napier, Queen's Counsel Instructed by- Messrs Mackinnons Solicitors 21 Albert Street ABERDEEN AB25 1XX No Appearance Nor Representation

SUMMARY
Transfer of Undertakings

TUPE: whether applying to crew of ship

(1) which was not transfered

(2) stable economic entity

(3) transfer


 


LORD JOHNSTON:

1. 1.                  This is an appeal against a decision of the Employment Tribunal which considered certain preliminary issues with regard to the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE") with regard to a dispute between the relevant parties in relation to the crew of an oil rig belonging to a third party, China National Star Petroleum Corporation ("China").
2. The compearing respondents were initially under a management contract with China to man, maintain and market the rig for that purpose and had a crew on board it. The findings of fact reveal that China became dissatisfied with the performance of the respondents and determined to terminate the management agreement which was eventually effected, not before, however, the dispute had escalated to the extent of China obtaining an interdict in the Court of Session against the respondents, in the following terms:-

"Ad interim, interdicts the defenders by themselves or by their agents or servants, or by the instruction, procurement or encouragement of anyone else … from boarding or attempting to board or by any means gain access to the Kan Tan IV except with the prior written consent of the pursuers".

3. The appellants were the company determined by China to follow the respondents, and, they in turn, put their own crew on the rig. They did not employ the employees of the respondents that had previously worked upon the rig. The issue, accordingly arising for preliminary determination, was whether or not those employees were entitled to protection under TUPE on the basis that they were covered by the Regulations and a relevant transfer in terms of the Regulations had taken place as between the respondents and the appellants in respect of the change-over of crew.
4. The preliminary issues were four in number as follows:-

"1) the semi-submersible drilling rig Kan Tan IV is a "ship" within the meaning of Regulation 2(2) of the Transfer of Undertakings (Protection of Employees) Regulations 1981 ("the transfer regulations"), but that Regulation 2(2) does not operate so as to exclude the application of the Regulations in respect of these applications;

2) Regulation 2(2) is not ultra vires;

3) there was an undertaking within the meaning of the transfer regulations;

4) there was a transfer within the meaning of the transfer regulations;"

5. These issues are separate and it is appropriate that we deal with them as such.
6. However, before doing so, we should record that the parties both submitted extensive authorities, albeit with substantial overlap, and the following cases were referred to us by both of them, or at least one of them:-

"Von Colson and Kamann v Land Nordrhein-Westfalin C-14/83 [1984 ECT 1891, paragraph 26 on page 1909

Marleasing SA v La Comercial Internacional de Alimentacion SA C-106/89 [1990] ECR I-4135 at paragraph 8 on page 4147 A-G and para 8 Court on Page 4159

Litster v Forth Dry Dock Engineering Co. Ltd 1989 SC (HL) 96

Per Lord Keith of Kinkel page 101

Per Lord Templeman page 104-5

Per Lord Oliver of Aylemerton page 105, page 108 and 120-121

Castle View Services Limited v Howes & 2 Ors 2000 SLT 696 IH

Addison v Denholm Ship Management (UK) Ltd [1997] ICR 770 EAT

R v Secretary of State for Trade and Industry ex parte Unison [1996] ICR 1003 DC

Spijkers v Gebroeders Benedik Abbatoir CV C-24/85 [1986] ECR I-119

Ayse Suzen v Zehnacker Gebaudereinigung GmbH Krankenhausservice [1997] ECR I-1259 ECJ

ECM (Vehicle Delivery Systems) Ltd v Cox [1999] ICR 1162 CA

RCO Support Services v Unison [2002] IRLR 401 CA

Cheesman v R Brewer Contracts Ltd [2001] IRLR 144 EAT

Argyll Training Ltd v Sinclair & Anr. [2000] IRLR 630 EAT"

1) Are the relevant employees subject to TUPE Regulations?

In this context the parties were agreed that the rig was a ship within the meaning of the Regulations, and, that the reference to "ship" in the Regulations included the crew. They thereafter diverged on the issue of whether or not the Regulations afforded protection to the crew in question.

The nub of the matter is Regulation 2.2 which is as follows:-

"Regulation 2(2) of the Transfer Regulations provides as follows:-

"(2) References in these regulations to the transfer of part of an undertaking are references to a transfer of a part which is being transferred as a business and, accordingly, do not include references to a transfer of a ship without more."

It is also to be noted that the provision derives from Article 1(3) of the Acquired Rights Directive which provides the Directive itself shall not apply to "seagoing vessels". That latter phrase obviously includes a ship.

Mr Trustcott's, appearing for the appellants, opening position in this respect, was based fundamentally on Article 2(4)(9) of the Treaty of Amsterdam, which requires member states of the Community, in implementing Directives by national legislation, to effect the result to be achieved in the aim of the Directive.

In this context he said the aim of the Directive was the protection of workers but that had to be looked at in the context of the apparent exception excluding seagoing vessels, which, in turn, focussed the question of interpretation on Article 2(2) to which we have already made reference. Against the background of various authorities with regards to the question of interpretation of both Directives and the subsequent legislation, he submitted that the result to be achieved in this context required also to give effect to the exemption and that the national legislation could neither achieve a different result or go beyond that by extending the exemption. The fact that crews were identified with a ship, clearly indicated, he submitted, that there was a blanket exemption from the effect of the Directive of such persons and they could not qualify for protection in terms of the Regulations. The effect of Regulation 2(2) did not alter that position.

