United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR THOMAS LINDEN (Of Counsel) Instructed by: Messrs DLA LLP Solicitors 3 Noble Street London EC2V 7EE
For the Respondents	MR OLIVER SEGAL (Of Counsel) Instructed by: Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW

SUMMARY

Whether the employment tribunal's decision as to the identity of the employer of each of six test claimants involved a misdirection, was perverse and/or was insufficiently reasoned.


 


THE HONOURABLE MR JUSTICE RIMER

Introduction

1. This is an appeal by three companies in the Crest group. They are (i) Crest Packaging Limited, (ii) Crest Flexible Packaging Limited, and (iii) Crest Cartons Limited. The first appellant is the parent company of the second and third appellants. They are the Respondents to claims brought before the Ashford, Kent, employment tribunal by some 267 claimants. The claims followed the collapse of the Crest group in 2003 by reason of its insolvency and included claims in respect of employment liabilities, such as claims for outstanding wages and for unfair and wrongful dismissal.
2. The tribunal's judgment under appeal was a decision following a Pre-Hearing Review and was sent to the parties on 4 April 2005. It was a judgment of a chairman, Mr G. Sutton, sitting alone. The title page of the judgment described the claimants as: (i) Mr I.M. Curtis and Others, (ii) Mr L. Palmer and Others, (iii) Mr B.L. Allchin and Others, (iv) Mr M. Black and Others, (v) Mr A. Steward and Others, (vi) GPMU, and (vii) Amicus AEEU. None of the parties so named is, however, a named Respondents to this appeal. The reason for that is that most, if not all, of the 267 claims had resulted in the arising of an issue as to which of the three Crest companies had employed the particular claimant. At a directions hearing on 24 March 2004, it was therefore ordered that there should be a hearing to determine the employer of different representative employees who were to be chosen by the parties as being typical of the main categories of claimant.
3. The result was that six claimants were chosen. Each of their cases was in the nature of a test case. I was told that those non-represented claimants whose cases fall into the category of case represented by one or other of the six test claimants have agreed to be bound by the outcome of those cases as to the identity of their employer. The six test claimants are (i) Terence Bell; (ii) Jamie Breaker; (iii) Kevin Ingram; (iv) David Packham; (v) Roger Parry; and (vi) Richard Stevens, and they are the Respondents to this appeal.
4. The decision of the chairman was that each of the six test claimants was employed by the first appellant, Crest Packaging Limited, the parent of the group; and that none was employed by either of the second and third appellants, which were operating subsidiaries of the parent. The appellants (represented by Mr Thomas Linden, who also represented them before the chairman) challenge that decision on the grounds, broadly speaking, that the chairman misdirected himself as to the principles he had to apply and produced a decision which was anyway insufficiently reasoned and was perverse. The Respondents (represented by Mr Oliver Segal, who also represented them before the chairman) seek to uphold the decision on the basis that, whilst it is conceded it was not a model of clarity, it is said that the decision sufficiently evinced the basis on which the chairman arrived at the conclusion that he did, that it was a conclusion that was open to him on the evidence and that there is therefore no proper basis on which this tribunal can now review his decision.

The decision of the employment tribunal

5. The chairman made findings of fact, which I summarise as follows. Prior to May 1985, Bowater Packaging Limited ("Bowater") had two operating subsidiaries: Bowater Cartons Limited ("Bowater Cartons") and Bowater Flexible Packaging Limited ("Bowater Flexible"). He found (paragraph 8.2) that on 7 May 1985 both subsidiaries were sold to Crest Flexible Packaging Limited, which the chairman called "Flexible" and so will I (it is the second appellant). The chairman did not describe the nature of the sale with precision, and the natural inference from his chosen language in paragraph 8.2 is that the sale was of the shares in the subsidiaries. But it is apparent from matters to which he later referred that the sale was in fact of the business, assets and undertaking of the two subsidiaries rather than of their shares. That is also shown by a copy sale agreement that I have been shown, one dated 7 May 1985 between Bowater as vendor and Flexible as purchaser, which was also shown to the chairman but to which he did not refer expressly. That agreement made clear that the subject matter of the sale to Flexible was the assets and goodwill of Bowater's Flexible Packaging business and its Cartons business, which the sale agreement recorded had been carried on by Bowater Flexible and Bowater Cartons as agents for Bowater. Presumably, therefore, both Bowater Flexible and Bowater Cartons remained subsidiaries of Bowater following the sale, although shorn of their core businesses.
6. The chairman also found in paragraph 8.2 that at a later stage, as to the timing of which he made no finding but which counsel agreed was probably shortly after 7 May 1985, the assets that had formerly been owned by Bowater Cartons were transferred onwards by Flexible to Crest Cartons Limited, another Crest group company, which the chairman called "Cartons" and so will I (it is the third appellant).
7. Although I do not think that the chairman anywhere says so in terms, the parent company of the Crest group was, or became, Crest Packaging Limited ("Packaging"), the first appellant. Without, so far as I can see, anywhere explaining how Packaging fitted into the Crest corporate structure, the chairman focused closely on Packaging's role in the case and, as I have said, ultimately found that, at the time of the collapse of the Crest group in 2003, it was the employer of each of the six test claimants. His first reference to Packaging was in paragraph 8.5, where he said:

"'Packaging' was not a manufacturing company. Its main activities were as employers of the management, as providers of some of the central services to the Crest Group and as landlords of the two operating subsidiaries, 'Cartons' and 'Flexible'"

