EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
At the Tribunal
Before
(SITTING ALONE)
(2) SODEXO HEALTH CARE SERVICES LTD
(3) PINNACLE HOUSING LTD RESPONDENTS
Transcript of Proceedings
JUDGMENT
REVISED
APPEARANCES
(One of Her Majesty’s Counsel) & MR SHABBIR LAKHA (of Counsel) Instructed by: Walsall Metropolitan Borough Council Legal Services The Civic Centre Darwall Street Walsall WS1 1TP
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(One of Her Majesty’s Counsel) & MS NADIA MOTRAGHI (of Counsel) Instructed by: Messrs Thompsons Solicitors City Gate East Tollhouse Hill Nottingham NG1 5FS
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SUMMARY
PRACTICE AND PROCEDURE
Amendment
Parties
The Employment Judge granted to a group of 103 Claimants permission to amend the claims and join the TUPE transferee where the TUPE transferor had been the Respondent. The application was made after the expiry of a relevant time limit – namely the time limit on making a claim post TUPE transfer for pre transfer arrears of equal pay as per Sodexo Limited v Gutridge [2009] ICR 1486. The Employment Judge applied the principles in Selkent Bus Co v Moore [1996] ICR 836.
Held: the Employment Judge was correct to apply Selkent principles, and she did not make any error of law in the way she applied them. Appeal dismissed.
Note. The Notice of Appeal contained a ground to the effect that it was not open to the Employment Judge to order joinder of a party after expiry of a relevant time limit. It was conceded by the Appellants that this argument was not open to them at Appeal Tribunal level, but it was kept open against the possibility of further appeal.
HIS HONOUR JUDGE RICHARDSON
The Background Facts
The Underlying Law
9. It follows that the Claimants ought to have brought their claims against Housing 21, not the Council even though they relied on comparators and breaches of the equality clause during the time when they were employed with the Council. If it was not always clear that this was the law, it was certainly established by the decision in Sodexo Limited v Gutridge [2009] ICR 70 (Appeal Tribunal), 1486 (Court of Appeal). It was held that the equal pay claimed by the claimants in that case (which was predicated upon male comparators during employment with the transferor) was capable of surviving the transfer. Once the right to equal pay crystallised, it was not terminated on transfer but rather was transferred to the transferee.
13. I have stated the law in the last paragraph as the Court of Appeal has now found it to be in Sodexo Limited v Gutridge [2009] ICR 1486. It was, however, not necessarily obvious that a time limit became applicable on a TUPE transfer. It was, for example, arguable that the effect of the TUPE transfer was that the women never ceased to be employed in the same employment, so that the time limit in section 2ZA(3) had not started to run: this was the view of Janet Smith LJ, dissenting in the Court of Appeal. But the decision of the Appeal Tribunal [2009] ICR 70, handed down on 31 July 2008 and reported first in October 2008, was to the contrary; and this decision was upheld by the majority (Wall LJ and Pill LJ) in the Court of Appeal on 14 July 2009.
15. There is one other feature of the decision of the Court of Appeal in Sodexo which it is, I think, important to keep in mind. Any rights the Claimants had to equal pay when employed by the transferor would continue during the course of their employment with the transferee employer. See [2009] ICR 1486 at paragraphs 27-29, 81, 100-104. So it is still necessary, even if the claim for pre-transfer remuneration is statute-barred, to investigate the validity of the claim to equal pay during employment with the transferor in order to adjudicate upon an equal pay claim against the transferee relating to the time after transfer.
The Selkent Principles
17. In Selkent Bus Co v Moore [1996] ICR 836 Mummery P gave general guidance as to how applications for leave to amend, including applications for amendments raising a new cause of action, should be approached. In doing so he built on earlier cases, including Cocking v Sandhurst Stationers [1974] ICR 650. The “Selkent principles”, as they are generally known, include the following.
“(4) Whenever the discretion to grant an amendment is invoked, the tribunal should take into account all the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it.
(5) What are the relevant circumstances? It is impossible and undesirable to attempt to list them exhaustively, but the following are certainly relevant.