The position of Mr Napier was obviously to the opposite effect. The exemption should be very narrowly construed given the overall purpose of the Directive, and, properly understood, Regulation 2(2) did precisely that. It should not be distorted. He pointed out that in Castle View Services the Inner House was of the opinion, albeit obiter, the Regulation 2(2) did not automatically exclude all crewing members of seagoing vessels if what was being transferred, was, in effect, a business entity, albeit including a ship. He referred to Regulation 13(1) which disapplied certain other Regulations in relation to employees working outside the country if they were on board a ship and also to Regulation 3(5) which supported the view that the Regulations did contemplate ships being involved in a relevant transfer, albeit as only part of an undertaking. The exemption should be narrowly construed, and, in effect, should only apply when the only issue was whether a ship and its crew were being transferred and nothing more. This, he said, was the effect of Regulation 2(2) in the second part.

We recognise that in Addison this Tribunal considered the question of TUPE and seamen's rights but were not entertained with the argument which prevailed in the present case on the basis that what was being transferred, on the facts, still was not covered by Regulation 2(2) since no ship was being transferred.

This, to our mind, is the conclusive point on this aspect of the case. A proper construction of Regulation 2(2), which refers to part of an undertaking, but uses the word "accordingly" which suggests that a ship can be the relative undertaking, if what is being transferred is it and its crew, and nothing more. Beyond that, there seems to be, in our opinion, scope for a transfer of a business entity, albeit it includes a ship and its crew, provided it is something more. Critically, in the present case, however, there was no transfer of a ship. In our opinion, therefore, the Tribunal came to the correct conclusion that the relevant workers in the present case are not embraced by the exemption, and, thus, are entitled to the protection in principle of the TUPE Regulation in the relevant circumstances. We should add that this appears to be consistent with the Inner House in Castle View Services which is binding upon us. We therefore confirm the decision of the Tribunal in this respect.

2.) The Vires of Regulation 2(2)

This issue was first focussed in Unison and considered by this Tribunal in Addison. It raised an interesting question of the extent to which it is permissible by subordinate legislation for the legislation to extend the terms of a Directive setting out the particular aim. But the matter has become academic, inasmuch, that if the Regulation 2(2) is ultra vires, and we say no more on that subject, it becomes pro non scripto which means there will be nothing in the Regulations dealing with the exemption, and it will thereafter be open for a wider construction consistent with the general purposes of TUPE, namely, protection of workers, to apply. We do not therefore consider that this argument advances the appellant's position in any way in the present context.

3.) Was there an undertaking within the meaning of the transfer Regulations?

In this context Mr Truscott's essential position, was, that such an undertaking had to be a stable entity, and such was not the case here, firstly, because the respondents, whose only work at China's behest on the rig, were not stable because of their performance, and, in any event, the issue of interdict, greatly reduced, if not destroyed the stability by preventing the respondents' employees from working on the rig.

The Tribunal deal with this matter in paragraphs 81, onwards, and we are content simply to adopt their conclusions. It seems to us that there is more than sufficient material to enable the Tribunal to conclude that the crewing activities of the respondents, even if severable from the marketing activities, constituted an economic entity involving employees which were sufficiently stable to be capable of being transferred. Various references were made to the cases from the European Court, particularly with regard to the labour-intensive contracts. However, at the end of the day, we determine the matter to be one of fact and there is no authority that we can find which would vitiate the conclusion that the Tribunal reached, that a stable economic entity existed at the time of the putative transfer.

4.) Was there a transfer?

The Tribunal deal with this matter from paragraph 88 onwards.

Here, Mr Truscott's submissions essentially turned, on what he claimed, was the improper approach of the Tribunal, in respect that they had looked at what might have happened, rather than what had happened. Given they did not employ or take on the respondent's employees because of their interpretation of the interdict, there was, in fact, no transfer and the Tribunal should have determined such, not upon the basis of what might have happened in the future with regard to employment of the appellants' crew members in the context of a new management agreement, which had not yet been signed. He accepted Mr Napier's submission that there was at least an element in the Tribunal's decision of motive, i.e., determination by the respondents not to take on the appellants' employees, redolent of ECM Vehicle Recovery. In that context, however, we do not consider that the findings of the Tribunal are sufficient to introduce the notion of bad faith or an improper motive such as to be found in ECM. There is no finding of lack of credibility in this respect by the Tribunal.

More importantly, we consider that the recent review of the relevant cases in RCO Support Services, is comprehensive and restores, if not reinforces, the original position of Spikers to the effect that the transfer of employees is not necessary and not conclusive, in the context of whether or not a transfer has taken place by the relevant undertaking. What has to be examined is the situation before and after the putative transfer with regard to the activities of the new contractor i.e., transferee. We consider in this respect that the Tribunal have assessed the facts and reached a conclusion they were entitled to reach in the context. Nor do we consider that the existence of the interdict would have prevented a transfer taking place, but, whatever was understood to be the position on behalf of the appellants, there was, in fact, nothing to prevent the appellants employing de novo the employees of the respondents on the rigs, since they would not be the employees of the respondents, and, thus, not caught by the interdict. Thus the interdict has no bearing on the issue of transfer.

8. As this Tribunal has said on a number of occasions, the issue of whether a transfer has in fact taken place against the relevant tests enunciated, particularly in RCO, is essentially a question of fact and this Tribunal will not interfere unless the Tribunal below has misdirected itself in either law or fact upon the evidence. We find neither to be the case in this case.
9. In these circumstances we consider that the Tribunal were entitled to conclude a relevant transfer had taken place.
10. For all these reasons this appeal is refused, in respect of each and all of the relevant issues.