8. That was, in the context of the issue before him and the decision he ultimately made, in part an odd finding. His decision that Packaging employed the six test claimants was not based on any peculiarities special to any of their cases, which were test cases: the essence of his decision was that it was Crest policy that Packaging should, and did, employ all Crest group employees, although he here referred – inconsistently – to their employment activities extending merely to Crest's management. His ultimate decision therefore undermined the relatively specific finding he had here made as to Packaging's employment function. He nowhere considered how his finding in this paragraph as to the limited nature of Packaging's employment functions was to be reconciled with his ultimate decision as to its much wider employment functions.
9. The chairman turned first, in paragraph 8.4, to three of the test claimants, Messrs Parry, Bell and Ingram. They had previously been employed by Bowater which, as the chairman found, had issued particulars of the terms and conditions of employment to each of them in compliance with what is now section 1 of the Employment Rights Act 1996 ("the section 1 particulars"). The chairman further found that, upon the transfer of the assets of the two Bowater subsidiaries to Flexible in May 1985, the employment of Messrs Parry, Bell and Ingram was, by regulation 5 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE"), also transferred to Flexible. He also found that, upon the subsequent transfer of the carton business to Cartons, Mr Ingram's employment was transferred onwards to Cartons, also by the operation of regulation 5 of TUPE. No question arises as to the correctness of those findings. It was, therefore, common ground that by May 1985 Messrs Parry and Bell were each employed by Flexible (and not by Packaging) and that Mr Ingram was employed by Cartons (and not by Packaging).
10. The chairman proceeded next to make these findings:

"8.6 Contractual and pay documentation concerning obligations between the employees and 'Cartons' and 'Flexible' was for the most part conducted between the subsidiary and the employees who worked for it.

8.7 However, for some purposes, notably in negotiations with the recognised unions, SOGAT82 and later GPMU in relation to staff domestic agreements over pay and other conditions, 'Packaging' would be the contracting party.

8.8 No contracts of employment were issued to any of the test case employees by any of the Crest companies. However, those who started employment with group companies after 1985 were issued with a statement of particulars of employment."

11. I shall, in later rehearsing the arguments, flesh out by reference to the documents the essence of what the chairman was saying in paragraph 8.6, but the substance of it, as the documents themselves purported to show, was that the six test claimants each worked either for Flexible or Cartons (and, in introducing the test claimants in paragraph 4, the chairman had expressly recognised that they did so work, although I should note that he there described each as having worked "in" one or other subsidiary rather than "for" it) and that the documents relating to pay and other matters apparently showed that one or other of Flexible and Cartons was in fact their employer. In paragraph 8.7, he was making the point, however, that in certain employment contexts Packaging played a key role. To explain this more fully, SOGAT82 was a predecessor of the GPMU and in 1990/91 Packaging entered into an agreement with SOGAT82 in relation to the terms and conditions of employment of "staff employees in" Cartons and Flexible, an agreement which was signed not just by Packaging but also by Cartons and Flexible "for and on behalf of Packaging". The chairman appears to have attached significant weight to this agreement in the context of the question he had to answer, but it is relevant to note that the agreement expressly did not purport to relate to all employees in Cartons and Flexible, but only to "staff" employees there; and Mr Linden disputes, for example, that all six test claimants were "staff", in particular he does not accept that Mr Parry was. In the like context, it is to be noted that later in the 1990s Cartons and Flexible also entered into an agreement with the GPMU over the terms and conditions of the hourly paid workers, but this was an agreement to which Packaging was not a party (the chairman referred to it in paragraph 11).
12. Having set that general scene, the chairman then turned, in paragraph 9, specifically to the cases of Messrs Breaker, Packham and Stevens, who had all joined the Crest group after May 1985. He found that they were each issued with section 1 particulars by Packaging, which in each case referred to the "main terms and conditions of your employment by the Company". He said no company other than Packaging was referred to in them so that the impression they gave was that the intended employer was Packaging. He also related that Mr Packham had sued Packaging in respect of a personal injury claim, which was compromised in January 2002, and said this supported the presumption that Packaging was his employer.
13. In paragraph 10, the chairman reverted to the cases of Messrs Parry, Bell and Ingram, who had each joined Bowater before 1985. He recorded that it was agreed, as he had already said, that in May 1985 the employment of each was transferred to Flexible and, in Mr Ingram's case, onwards to Cartons. He continued:

"10. … It is to be noted that the form of particulars of employment issued to these three Claimants by Bowaters is almost identical to the form later used by 'Packaging'. Mr Linden contended that 'Flexible' and 'Cartons' remained their employers throughout, whereas Mr Segal contended that they too had become employees of 'Packaging, there being a clear inference that 'Packaging' was intended to be the employer of all group employees. This inference was to be gained from the reference to 'Packaging' acting as agent for Bowater Packaging in 1985 (p. 2), and the fact that subsequent events were consistent with the subsidiaries having continued to act as agents for their parent 'Packaging'.

11. Against this argument, however, is the fact that 'Cartons' and 'Flexible' traded in their own names, corresponded with an [sic] paid their own employees. They also entered into domestic agreements with the GPMU (p. 47) and (p. 85) for 'Cartons', (p.95) and (p. 136) for 'Flexible' as if the subsidiaries were the employers.

