At the Tribunal | |
On 13 August 2007 | |
Before
HIS HONOUR JUDGE ANSELL
(SITTING ALONE)
APPELLANT | |
2) NEWELL LTD |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
For the Appellant | ADRIAN LYNCH (One of Her Majesty's Counsel) Instructed by: Messrs DLA Piper UK LLP Victoria Square House Victoria Square Birmingham B2 4DL |
For the 1st Respondent | NICHOLAS SIDDALL (Of Counsel) Instructed by: Messrs EAD Solicitors Employment Law Unit Prospect House Columbus Quay Liverpool L3 4DB |
For the 2nd Respondent | NEITHER PRESENT NOR REPRESENTED |
SUMMARY
Transfer of Undertakings – Consultation and other Information
TUPE regulations have the potential to apply for transfer of a business entity outside the UK.
HIS HONOUR JUDGE ANSELL
"27 On 15 February 2006 the works Council at the Tamworth plant was informed that the second respondent had expressed an interest in purchasing the track and pole part of the business that was due to be closed. The blind part was not included. The second respondent is a company based in Israel.
28 A letter was issued on 21 February 2006 which made reference to the jobs going to Israel. On 24 February 2006 a representative representing the second respondent addressed the workforce and informed them that 107 staff in the track and pole part of the business which was due to be closed would transfer to the second respondent on 9 April 2006 when the purchase took place. The workers were informed that unless they wished and agreed to move to Israel they would be made redundant following the transfer, because the operation was to be moved to Israel. Thus, with effect from 9 April 2006 the first respondent's track and pole manufacturing business was transferred to the second respondent. After the transfer, the second respondent moved the manufacturing business to premises in Israel. None of the employees in the track and pole business moved to Israel and the second respondent dismissed all of the transferred workers employed in those parts of the undertaking shortly after the transfer. For administrative reasons, the redundancy payments were made through the first respondent."
"Both the transfers and redundancies took place in the jurisdiction on the information available to me. The pole and track part of the undertaking or business was situated immediately before the transfer in the UK."
I read those sentences as meaning that the redundancies took place whilst the business to be transferred to Israel (if there was one) was effectively still in the UK although I accept that there may be an issue to be determined on the facts as to the precise timing of events around 9/10 April 2006.
"1992 Act
188 Duty of employer to consult…representatives
(1) Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.
(1A) The consultation shall begin in good time and in any event-
(a) where the employer is proposing to dismiss 100 or more employees as mentioned in subsection (1), at least 90 days, and
(b) otherwise, at least 30 days,
before the first of the dismissals takes effect.
(1B) For the purposes of this section the appropriate representatives of any affected employees are-
(a) if the employees are of a description in respect of which an independent trade union is recognised by their employer, representatives of the trade union, or
(b) in any other case, whichever of the following employee representatives the employer chooses:-
(i) employee representatives appointed to elected by the affected employees otherwise than for the purposes of this section, who (having regard to the purposes for and the method by which they were appointed or elected) have authority from those employees to receive information and to be consulted about the proposed dismissals on their behalf;
(ii) employee representatives elected by the affected employees, for the purposes of this section, in an election satisfying the requirements of section 188A(1).
TUPE Regulations 2006
3 A relevant transfer
(1) These Regulations apply to-
(a) a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity;
(b) a service provision change, that is a situation in which-
(i) activities cease to be carried out by a person ("a client") on his own behalf and are carried out instead by another person on the client's behalf ("a contractor");
(ii) activities cease to be carried out by a contractor on a client's behalf (whether or not those activities have previously been carried out by the client on his own behalf) and are carried out instead by another person ("a subsequent contractor") on the client's behalf; or
(iii) activities cease to be carried out by a contractor or a subsequent contractor on a client's behalf (whether or not those activities had previously been carried out by the client on his own behalf ) and are carried out instead by the client on his own behalf.
And in which the conditions set out in paragraph (3) are satisfied.
(2) In this regulation "economic entity" means an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.
(3) The conditions referred to in paragraph (1)(b) are that-
(a) immediately before the service provision change-
(i) there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client;
(ii) the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; and
(b) the activities concerned do not consist wholly or mainly of the supply of goods for the client's use.
4 Effect of relevant transfer on contracts of employment
(1) Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee.