(a) The nature of the amendment. Applications to amend are of many different kinds, ranging, on the one hand, from the correction of clerical and typing errors, the addition of factual details to existing allegations and the addition or substitution of other labels for facts already pleaded to, on the other hand, the making of entirely new factual allegations which change the basis of the existing claim. The tribunal have to decide whether the amendment sought is one of the minor matters or is a substantial alteration pleading a new cause of action.
(b) The applicability of time limits. If a new complaint or cause of action is proposed to be added by way of amendment, it is essential for the tribunal to consider whether that complaint is out of time and, if so, whether the time limit should be extended under the applicable statutory provisions, e.g., in the case of unfair dismissal, section 67 of the Employment Protection (Consolidation) Act 1978.
(c) The timing and manner of the application. An application should not be refused solely because there has been a delay in making it. There are no time limits laid down in the Regulations of 1993 for the making of amendments. The amendments may be made at any time — before, at, even after the hearing of the case. Delay in making the application is, however, a discretionary factor. It is relevant to consider why the application was not made earlier and why it is now being made: for example, the discovery of new facts or new information appearing from documents disclosed on discovery. Whenever taking any factors into account, the paramount considerations are the relative injustice and hardship involved in refusing or granting an amendment. Questions of delay, as a result of adjournments, and additional costs, particularly if they are unlikely to be recovered by the successful party, are relevant in reaching a decision.”
18. It is common ground that the Employment Appeal Tribunal, which hears appeals only on questions of law, has a limited role in reviewing the exercise of a discretion according to Selkent principles. It is common ground that the test can be taken from Noorani v Merseyside TEC Ltd [1999] IRLR 184 at paragraph 32:
“…..Such decisions are, essentially, challengeable only on what loosely may be called Wednesbury grounds, when the court at first instance exercised the discretion under a mistake of law, or disregard of principle, or under a misapprehension as to the facts, where they took into account irrelevant matters or failed to take into account relevant matters, or where the conclusion reached was “outside the generous ambit within which a reasonable disagreement is possible”.
The Tribunal’s Reasons
“44. In my opinion this is amendment application which falls to be dealt with under Cocking and Selkent principles. I do not accept that it would be a misdirection in law for me to apply the unvarnished principles set out in Cocking and Gillick to an equal pay claim, indeed those principles are binding on me. I do accept that the nature of equal pay claims, in particular the strict six month time limit with no provision for extension and the six year backdating period, are relevant factors to take into account, and that they are weighty factors, both as regards the impact on the claimants if the amendment is not allowed, and as regards the impact on House 21 Ltd if it is.”
“45. In Selkent the Employment Appeal Tribunal noted that when deciding whether to exercise discretion to grant leave to amend an originating application the tribunal should take account of all of the circumstances and balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it. The EAT also noted that relevant circumstances would include: the nature of the amendment; the applicability of statutory time limits if a new complaint or cause of action is proposed to be added by way of amendment; and the timing and manner of the application.
46. As regards the nature of the amendment, Selkent draws a distinction between minor amendments such as the correcting of clerical and typing errors, the addition of factual details to existing allegations, or the addition/substitution of other labels to facts already pleaded; and substantial alterations making entirely new factual allegations which change the basis of the existing claim. I accept that the addition of the second respondent will not entail a substantial alteration such that the basis of the existing claims is changed, or entirely new factual allegations are added. I also accept that the second respondent is already a respondent in respect of some claimants in these proceedings. However, it does seem to me that it cannot be properly described as a minor amendment to join Housing 21 Ltd as respondent when it did not face the possibility that it would become respondent to 103 additional claims prior to the amendment application being made.
47. As regards the applicability of the statutory time limits, clearly the initial complaints against the first respondent were presented in time but the joinder application is out of time. It is clear that if I allow the amendment i.e. the joinder of Housing 21 Ltd, the consequence will be that the affected claimants can circumvent a problem with they presently face in respect of establishing liability for damages for pre-transfer breaches of the equality clause losses against Housing 21 Ltd as transferee. If I allow the amendment, the relevant date for backdating purposes is the date when the claims were originally presented, notwithstanding the fact that they were not presented against Housing 21 Ltd on that date. If I do not allow it, the claimants are out of time to claim against Housing 21 Ltd for pre-transfer breaches of the equality clause.