12. The domestic agreement with SOGAT82 (pp 19-31) on the other hand was entered into by 'Packaging', described as 'the company' which recognised SOGAT 'to represent and negotiate on behalf of staff employees in 'Cartons' and 'Flexible' in certain job categories. The agreement was signed by 'Cartons' and 'Flexible' for and on behalf of 'Packaging' (p. 31). The SOGAT agreement therefore lends support to Mr Segal's argument."

14. As to paragraph 10, a possible inference from its first sentence is that the chairman was saying that Packaging issued terms and conditions of employment not just to the post-1985 employees, but also to the pre-1985 employees, including Messrs Parry, Bell and Ingram. I understand, however, that it did not. I do not understand the point the chairman was making that Packaging acted as an agent for Bowater in 1985. This may perhaps have been a reference to the recording in the sale agreement dated 7 May 1985 of the fact that Bowater Flexible had traded as an agent for Bowater: but, if so, this reference to the trading relationship between two different companies, neither of which was in the Crest group, was not obviously relevant. As to paragraph 11, it can perhaps be said that in the first sentence the chairman came close to answering the very question he was required to decide in relation to this trio of test claimants, referring as he does to "the fact that 'Cartons' and 'Flexible' … paid their own employees", a reference which plainly included Messrs Parry, Bell and Ingram. But it is clear that he did not regard these words as marking the end of the inquiry. Mr Segal submitted that he must here be taken to have been saying no more than that the two subsidiaries paid the employees who respectively worked for them, without prejudice to the question of who was in fact their employer. I have earlier referred to the points made in paragraph 11.
15. In paragraphs 13 and 14, the chairman explained that the six claimants were themselves uncertain who their employer was. None had named Packaging as his employer in their originating applications: Messrs Bell, Parry and Stevens had named Flexible, and Messrs Breaker, Ingram and Packham had named Cartons. The chairman did not explain that the six claimants had also supported their pleaded cases by their witness statements, which at the hearing they read out as being their case, having first taken the oath. Any uncertainty on their part therefore only seems to have emerged when they gave oral evidence, the chairman saying that at the hearing they gave evidence that "they believed their employer to be 'Packaging'….". According to the less than comprehensive notes of the oral evidence with which I have been provided by Mr Segal, that may not, however, be a wholly accurate summary of what they each said, as I shall explain. In paragraph 14, the chairman also recorded the uncertainty by each of the appellants as to which company employed whom. It was, however, common ground that each employee had only one employer.
16. After his summary of the facts, and after commenting on the dearth of direct evidence, the chairman turned to the law. He referred to section 1 of the Employment Rights Act 1996, which imposes an obligation on an employer to provide his employee with a written statement of the section 1 particulars. He explained that such particulars are not themselves a contract, but are "prima facie an employer's view of the terms of the contract" and he referred to System Floors (UK) Ltd. v Daniel [1982] ICR 54. He then referred to the provisions of TUPE, saying that the incoming employer steps into the shoes of the outgoing one, with the effect that the employee is employed by the new employer on the same terms as he was with the old one. He again recorded that the employment of Messrs Parry, Bell and Ingram had been transferred under TUPE from Bowater to Flexible and (in Mr Ingram's case) onwards to Cartons. But he said that the question for him was:

"20. … whether their employment remained with the subsidiaries or whether, in the absence of direct evidence, it can be inferred from all the circumstances that 'Packaging' was intending to be the employer of all employees. The similarity between the statements of terms and conditions issued by Bowaters and those issued by 'Packaging' are one factor pointing to this. Others were the agreement with SOGAT82 signed by 'Cartons' and 'Flexible' on behalf of 'Packaging' (p.31) and a letter not previously referred to in this judgment from Mr C. Cook, Managing Director of 'Packaging' to the GMPU dated 18 March 2001 (p. 89). This refers to the fact that 'we' ('Packaging') have reached a compromise settlement with employees at Gillingham in both the 'Flexible' and 'Cartons' operation'. This showed that 'Packaging' considered itself to be the company which negotiated employment terms with the GPMU."

The letter of 18 March 2001 was in fact dated 19 March 2001. For completeness, the chairman might have added that the quoted sentence was followed by one reading "Local management achieved this with the co-operation of all employees."

17. The chairman then expressed his conclusions as follows:

"21. Taking all the above factors into account, the Tribunal has come to the conclusion that:

(a) Messrs Breaker, Packham and Stevens were employees of 'Packaging' primarily because of the effect of their statements of terms and conditions of employment as set out above. The name of the employer is a mandatory requirement of such a statement, and 'Packaging' must have considered itself to be the employer, or expected itself to be considered as the employer in issuing the statements in its own name.

(b) That Messrs Parry, Bell and Ingram were also employees of 'Packaging' on the basis that:

(i) it would be irrational for pre-1985 employees to have a different employer from post-1985 employees in the absence of some special factor. There was no evidence, or suggestion that there might be such a factor.

(ii) 'Packaging' clearly controlled their terms and conditions of employment and made no distinction between pre- and post-1985 employees;

(iii) that their terms and conditions issued by Bowater were almost identical to those subsequently issued by 'Packaging'.