(2) Without prejudice to paragraph (1), but subject to paragraph (6), and regulations 8 and 15(9), 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) any act or omission before the transfer is completed, of or in relation to the transferor in respect of that contract or a person assigned to that organised grouping of resources or employees, shall be deemed to have been an act or omission of or in relation to the transferee.
13 Duty to inform and consult representatives
(1) In this regulation and regulations 14 and 15 references to affected employees, in relation to a relevant transfer, are to any employees of the transferor or the transferee (whether or not assigned to the organised grouping of resources or employees that is the subject of a relevant transfer) who may be affected by the transfer or may be affected by measures taken in connection with it; and references to the employer shall be construed accordingly.
(2) Long enough before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees, the employer shall inform those representatives of-
(a) the fact that the transfer is to take place, the date or proposed date of the transfer and the reasons for it;
(b) the legal, economic and social implications of the transfer for any affected employees;
(c) the measures which he envisages he will, in connection with the transfer, take in relation to any affected employees or, if he envisages that no measures will be so taken, that fact; and
(d) if the employer is the transferor, the measures, in connection with the transfer, which he envisages the transferee will take in relation to any affected employees who will become employees of the transferee after the transfer by virtue of regulation 4 or, if he envisages that no measures will be so taken, that fact.
(3) For the purposes of this regulation the appropriate representatives of any affected employees are-
(a) if the employees are of a description in respect of which an independent trade union is recognised by their employer, representatives of the trade union; or
(b) in any other case, whichever of the following employee representatives the employer chooses-
(i) employee representatives appointed or elected by the affected employees otherwise than for the purposes of this regulation, who (having regard to the purposes for, and the method by which they were appointed or elected) have authority from those employees to receive information and to be consulted about the transfer on their behalf;
(ii) employee representatives elected by any affected employees, for the purposes of this regulation, in an election satisfying the requirements of regulation 14(1).
15 Failure to inform or consult
(1) Where an employer has failed to comply with a requirement of regulation 13 or regulation 14, a complaint may be presented to an employment tribunal on that ground-
(a) in the case of a failure relating to the election of employee representatives, by any of his employees who are affected employees;
(b) in the case of any other failure relating to employee representatives, by any of the employee representatives to whom the failure related;
(c) in the case of failure relating to representatives of a trade union, by the trade union; and
(d) in any other case, by any of his employees who are affected employees.
(8) Where the tribunal finds a complaint against a transferor under paragraph (1) well-founded it shall make a declaration to that effect and may-
(a) order the transferor, subject to paragraph (9), to pay appropriate compensation to such descriptions of affected employees as may be specified in the award; or
(b) if the complaint is that the transferor did not perform the duty mentioned in paragraph (5) and the transferor (after giving due notice) shows the facts so mentioned, order the transferee to pay appropriate compensation to such descriptions of affected employees as may be specified in the award.
(9) The transferee shall be jointly and severally liable with the transferor in respect of compensation payable under sub-paragraph (8)(a) or paragraph (11).
"Article 1
1.
(a) This Directive shall apply to any transfer of an undertaking, business, or part of an undertaking or business to another employer as a result of a legal transfer or merger.
(b) Subject to subparagraph (a) and the following provisions of this Article, there is a transfer within the meaning of this Directive where there is a transfer of an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.
(c) This Directive shall apply to public and private undertakings engaged in economic activities whether or not they are operating for gain. An administrative reorganisation of public administrative authorities, or the transfer of administrative functions between public administrative authorities, is not a transfer within the meaning of this Directive.
2. This Directive shall apply where and in so far as the undertaking, business or part of the undertaking or business to be transferred is situated within the territorial scope of the Treaty.
3. This Directive shall not apply to seagoing vessels."
"39 I now turn to deal with the jurisdictional issue raised by the second respondent. Mr Jew submitted that the TUPE Regulations did not apply to what he called an "off-shoring situation". He came to this conclusion applying the various principles that he set out neatly in his skeleton argument R4. I do not propose to repeat the detail of it. However, he did assert that there was a common law presumption that UK legislation does not have extra-territorial effect unless clearly provided for. He drew upon the cases of Lawson and MacKinnon to support this proposition. Further, common law held a presumption that UK legislation was not applied to foreign persons or corporations. He submitted that the principles in the Arab Bank case were supportive of his argument. Looking at TUPE, he asserted that the Regulations did not rebut the two presumptions that he set forth, notwithstanding Regulation 3(1). Additionally, he submitted that Regulation 13 of TUPE 1981 excluded employees working abroad, and took me to R8 for an explanation as to why TUPE 2006 changed from its predecessor. He took me to the legal policy set out in Haisbury's Laws. Finally he submitted that applying the Regulations would be inconsistent with the Acquired Rights Directive (Rio).