22. Accordingly, the proper Respondents for all the test case Claimants is 'Packaging'"

The appeal to this tribunal

18. The chairman's reasoning is, in my view, superficial and imprecise and leaves unanswered certain questions which needed to be answered. To a reader who has not first seen the underlying material that was before the chairman, it is in material respects difficult to follow, notably in the surprising absence of an explanation of how "Packaging" fitted into the Crest corporate structure.
19. It is, however, common ground that Packaging was the parent company of the Crest group and that it had various subsidiaries, of which the relevant ones for present purposes are Cartons and Flexible. They are the three appellants. By February 2003, they were insolvent and an administration order was made in respect of Packaging and joint administrative receivers were appointed in respect of each of Cartons and Flexible. The six test claimants gave evidence before the chairman and so did Mr Dines, of BDO Stoy Hayward, on behalf of the office holders, his evidence being given primarily by reference to documentation which the office holders had unearthed. Witnesses whom Mr Segal suggested the appellants might have called, but did not, were representatives of their personnel departments and from management. The question for the employment tribunal was which of the three companies employed which of the six test claimants. The best answer from the claimants' point of view was Packaging, as it has the most assets with which to meet liabilities, including the claimants' employment claims.
20. For the appellant companies, Mr Linden levelled a substantial attack on the chairman's reasoning, which he criticised as unprincipled, unreasoned and perverse. The task for the chairman was an essentially simple one, namely to determine which of the three appellant companies employed each of the six Respondents. That required an application to the facts of the basic rules of offer, acceptance and consideration which underpin the law of contract, albeit set in the employment context. That context required the chairman to consider, in the case of each claimant, who owed those essential obligations of an employment contract identified by MacKenna J in Ready Mixed Concrete (South East) Limited v. Minister of Pensions and National Insurance [1986] 2 QB 497, 515C to 516B. The chairman thus had to decide to which of the three appellant companies each test claimant owed the obligation to work; and which of the three companies owed him an obligation to pay for his work. He also had to consider by which of the three companies each of the claimants had agreed to be subject to control (meaning who controlled "the thing to be done, the means to be employed in doing it, the time and the place where it shall be done") and with which of them the other terms of their contracts were agreed. The chairman was not referred to Ready Mixed Concrete itself, but he was referred to a later authority which referred to the principles it had established.
21. Instead of applying himself to such questions, Mr Linden said that the chairman approached the task before him in an unprincipled way. In particular, having acknowledged that in 1985 Messrs Parry, Bell and Ingram became employees of Flexible and (in the case of Mr Ingram) Cartons, the chairman thought in paragraph 20 (specifically in relation to this trio of claimants) that the question he had to ask himself was "whether it could be inferred from the circumstances that Packaging was intending to be the employer of all employees." Mr Linden said that was the wrong question, and so involved a material misdirection, or at any rate was not by itself the only right question. What Packaging may unilaterally have intended might be relevant to the inquiry, but it could not by itself have been the critical question. X cannot become the employer of Y merely by his unilateral intention to do so. Accepting that these three employees had become employed by Flexible and Cartons in May 1985, they could only have ended up as employees of Packaging if at some later point there had been a novation of their respective employment contracts with Packaging: that is, an express or implied tripartite agreement under which each employee and his employer subsidiary mutually released each other from the contract of employment which bound them in 1985 and under which each employee instead became exclusively bound by an employment contract with Packaging. Any such novation would have been an event, not a process, and the assessment of whether it ever occurred required a scrutiny of all the facts relevant to the question, not just a consideration of Packaging's intentions, Packaging being but one of the affected parties.
22. Mr Linden submitted also that the chairman's reasoning for thereafter concluding that these three had become employees of Packaging was anyway inadequate. The chairman relied, in paragraph 21(b), first on the point that "it would be irrational for pre-1985 employees to have a different employer from post-1985 employees". The reasoning there is apparently that, because the chairman had found the post-1985 employees were employed by Packaging, it must follow that so were the three pre-1985 employees, even though each had been initially employed by Flexible and Cartons. It is said that the point provides no assistance on whether there was ever a novation of their employment contracts.
23. The chairman's second point was that Packaging "clearly controlled their conditions of employment and made no distinction between pre- and post-1985 employees", a point which may be more relevant, but which does not by itself prove a novation. The weight to be attached to it depended on the type of control to which the chairman was referring, which Mr Linden submitted was anyway not the type of control relevant to the particular inquiry before the chairman. The control he needed to be considering was who controlled "the thing to be done, the means to be employed in doing it, the time and the place where it shall be done" (see the Ready Mixed Concrete case). The factual basis for the chairman's sweeping finding was, it appears, primarily Packaging's role as a party to the SOGAT82 agreement in 1990/91, which anyway related only to "staff in" Cartons and Flexible and which Mr Linden disputed related to Mr Parry.
24. The chairman's third point was that these three test claimants had originally been employed under terms and conditions issued by Bowater which were "almost identical to those subsequently issued by 'Packaging'". Again, that may have been a relevant factor to take account of but it provides no conclusive assistance on whether there had been a novation. Mr Linden said it was probably no more than another way of putting the irrationality point.
25. Mr Linden submitted that the chairman's approach to the cases of Messrs Parry, Bell and Ingram was therefore flawed. He further submitted that, had the chairman addressed himself to the features of the evidence before him which were relevant to their cases, and had correctly addressed him himself to the relevant legal considerations, he could not have concluded that, having started out as employees of Flexible and Cartons, they had ended up as employees of Packaging. He made the following points in relation to each of these claimants. In reciting them (which I have fleshed out by reference to the documents), I shall also summarise what the notes of the oral evidence indicate that each Respondents said about the identity of his employer.

Mr Parry

26. Mr Parry was provided with section 1 particulars of employment by Bowater in July 1974, which set out the "main terms and conditions of your employment with the Company". Upon the sale to Flexible in May 1985, he became employed by Flexible. He worked for Flexible throughout his post-1985 employment and was paid by Flexible. His payslips referred to Flexible as his employer, and Flexible accounted to the Inland Revenue as if he was their employee. Flexible provided him with all information and communications relating to the terms and conditions of his employment. He named Flexible as his employer in his originating application. In paragraph 1 of his Details of Complaint, he said he had been employed by Flexible until the termination of his contract on 28 March 2003. In his witness statement he said he had been employed by "the Respondents" since July 1974, although that statement defined the Respondents as the "Crest Group of Companies." He said that in 1974 the Respondents was known as Bowater Packaging Limited and that he was employed in the Flexible Division, where he was Head of Development. He said he had remained in that position for 30 years, wrongly asserting that the events of May 1985 were merely a change of name. He also said he was not involved in any of the changes that were made to the company structure. He said in his oral evidence that he understood his employer was Flexible. He gave no evidence to the effect that after 7 May 1985 he entered into a contract with Packaging. The notes I have of Mr Parry's oral evidence are so brief as to be virtually worthless, but in answer to a question in cross-examination in relation to why he had named Flexible as his employer, and as to whether he assumed Flexible was his employer, he said yes. In re-examination, he said this was because of its name on his payslips and notepaper. He said he had no other documents or communications.

Mr Bell

27. He was originally employed by Bowater, which issued him with section 1 particulars in September 1976. He became employed by Flexible in May 1985. Throughout his post-May 1985 employment he worked for Flexible and was paid by Flexible. His payslips referred to Flexible as his employer and all information and all communications with him relating to his terms and conditions of employment came from Flexible. Flexible accounted to the Inland Revenue on the basis that it was his employer. His originating application alleged he was employed by Flexible. Paragraph 1 of his Details of Complaint asserted that he remained employed by Flexible until his employment contract was terminated on 25 April 2003. In paragraph 4 of his witness statement, he asserted by reference to a letter dated 9 November 1988, one from Mr Auger to Mr Hore, the latter being the personnel director for each Crest company, that he was employed by Flexible. He said in his statement that he believed that all that happened in 1985 was a change of name from Bowater Packaging Limited to Crest Flexible Packaging Limited, a matter about which he was wrong. He gave no evidence that he ever entered into a contract with Packaging. In his oral evidence, he was asked about his point that there had merely been a name change in 1985, and he said that is what he had thought. He said he understood that he was employed by Packaging in its Flexible division. He said that, if asked, he always said "Crest Packaging". He was asked why therefore he had not named Packaging as a Respondents, to which no reply is recorded. He was not sure whether communications in relation to his pay came from Flexible – he said he had not got the letters.

Mr Ingram

28. He was originally employed as an apprentice lithographer by Bowater which issued section 1 particulars to him in September 1969. In about May 1985, he became employed by Cartons. He asserted that in that month Bowater changed its name to Crest Cartons Limited, about which he was wrong. He worked for Cartons for the remainder of his employment and was paid by them. His payslips referred to Cartons, which accounted to the Inland Revenue on the basis that it was his employer. All information and communications relating to his terms and conditions of employment

came from Cartons. One document in the case was dated 27 May 1993: it was signed by Mr Ingram, it described his employer as Cartons and it was one by which he authorised Cartons to deduct sums from his wages. His originating application alleged that he was employed by Cartons and paragraph 1 of his Details of Complaint alleged that he was so employed until his contract was terminated on 16 May 2003. He gave no evidence to the effect that he had entered into a contract with Packaging. I derive no help from the notes of his oral evidence, save that he appears to have said that he always worked in the Cartons Division.

29. Mr Linden therefore submitted that, as regards this trio of claimants, and quite apart from his point about the chairman's self-misdirection in paragraph 20 as to the question he had to decide, the evidence pointed overwhelmingly to a conclusion that not only were they originally (in May 1985) employed by Flexible and (as to Mr Ingram) by Cartons, they remained so employed and there was no evidence justifying any conclusion that at some point they had become disengaged from the subsidiaries and employed by Packaging. The only material which might perhaps be regarded as suggesting otherwise was Packaging's participation in the SOGAT82 agreement, but (a) that fell short of being conclusive because it was just one straw in the wind, being one which anyway did not relate to all Flexible and Cartons employees, (b) there was nothing odd about a parent company negotiating with unions about the terms and conditions of group employees who were in fact employed by different group subsidiaries, and (c) later in the 1990s it was Flexible and Cartons who conducted union negotiations on behalf of the hourly-paid workers. Mr Linden submitted that, in relation to these three employees, I should set aside the chairman's decision and decide instead that each continued to be employed by Flexible and (as to Mr Ingram) Cartons.
30. Mr Linden's submissions then turned to the chairman's conclusion in relation to the other three claimants, Messrs Breaker, Stevens and Packham. The chairman's primary point was that they had been issued with section 1 particulars, which suggested that Packaging was their employer. Mr Linden recognises that these particulars were relevant, but points out (as the chairman recognised) that the statements are not themselves contracts of employment. Each of the section 1 particulars is before me and they are in similar but not identical form. They were issued by Packaging and, as the chairman said, set out the terms and conditions of employment by "the Company", which, as a matter of ordinary interpretation, most naturally refers to Packaging, no other company being identified. Although each of this trio of employees signed the particulars, their signatures purported to acknowledge no more than that they had received them.
31. Mr Linden said, however, that even though the section 1 particulars were relevant, so was the underlying contractual documentation relating to these employees, which received no express consideration by the chairman in his reasons. He said that this material made it clear that their contracts were in fact with one of the subsidiaries. The matters Mr Linden relied on were as follows.