40 Mr Siddall submitted that this application by the second respondent was wholly misconceived. Simply stated, Regulation 3 of TUPE clearly gave jurisdiction when the entity was present in the jurisdiction prior to the date of transfer. His extract from Lewis supported that contention. Additionally he drew my attention to Regulation 19(l)(a) of the Employment Tribunal Rules, in that the tribunal has jurisdiction over a dispute if "...the respondent or one of the respondents resides or carries on business in England and Wales…" Additionally, the White Book shows CPR part 11 permitting a challenge to the Court's jurisdiction; but by pleading to the case, through lodging the response form, the second respondent has submitted to the jurisdiction of the tribunal.
41 Mr Stilitz adopted the same argument as Mr Siddall and particularly drew attention to Regulation 3(4)(b)(ii) and 3(4)(c). He also argued that it was consistent with the clear wording of Regulation 3(l)(a), these inclusive provisions strongly indicate that TUPE applies to a transfer to business based abroad outside the UK. This was also consistent with Article 1(2) of the Acquired Rights Directive (200 1/23/EC):
"This directive shall apply where and insofar as the undertaking, business or part of the undertaking or business to be transferred is situated within the territorial scope of the treaty".
This emphasises the applicability of TUPE being determined only by location of the business ~ to transfer. In summary, it would be contrary to the protective policy underlying both TUPE and the Directive if workers could be derived of their rights simply by affecting a transfer to a company outside the UK. This could not be the intention of Parliament.
42 I conclude that I accept and adopt the arguments of Mr Siddall and Mr Stilitz. The wording of Regulation 3 is clear. I agree that the interpretation of Mr Jew would mean that, if he was right, it would be easy for unscrupulous employers to avoid the application of TUPE by setting up an overseas subsidiary. The Lawson case related to a claim for unfair dismissal, and claimants working abroad. Mr Jew was unable to convince me that the present case was in fact on all fours with it. Parliament could have put TUPE into the Employment Rights Act 1996, but did not do so. The issue of territory is covered in TUPE and I give Regulation 3(1)(a) its plain interpretation. MacKinnon and Arab Bank do not help Mr Jew. These cases do not impose a bar against a foreign respondent being a party to the proceedings in respect of their conduct within the jurisdiction. Both the transfers and the redundancies took place in the jurisdiction on the information available to me. The pole and track part of the undertaking or business was situated immediately before the transfer in the UK.
43 Thus, my answer to the strike-out question in relation to the second respondent's application is that the second respondent has not made out a clear case that the claimant has no reasonable chance of success. The application to strike-out the claim against the second respondent is refused and is dismissed."
"Moreover those who believe that TUPE applies in such circumstances argue that, in reality, such transfer does not even require the extra territorial application of the regulation. This argument proceeds thus: under TUPE, the transferee inherits the transferring workforce under their pre-transfer terms and conditions. Generally, those terms will involve the that workers performing their jobs in the UK. So, the transfer, in essence, takes place within the UK (and is thus covered by TUPE), and the employees only move abroad as a result of the transfer."
Appellant's submissions
"1. This Directive shall apply to the transfer of an undertaking business or part of business to another employer as a result of a legal transfer or merger.
2. This Directive shall apply where and in so far as the undertaking business or part of the business to be transferred as situated within the territorial scope of the Treaty. Under article 2 a transferee means "any natural or legal person who, by reason of a transfer within the meaning of Article 1(1), becomes an employer in respect of the undertaking business or part of the business."
Article 3(2) provided that:
"Following the transfer within the meaning of Article 1(1), the transferee shall continue to observe the terms and conditions agreed at any collective agreement on the same terms applicable to the transfer or under that agreement…"
The current Council Directive I have set out above in paragraph 6. There is no doubt that by referring to the business to be transferred being situated within the territorial scope of the treaty, that means the EU, see Addison v Denholm Ship Management UK Ltd [1997] IRLR 389. Mr Lynch argues that the wording of these Directives is the clearest possible statement that the EU council decided that the terms of the ARD were to be confined transfers which occurred within "the territorial scope of the treaty" i.e. between businesses situated within the EU. He argued that this approach was consistent with the purposes of the original (pre-Maastricht treaty) for example article 117 provided that:
"Member States agree upon the need to promote improved working conditions and an improved standard of living for workers, so as to make possible their harmonisation while the improvement is being maintained. They believe that such a development will ensue not only from the functioning of the common market, which will favour the harmonisation of social systems, but also from the procedures provided for in this Treaty and from the approximation of provisions laid down by law, regulations or administrative action."
"(5) The applicability of § 613 a BGB is not ruled out by the fact that the acquiring party has its registered office outside the Federal Republic of Germany.
Pursuant to Article 30 II EGBGB5, the employment relationship in the present case is subject to German law. The applicability of German law does not presuppose that all objects to which constituent facts are linked fall within the scope of the BGB.
The aim and object of § 613 a BGB nevertheless militate against the application of the rule in cases where its object would be thwarted if it were to be applied. The object of § 613 a BGB is to protect the jobs in an establishment where the owner of the establishment changes but the establishment retains its economic identity. This follows from the heading of Council Directive 200 1/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. This Directive was transposed into national law in Germany through § 613 a BGB. If the rule applied when an establishment or a part of an establishment were transferred out of Germany to an acquiring party outside the territory in which the Directive applies, the employee would be formally successful in claiming that the court should declare that a notice of dismissal issued for this reason was invalid. However, the judgment which prompted the action would indicate that the employment relationship with the employer resident in Germany was terminated and transferred to an employer resident in a place which was not subject to Council Directive 200 1/23/EC. The employee would ultimately have no protection.
However, if a notice of dismissal is invalid because an establishment or part of an establishment has been transferred by a legal entity resident in Germany to a legal entity in another EU Member State, Council Directive 200 1/23/EC of 12 March 2001 provides minimum protection to an employee with respect to whom the application of § 613 a BGB is justified. As the Republic of Ireland has been a member of the European Community since 1972, this applies to the case in hand.
Given that the BAG, in its judgment of 20.4.1989 (2 AZR 431/88 — BAGE 61, 369 = NZA 90, 32), took the view that § 613 a BGB would, in principle, apply to a case where the place of business was moved to France, the court holds that the issue of law in the present case is no longer of fundamental importance, as it has already been clarified in a decision by a supreme court. However, the BAG takes the view that employment relationships may only be transferred in the case of employees who are either obliged by their employment contract to work at the establishment's new headquarters or are willing to do so. In the present case, the plaintiff stated once again at the hearing before the appeal court that he would be prepared to work in Ireland under the contractual terms prevailing hitherto."
Mr Lynch argued that the Court's view was that the ARD would not apply to a transfer to a state outside of the EU since German legislation was not intended extend the situations where in reality the allegedly transferred employee would be left with no practical remedy.
Page 54
"According to its wording, the Directive is applicable to transfers of businesses to non-EU and non-EEA countries. This gives rise to the question, whether the application of the national law of the state of origin of the transfer will also apply to a transferee from outside the EU, which, however, will in practice be only of minor importance: Firstly, the relocation of a business must qualify as a business transfer according to the criteria described by the ECJ. Therefore, as personnel or tangible assets will most likely not be transferred over a large distance to non-EU undertakings, this transfer does not fall within the scope of the Directive.
It is also questionable if the identity of the economic unit is maintained, when the changes in the environment are substantial in case of an international transfer (change of country and generally language, change in the legal, economic and social context). In this context the French Supreme Court explicitly held that in the event of a relocation of a business from France to Brazil, employment contracts were not transferred, because the business is transferred "to a different environment"
Page 61
Therefore, the Directive applies also to both Ownership and Relocation Transfers from one Member State to another Member State or to a third country but does not apply where the undertaking is situated outside the EU originally, even if the Transferor, Transferee or both of them are domiciled in the EU."
However Mr Lynch also reminded me of the provisions of EU regs. 44/2001 which allows employees to sue in their own jurisdiction Respondents located in other EU countries as described in the CMS report at pages 58 to 59.