Mr Breaker

32. Mr Linden said his contract was obviously with Cartons. He received a written offer of employment by Cartons by a letter dated 22 November 1996 from its personnel manager, Mr Hore, which he accepted by his letter of 26 November 1996. The natural inference from those letters is that Mr Breaker had been offered, and had accepted, employment with Cartons: Packaging did not receive a mention in them. He was employed as a platemaker. On 25 November 1996, he signed a document authorising Cartons to make deductions from his pay for the purposes of a profit related scheme. This reflected his acknowledgment that Cartons had the obligation to pay him. He always worked for Cartons and was always paid by Cartons. His payslips referred to Cartons as his employer, as did his P45, and Cartons accounted to the Inland Revenue on the basis that it was his employer. The only document arguably inconsistent with all that was the statement of section 1 particulars that Packaging issued in December 1996, which he signed by way of acknowledgment of its receipt. His originating application named Cartons as his employer. So did paragraph 1 of his Details of Complaint. In his witness statement, he said that he had applied for a position with Packaging and was informed that he would be employed by Cartons. He also said that whilst the particulars of his employment were issued by Packaging, he understood he was employed in the Cartons Division. There is no useful note of his oral evidence. He said nothing constructive on the point in chief and in cross-examination appears to have accepted that his P45 referred to Cartons as his employer. He also said he thought Cartons was a division of Packaging.

Mr Stevens

33. On 1 December 1993, Flexible wrote to Mr Stevens inviting him to an interview for employment as a production operative. On 20 December 1993, Flexible made him a written offer of employment setting out its terms, which he accepted by his letter of 29 December 1993. The inference from that exchange of letters is that he became an employee of Flexible. Packaging issued particulars of his employment to him on 17 January 1994, the receipt of which he acknowledged by his signature. He thereafter worked for and was paid by Flexible. His payslips recorded that Flexible was his employer, Flexible accounted to the Inland Revenue on the basis that it was his employer and all communications relating to the terms and conditions of employment was with Flexible. The documents show that he had to attend certain disciplinary interviews: at least five of the relevant documents are on Flexible paper, others identify no company. On 16 July 2002, Mr Hore, Flexible's Personnel Manager, signed a "to whom it may concern" letter confirming that Mr Stevens had been employed by Flexible since January 1994. His originating application named Flexible as his employer as did paragraph 1 of his Details of Complaint. His witness statement refers to the issue of particulars by Packaging but asserted that he was employed "in" Flexible. He said in his oral evidence in chief that everybody thought they worked for Packaging – "all under same roof". In cross-examination, he appears to have stuck to the position that he believed he was an employee of Packaging. He said he did not fill out his originating application.