"The objective of safeguarding the employee's rights becomes aimless when the employee is not willing to preserve these rights. To this extent, there is little, if any, evidence, where undertakings or jobs are lost abroad, that employees are complaining they have no legal rights to follow their jobs. Rather, the evidence is that their desire is to prevent the transfer of jobs abroad, or at least to obtain promises of redeployment, retraining and no "compulsory" redundancies, when undertakings/jobs are lost offshore. See for example the campaigns of the Communications Workers Union (www.cwu.org/elephant) and of the Amicus trade union in the United Kingdom."
However in general Mr Lynch argued that although the report in parts appeared to suggest that the language of the ARD was consistent with this application outside of the EU, he relies on the important passages 68 to 69 which he argued suggested that the ARD should be amended so as to clarify the fact that it was confined to transfers within member states of the EU:
"Article 1(12) provides that the Directive will apply where and in so far as the undertaking to be transferred is situated within the territorial scope of the Treaty i.e. the territory of the European Union.
However, do the provisions need to be modified when a transfer is classified as a cross border transfer?
Arguably, the application of the Directive to a transfer of an undertaking located within the EU to a natural or legal person in a state outside the EU is worth examining, as the Directive will apply to a transfer within the EU, but will not apply to a State outside the EU. This will be the case e.g. for a transfer of an undertaking from France to India.
In the proposed revised version of the Directive in 1975, it was suggested that the territorial scope of the Directive should be extended. However, the Directive as it currently stands limits the application of the Directive solely to transfers in which the undertaking or business to be transferred is located within the territorial scope of the treaty.
In the light of this, it seems that the working of Article 1(2) needs to be amended. The following words "provided that the undertaking is transferred within the territorial scope of the Treaty" or "from one Member State to another Member State" should be added to clarify matters. Alternatively, the application of the Directive could be restricted to transfers within a particular Member State's territory and particular rules relating to cross border situations could be drawn up.
This amendment would avoid the Directive being applied to only one of the parties to the cross border transfer. Furthermore, there could be need for provisions to make clear that the party who was not subject to the Directive (transferor established in a third State) would not be held liable for the other party's failure (transferor established in a third State) would not be held liable for the other party's failure (transferee established in a Member State).
…
Should the concept of a cross border transfer be defined more clearly in the Directive? With the exception of the suggestion above, we do not think that this is necessary."
"Let us apply this to our international transfer case. Unless there is a pan-European mobility clause in the employment contract of the employee, the employee may assert that the change of location involved in the cross-border transfer would be such as to be a significant breach of contract. An individual could therefore generate a constructive dismissal claim arising from this change of terms and conditions under reg.5(5) and simultaneously exercise a right of objection to being employed by the transferee under reg.5 (4A). The Humphreys case would mean that the resultant claim for unfair dismissal would be properly made against the transferor. Again the transferor would have available the argument that the dismissal was not automatically unfair because there was an economic, technical or organisational reason entailing changes in the workforce. However, as stated above, this argument has its problems: as we have discussed, the change of location alone may be insufficient grounds to argue the point. If, on a cross-border transfer, an employee therefore wished to advance this proposition and generate a claim for unfair dismissal compensation, he or she could, arguably, do so by the virtue of the application of the Humphreys case. This remains to be tested.
The extent of the applicability of the EC Acquired Rights Directive to cross- border transfers from within the EEA (particularly the United Kingdom) to a zone outside the EEA
We believe [in particular] the issues are not dissimilar. First, as TUPE applies to the transfer of an undertaking immediately before the transfer in the United Kingdom, an employee should enjoy TUPE rights are capable to the period prior to the transfer. We have explained that these rights are, principally, the r. s to information and, if appropriate, consultation, via appropriate employee representatives. We believe this position unchanged by the fact that the transfer is ultimately out of the EEA.
Despite the procedural complexities in persuading a United Kingdom employment tribunal to hear a claim for unfair dismissal (it is unlikely that offshoring centres outside Europe would have local laws requiring a local employer to confer transfer of employment rights on a United Kingdom employee (see, in the case of India, Mensik and Hengesbaugh (2004))) against a foreign transferee outside the EU, Evason (2004) argues it is not impossible (see, for the procedural and substantive issues here, Dicey and Morris, Conflict of Laws, 13th ed). Again the position is untested. However whether Evason is correct or not, we believe that the argument for a claim against the transferor by virtue of the decision in University of Oxford v Humphreys is still arguable.