Mr Packham

34. Cartons wrote to Mr Packham on 20 January 1995, the letter being signed by Mr Hore, Cartons' personnel manager. It offered him employment with Cartons on the terms there mentioned. The inference is that Mr Packham accepted the offer, although no letter of acceptance is in evidence. A supervisor's notification form dated 26 January 1995 relating to Mr Packham is on Cartons paper. Mr Packham worked for Cartons throughout his employment and was paid by Cartons. All communications relating to his employment came from Cartons. His payslips referred to Cartons as being his employer, and Cartons accounted to the Inland Revenue on the basis that it was his employer. On 20 February 1997, Cartons wrote to him offering him the position of Jagenberg operator and on 1 December 1997 he signed an authorisation for Cartons to make contributions to a profit related payment scheme by making deductions from his pay. All that material is consistent only with Mr Packham's employer being Cartons, and it was not until 1 December 1997 (the same day he signed the authorisation) that Packaging provided him with the section 1 particulars, whose receipt he acknowledged by its signature. Those particulars inexplicably described his employment as having commenced on 1 December 1997. On 21 January 1999, Cartons issued a memorandum to Mr Packham relating to a disciplinary matter. It is correct, as the chairman pointed out, that Mr Packham sued Packaging rather than Cartons in relation to his personal injury claim, his claim being settled by a consent order in 2002. It is also correct that on 1 June 2002 Packaging issued Mr Packham with a further form of section 1 particulars, which again, inexplicably, described his employment as having commenced on 1 June 2002. Mr Packham's payslips, however, always described Cartons as his employer, as did his P45 issued in June 2003. As for Mr Packham's understanding of the position, he named Cartons as his employer in his originating application and asserted the same in paragraph 1 of his Details of Complaint. In paragraph 2 of his witness statement, he asserted that he had been employed by Cartons, and referred to his letter of "appointment" of 20 January 1995, which was in fact a letter offering an appointment. According to the notes of the oral evidence, Mr Packham said in his evidence in chief that his employer was Packaging. In cross-examination he expressed surprise that he had named Cartons as a Respondents in his originating application, saying it was news to him. He said he had three interviews and that it was "always for Packaging". He appears to have accepted that it was Cartons that offered him a job and that Cartons was named as his employer on all his payslips.
35. Mr Linden said that, in relation to these three claimants, the chairman either failed to take into account the matters I have summarised in relation to them, being matters relevant to the question he had to decide; or, if he did them into account, he provided no explanation as to why they did not lead to the conclusion that these claimants were employed (in Mr Breaker's and Mr Packham's cases) by Cartons and (in Mr Stevens's case) by Flexible. He said that the chairman gave no direction to himself in relation to these employees as to the approach he should make to their case, and that his conclusion was anyway, and significantly, insufficiently reasoned. In their case too he asks me to set the chairman's decision aside and to substitute a decision that they were respectively employed as I have just summarised.
36. In response to the appeal, Mr Segal pointed out that an important background consideration to the task before the chairman was the fact that the evidential picture before him was far from complete. In this respect, Mr Segal was referring to the claimed lack of documentary evidence touching directly on the questions the chairman had to decide and also to the absence of any evidence from Crest's management or human resources departments. The chairman himself commented, in paragraph 6, that the documentation before him was incomplete, and in paragraph 16 he again referred to a "dearth of direct evidence" and the absence of any oral evidence from management or human resources. Mr Segal pointed out further that the task of the chairman was to make a finding of fact as to who each test claimant's employer was. He said that in doing so the chairman was entitled to draw inferences from such evidence as he had, he had done so and had made his findings accordingly, and Mr Segal submitted that the appeal is in substance no more than an attempt to retry the facts before this tribunal. If that is a sound summary of the basis of the appeal, I need no persuasion that it would not be one to which this tribunal should extend any sympathy. This is not the fact-finding tribunal. That exercise is exclusively within the jurisdiction of the employment tribunal and this tribunal does not retry, or review, their factual findings save in cases in which it can be shown that there was no evidence for a particular finding or that it was perverse (both alternatives involving errors of law). Mr Segal also said that I should not be impressed by any over-detailed analysis of the chairman's reasons in support of the endeavour to show that he had misdirected himself and he referred to the observations of Donaldson LJ in Ucatt v. Brain [1981] IRLR 224 that a tribunal's reasons are not required to include a comprehensive and detailed analysis of the case either in terms of fact or law. It should, however, be noted that Donaldson LJ acknowledged that tribunals must at least tell the parties in broad terms why they have lost or won, a theme famously repeated by Bingham LJ in Meek v. City of Birmingham District Council [1987] IRLR 250, paragraph 8.
37. The main thrust of Mr Segal's argument in support of the decision was that whilst, as he acknowledged, the chairman's reasons were not a model of clarity, the underlying basis of his decision was still sufficiently clear. Mr Segal recognises – and, I have no doubt, recognised before the chairman – that there is a considerable volume of documentary material pointing solidly to the conclusion that each claimant was employed either by Flexible or Cartons rather than by Packaging. But he said there was also at least some evidence entitling the chairman to find that each claimant was in fact employed by Packaging, which is what the chairman did find. In those circumstances he submitted that unless I can be satisfied that the chairman's decision was perverse, I cannot review it: and he reminded me of how difficult it is to establish such a case. Mr Segal's main thesis was that what the chairman had found, in relation to all six test claimants, was that Packaging was their employer, but that it had delegated to either Flexible or Cartons, as the case may be, the basic functions of an employer. Thus he recognised that the companies which actually paid the claimants were either Flexible or Cartons, and he recognised that the claimants worked for one or other of those companies. But he said that was merely an internal group administrative arrangement. The employer of each always was (or, in the case of Messrs Parry, Bell and Ingram, became), and at all times remained, Packaging. In particular, in so far as either subsidiary represented to the Inland Revenue or others on the pay documentation or elsewhere that it was the employer of any of the claimants it was misleading such representees. In short, Mr Segal's submission was that the case the chairman found was that Packaging was the employer but that it performed the bulk of its tasks as such by delegating its employer's role to one or other subsidiary.
38. As regards Messrs Breaker, Stevens and Packham, Mr Segal pointed primarily to (i) the section 1 particulars issued by Packaging, and (ii) Packaging's role in the SOGAT82 agreement in 1990/91 as providing sufficient evidence for the chairman's conclusion that Packaging was the true employer. As regards Messrs Parry, Bell and Ingram, Mr Segal was not able similarly to invoke point (i) as supporting a like conclusion, but said he could invoke point (ii), although I understood him to recognise that the latter evidence was, by itself, on the thin side. He said, therefore, that there was evidence supporting the chairman's conclusion that Packaging was the employer of each test claimant. He said also that the chairman was entitled to draw the inference that he did from the less than complete material before him, that there was nothing perverse about his decision and that I should leave it undisturbed.
39. Cogently though he argued the Respondents' case, I was not persuaded that Mr Segal's submissions are sufficient to entitle me to uphold the chairman's decision, and even though I accept that he advanced a similar case to the chairman.
40. First, I find the agency theory which underpinned the argument, and is said to underpin the chairman's decision, conceptually impossible to understand. Apparently the theory is that, for reasons about which there was apparently no evidence, Packaging wanted to employ the entirety of the group's employees. Despite that wish, it nevertheless also wanted to discharge its chosen obligations as such employer by delegating its primary employment functions to one or other of its subsidiaries. That meant that it was the chosen subsidiary that would actually pay the employee – and there is no dispute that Flexible and Cartons did all the paying - but there is also no suggestion that the paying subsidiary was then entitled to be reimbursed by the true employer, Packaging, for the payments of remuneration that it so made. That feature suggests that the so-called agency was a distinctly odd one, and that in reality it was not an agency at all. It also means that one of the primary elements of a contract of service, namely the obligation to pay, was being performed not by the putative employer or by someone on his behalf as a true agent, but by someone else purportedly as principal. If, however, the subsidiary did not pay, then I understood Mr Segal's argument also to be that the employee's remedy lay only against Packaging, not against the subsidiary. But the unanswered question which then arises is whether Packaging would in turn have had a right of indemnity against the non-paying subsidiary? It would be consistent with the absence of any right of indemnity by the subsidiary against Packaging that it would. But, if so, the suggested agency relationship becomes curiouser and curiouser.
41. Secondly, none of this was explored by the chairman, whose findings nowhere suggest that he was deciding the case on the basis that there was any such agency arrangement. Whilst I do not question that Mr Segal put the agency argument to him, I have no hesitation in rejecting his submission that that was the basis of the chairman's decision.
42. Thirdly, therefore, I am left with trying to find what that basis was. Taking first the cases of Messrs Parry, Bell and Ingram, the chairman appears to have been of the view that, accepting that in May 1985 they were employed by either Flexible or Cartons, he had to do no more in answering the question before him than to assess whether it could be inferred that Packaging intended to be the employer of all employees, including these three. That was an obvious and elementary misdirection, for reasons Mr Linden submitted. The chairman was directing himself that he was only concerned with what Packaging intended, whereas what he was required to grapple with was whether there was any evidence supporting a finding that there had at some stage been a novation of this trio's contracts resulting in their disengagement from Flexible and Cartons and their engagement in new contracts of employment with Packaging. The chairman neither asked nor answered this question and, for reasons submitted by Mr Linden, his particular reasons for concluding that these three employees did become employees of Packaging were manifestly inadequate to support his conclusion. In the case of these three employees, I find that the chairman misdirected himself as to the relevant law and then proceeded to arrive at a factual conclusion which, by reference to the particular material he relied upon and the reasons he gave for his decision, was perversely misguided.
43. As for the cases of Messrs Breaker, Stevens and Packham, the chairman gave himself no direction at all as to the legal principles he should apply. His reason for his conclusion in their case was "primarily" because Packaging had issued them with their section 1 particulars. He did not trouble to say what else led him to that conclusion. That reason was, by itself, inadequate, since he explained it in paragraph 21(a) as indicating that "'Packaging' must have considered itself to be the employer, or expected itself to be considered as the employer in issuing the statements in its own name." The chairman therefore focused merely on what one party to the supposed employment contract intended or expected, and ignored all evidence pointing to whether or not there was any evidence to show whether the employees intended to, and did, contract with Packaging. In particular, the chairman paid no express regard to the steady flow of documentary material, both preceding and postdating the section 1 particulars, which pointed to one or other subsidiary rather than Packaging as being the true employer. If he was right that Packaging intended to be, and regarded itself as, the employer of all group employees, the personnel department must have known that. How, in those circumstances, could Flexible and Cartons issue all the material they did indicating that in fact they were the employers? The chairman offers not a word of explanation for that. It is true that in paragraph 21 he opened his conclusions by saying that he had taken "all the above factors into account", which may include a reference to this material, but his unexplained assertion to that effect is a worthless one: given the apparent weight of that material, and its manifest inconsistency with his favoured conclusion, he had to devote at least a paragraph to reconciling it with his conclusion. He did not do so but satisfied himself with producing a decision which is in material respects unreasoned. In my judgment, this is a case in which the appellants are indeed entitled to complain that they do not know why they have lost.