The rules with regard to redeployment, multiple redundancies, information and consultation and employee entitlement to compensation arising on job losses in the country of the company outsourcing its operations
Assuming our arguments regarding the difficulty of exercising TUPE rights on offshoring decisions are well founded or, if employees in practice are not motivated to assert such rights, the termination of employment with the transferor, on a decision to remotely source the employee's job, will be a redundancy within the legal definition in the Employment Rights Act 1996. [FN15]"
"The other, practical, issue to be taken into account in transnational transfer situations is that, unless the cross border transfer is between adjacent, or relatively adjacent countries (e.g. Great Britain to the Republic of Ireland), or between countries which share borders in mainland Europe employees, often, do not assert transfer rights in the courts. Instead, their efforts are concentrated on obtaining the best financial deal for their future in the country where they were originally employed whether this is enhanced redundancy payments, in placement or out-placement support or redeployment in the transferor's organisation elsewhere'."
Further at paragraph 41:
"The Acquired Rights Directive, even as amended, does not cater for the possibility of cross-border mergers and acquisitions and transnational transfers of undertakings or 'offshoring' within the EU. TUPE applies to a transfer of an undertaking or part of an undertaking situated immediately before the transfer in the UK or, in the case of a service provision change, to an organised grouping of employees situated in Great Britain, which has as its principal purpose the carrying out of the activities concerned on behalf of the client'. This raises a number of points. First TUPE does not make it clear what happens when there is a transfer of a business (or an outsourcing transaction) from the UK either to another country within the European economic area (EEA) to which the ARD Directive apples, or indeed outside the EEA. This is a serious defect in the scope of European and domestic legislation."
And again at paragraph 42 he said this:
"Although some argue that TUPE does have transnational effect in the EU, others doubt whether this is the case and the position is largely untested'. If the transfer is outside the EEA it is even more difficult for employees to mount an argument that they have the right to transfer to the new employer, if foreign based. One example is the outsourcing of information technology to the Indian subcontinent. In that kind of case it is likely (although not yet clarified by the Court) that employees would be left with redundancy claims against the British company with no automatic right of transfer to the foreign company."
"The general principal of construction is, of course, that legislation is upon the facie territorial. The United Kingdom rarely purports legislate to the whole world. Some international crimes, like torture, are an exception. But usually such an exorbitant exercise of legislative power would be both ineffectual and contrary to the comity of nations. This is why all the parties are agreed that the scope of section 94(1) must have implied territorial limits."
Lufkin & Jenrette Securities Corp [1986] 1 All ER 653 Hoffman J said at page 658:
"The principle is that a state should refrain from demanding obedience to its sovereign authority by foreigners in respect of their conduct outside the jurisdiction."
Mr Lynch submitted as regards to this case to seek to apply the regulations to the Appellant would be to demand obedience from a foreigner to UK jurisdiction potentially for Acts outside the UK and that this would not be appropriate.
The next presumption is that UK legislation does to apply to foreign persons or corporations outside the UK. In Arab Bank Plc v Merchantile Holdings Ltd [1994] 2 All ER 74 Millet J at page 82 said this:
"There is a presumption in the absence of contrary intention express are implied UK legislation does not apply to foreign persons or corporations outside the UK whose acts performed outside the UK."
In that case the court decide whether section 151 of the Companies Act 1985 which prohibited a company or any of its subsidiaries from giving financial assistance for the purpose of the acquisition of its shares applied to a foreign subsidiary of an English parent company as it would to an English subsidiary. The court held, applying the presumption, that in the absence of contrary intention the section was not intended to have extra territorial effect.
"(b) a transfer or service provision change howsoever effected notwithstanding-
(i) the transfer of an undertaking, business or part of an undertaking or business is governed or effected by the law of a country or territory outside the United Kingdom or that the service provision change is governed or effected by the law of a country or territory outside Great Britain.
(ii) that the employment of persons employed in the undertaking, business or part transferred or, in the case of a service provision change, persons employed in the organised grouping of employees, is governed by any such law;"
The regulation is silent on the position as whether regulations apply to transfer of an undertaking to a non-EU state. Although regulation 13 of the TUPE regulations 1981 excluded employees working abroad, which was removed from the new regulations, the DTI's consultation document of March 2005 at paragraph 92 stated this removal was "simply a tidying up exercise."
Respondent's submissions
"Both the transfers and the redundancies took place in the jurisdiction on the information available to me".