Conclusion

44. For reasons given, I propose to allow this appeal and to set aside the chairman's judgment that "the correct employer of all Claimants chosen as test cases for the purposes of these proceedings is 'Packaging'" (I do not understand what the "correct" added). There is an issue as to whether I can, and should, simply substitute a declaration that the employer of each of the claimants was Flexible or Cartons, as Mr Linden invited; or whether I should remit the test cases to the same chairman to think again; or should remit them to a different chairman for a re-hearing.
45. I do not propose to make a declaration in the terms invited by Mr Linden. I am not the fact finding tribunal and I have but a selection of the documentary material that was before the chairman and an inadequate note of the oral evidence he heard. I bear in mind also that I am concerned not just with six test cases but, in reality, with some 267 cases which will turn on their outcome. In my judgment it would be perceived to be highly unsatisfactory if, given the limitations of the material before me, my decision were (subject to any further appeal) regarded as deciding all those cases. All claimants are entitled, as a matter of basic justice, to have the test cases considered by a chairman who has the benefit of all the oral and documentary evidence that the parties wish to adduce and who then provides a properly reasoned decision which makes full and clear findings of fact, sets out proper self-directions as to the questions he has to answer and provides a clear and reasoned conclusion.
46. The choice is therefore between the second and third alternatives. I do not propose to remit the cases to the same chairman for further reconsideration, since in my view his handling of the matter was so inadequate that the appellants would have a legitimate concern as to the justice of that course. I will, therefore, remit them for a re-hearing before a different chairman.

Result

47. I will: (i) allow the appellants' appeal; (ii) set aside the chairman's judgment that "the correct employer of all Claimants chosen as test cases for the purposes of these proceedings is 'Packaging'"; and (iii) order that there be remitted to a different chairman for re-hearing the issue as to the identity of the employer of each of the six test claimants.