He argued on the basis of that finding Holis were present within the jurisdiction post the transfer and it acted within the jurisdiction and for a period of time owned the transferred business or entity prior to its removal to Israel. I have already indicated that in the absence of any more specific information relating to the events around 9 April that Mr Siddall's correct interpretation of the Chairman's findings would mean that the entity existed in the jurisdiction both pre and post transfer. Therefore even on Holis's most limited extent of TUPE's jurisdiction the rest would be satisfied. It seems to me therefore that on this narrow basis the appeal cannot succeed.
"whether or not an employee working abroad is able to bring a claim under the regulations would in future depend on the normal principles of international law."
"71. This case turns on the interpretation of WTR and the question that is central to the resolution of the issue between parties is whether, in declaring in paragraph 1(2) that:
"These Regulations extend to Great Britain only."
the WTR are referring not only to the extent of the reach of the legislation but also to its application. If they are, none of the claimants are entitled to the protection of WTR and the appeal succeeds. In this context "extent" concerns the legal system or systems in which cognisance is to be taken of the legislation, the geographical area throughout which it must be recognised as law (see e.g. Bennion, section 103; Enriquez v Urquhart). The term "application" is used in the sense of the persons and matters which are affected by its provisions (see e.g. Bennion, section 1 28).
72. As a starting point, I accept that the principle articulated in section 128 of Bennion applies, namely that:
"unless the contrary intention appears"
any legislative enactment applies to all persons and matters within the territory to which it extends but not to any other persons or matters. Thus, at first blush, a statement in an enactment that it extends only to Great Britain would seem to indicate that it is to be regarded as binding law in England, Scotland and Wales (but not Northern Ireland) and applicable to all persons within its landmass in respect of matters occurring or which have occurred or are situated within its landmass.
73. In the case of the WTR, as was conceded by the respondents, a contrary intention is immediately noticeable in respect that since August 2003, they have referred to "offshore work" which clearly takes their application beyond a restriction to the landmass. Two possible approaches then arise. One is an approach which views paragraph 1(2) as still being the only provision in the WTR within which their extent and application can be found. If that approach was followed then "Great Britain" is simply taken to mean Great Britain including its territorial waters. The other approach is to read the regulations as the claimants read them namely in a manner which regards paragraph 1(2) as dealing only with extent and then looking elsewhere to identify their application.
74. If the latter approach is followed, it is evident that from the outset in the history of WTR, specific provision has been made for sectors of economic activity which are excluded from their application. That shows that the draftsman took the view that without specific exclusion, all sectors functioning within the jurisdiction of member states would have been covered. In the first set of WTR (SI no. 1833 of 1998) "sea fishing" and "other work at sea" were excluded. That was at a stage prior to the extension of the WTR to "offshore work", a stage at which it might, on the "first blush" approach to which I have referred, have been thought that the paragraph 1(2) provision was such as to restrict the application of WTR to the landmass of Great Britain. That would have been on the basis that the purpose of paragraph 1(2) was to state not only the extent but also the application of the enactment. But if that had been the case, the draftsman need have had no concern that without the paragraph 18 exclusions, the regulations would have applied to activities beyond the landmass such as sea fishing or other work at sea. Thus, the indication is that the purpose and function of paragraph 1(2) was to state only the extent of WTR leaving their application to be found elsewhere.
75. Moving then to WTR in the form into which they were amended in terms of SI no. 1684 of 2003, paragraph 18 still provides for excluded sectors but the nature of the sectors excluded has changed. The reason for that is plainly because it is evident from the inclusion in the interpretation provisions of a description of "offshore work" that the "other work at sea" exclusion was no longer appropriate. But does it show that the inclusion of that sector took the application of WTR only as far as work carried out within territorial waters?
76. I think not. First, since the United Kingdom has jurisdiction in certain respects over the designated areas of the UKCS, it is quite possible for a statutory instrument to apply to activities carried on there. Secondly, I am satisfied that there is a clear indication from the inclusion of paragraph 18 in the original WTR that there was never any intention that paragraph 1(2) be regarded as a statement of both their extent and application. Their extent is limited to Great Britain but that is not to say that their application necessarily suffers a similar limitation. Between 1 998 and 2003 it was limited, certainly so fir as offshore work was concerned, but that was achieved not through the mechanism of paragraph 1(2) but through the mechanism of paragraph 18.
77. After August 2003, the paragraph 18 mechanism changed so as to remove the limitation so far as offshore work was concerned. Was there then anything in the regulations indicative of an intention to restrict the offshore work in question to only such work as was carried out within territorial waters? The respondents point to paragraph 1(2) but paragraph 1(2) had previously been shown as dealing only with the extent of the regulations, not their application and there was nothing to indicate that its function had changed at the time of the amendment on a reading of either the original or amended (as at 2003) regulations. It must then follow that the intention was to cover all offshore work within the jurisdiction of the UK, not simply such work as was carried out within territorial waters.
78. Further, still considering WTR alone, I take account of the terms of the recent 2006 amendment. It plainly cannot now be suggested that paragraph 1(2) is indicative of both the extent and application of WTR since the amendment to paragraph 2 makes it clear that their application goes beyond Great Britain and its territorial waters and into and over the UKCS. Yet the style and format of the regulations remains unchanged. Had it been that paragraph 1(2) was for some reason, in the period between August 2003 and 1 October 2006, intended as a statement of both extent and application, a different approach to amendment could have been expected. There is also the matter of the Explanatory Note. Whilst Mr Goudie rightly drew attention to it being only a note and not part of the regulations themselves, it is quite plain from the terms of the note that the Parliamentary intention prior thereto had been that the WTR should apply to the UKCS following the 2003 amendment. That is not conclusive of the issue but it seems to me that it is at least an adminicle which can properly be taken into account and it is one that points away from it having been the intention of Parliament that application be restricted to Great Britain and its territorial waters at that time.
79. Reverting then to the principle and presumption set out in section 128 of Bennion, it seems to me that on a reading of WTR alone, it is evident that Parliament did have an intention contrary to the norm whereby the application of an enactment coincides with and is confined to its extent. Further, for the reasons I have given, I am satisfied that that intention was not to confine their application to the territorial waters around Great Britain; an intention, rather, that they apply where the UK exercises jurisdiction is evident."
Applying these principles to TUPE Mr Siddall argued that the extent of the regulations can be seen from Regulation 1(3) whereby they extend to Northern Ireland whereas its application is to all transfers of undertakings which immediately prior to the transfer were situated within the UK. He argued that this approach did not offend against the principles set out by Mr Justice Millett referred to above. The acts complained of were not performed outside the UK but rather related to the transfer of a business situated within the jurisdiction. He argued that Holis's submissions as to the difficulties of enforcement outside the EU again conflated the issues of prescriptive and enforcement jurisdiction.
"to safeguard the rights of the workers in the event of a change of employer by making possible for them to work for the new employer under the same conditions as those agreed with the transferor."
As to the wording of the ARD he submitted that the purpose of the directive was to safeguard the rights of workers working within the EU immediately prior to transfer. There was no restriction within the directive as to where they might be working after transfer. The history of the wording of the ARD's predecessor (77/187/EC) was set out in a commission report entitled "The Legal Consequences Cross Border Transfers of Undertakings within the European Union" in May 1998 by Professor Bob Hepple QC and in particular at paragraphs 3.1 to 4.5. I do not propose to set out those paragraphs in detail. The Respondent summarised the same as follows:
1. The ARD drew no distinction between internal and cross border transfers.
2. The initial two drafts of the ARD in 1974 and 1975 envisaged even wider jurisdiction provisions. I have referred above to the Commission's paper in May 1974.
3. Conflict of laws provisions were in the initial draft of the ARD but were removed as a draft regulation on the conflict of laws in employment matters was to deal with the same but that regulation was never pursued. Mr Siddall argued that clearly TUPE was intended to give effect to the ARD and thus if possible the wording of TUPE should be read to conform with the ARD's intention: see Webb v EMO Cargo Ltd [1993] 1 WLLR 49. He argued that if it was the intention of the ARD to protect workers rights in the event of change of ownership of the business, it would be easily frustrated if Holis's interpretation were to be accepted.
relation to transfers to non-EU countries. A2.68 sets out the position thus:
"where the undertaking remains in the UK, the fact that the transferee has a seat outside the EU does not affect, in legal terms, the legal rights and protections of the employees under the TUPE regulations. However, where the undertaking itself is physically relocated outside the territory of the EU Regulation 44/2001 has no application and general principles of private international law come into play."
Conclusion