48. As regards the failure to name Housing 21 Ltd as second respondent when the claims against the first respondent were presented on 29 September 2008 (which was within six months of the transfer), the evidence from Mr Clews suggests that there was an intention to do so, hence the grievances being sent to Housing 21 Ltd. This factor assists the affected claimants in that it suggests that the failure to name Housing 21 Ltd as second respondent was an oversight, however it goes against them in that it demonstrates that it was known, or at least thought possible, that Housing 21 Ltd as transferee could be liable in respect of equal pay claims for the period pre-transfer. I do accept that such knowledge does not amount to knowledge that the time limit to claim against the transferee for pre-transfer breaches of the equality clause started running from the date of transfer. However the EAT's judgment in Sodexo v Gutridge was handed down on 31 July 2008 and reported in IRLR in October 2008 ([2008] IRLR 752). Therefore, even if the outcome was not known when the claims of these affected claimants were presented (although my recollection is that the case attracted publicity on legal updater services prior to being reported in the law reports) it was certainly reported widely shortly afterwards. Consequently, there clearly was the potential to apply to join Housing 21 Ltd as second respondent after Sodexo (EAT) was reported and to still be in time - the primary time limit to claim within six months ran from 8 April 2008 but would be extended by three months because of compliance with the statutory grievance procedure. Overall it is clear that the claimants' failure to name Housing 21 Ltd as second respondent when they presented their claims, or to apply to do so once the outcome of Sodexo in the EAT was known, is a factor which weighs against joinder now because there is no good explanation as to why this could not have been done within the applicable time limit.
49. I shall next deal next with the timing and manner of the application. There is force in what the respondents say about this point. As noted above, the time limit for bringing equal pay claims in respect of pre-transfer losses can fairly be said to have been clear from the time when the Employment Appeal Tribunal handed down its judgment in what was then Sodexho v Gutridge. That authority would be followed by tribunals until and unless the judgment was successfully appealed. Yet this application was not made at that point. Instead, the application was not made until several months after the Court of Appeal's judgment. That is a factor which weighs against joinder now.
50. Also, as regards the timing and manner of the application, Miss Motraghi is right to point out that by adding Housing 21 Ltd as a second respondent to these particular claims, it will not jeopardise the timetable in respect of these proceedings; it will not require Housing 21 Ltd to be represented at hearings where it would not have been present in any event; and, it will not introduce any new issues to be determined. That factor weighs in favour of joinder.
51. I shall next consider the factor arising as result of Issue 3. Assuming for these purposes that the first respondent establishes that it is the wrong respondent in respect of claims against transferred employees, the respondents' argument is that if I allow joinder, I will be allowing the claimants to resuscitate otherwise hopeless cases. The respondents' representative points out that the joinder application was only made, after the first respondent applied for claims against it in respect of transferred former employees to be dismissed. As regards those points, whilst I accept these are potentially relevant factors, it does seem to me that the key point is to recognise that the reason for the joinder application is precisely this point - the claimants recognise they have the wrong respondent. That is why their cases are "hopeless". It cannot be said their cases have been demonstrated to be "hopeless" in any other way, for example that they are unmeritorious. It is fair to say that most, if not all, joinder applications arise because the wrong respondent was originally named and therefore the claim against that respondent has no reasonable prospect of success. It is of course relevant that the claimants should have known this earlier and acted on it sooner, but I have already noted those points in paragraphs 48 and 49. I do not think that the fact that the case against the first respondent has no reasonable prospect of success because there is no reasonable prospect of recovering damages from it (assuming its arguments on the pension point to be correct) adds anything to those points.
52. I also consider a very relevant factor to be the fact that it would be difficult for these affected claimants to understand why colleagues who have claims in the same proceedings can look to the transferee as responsible for pre-transfer inequalities of pay caused by breaches of the equality clause, but they cannot. That would be a harsh and undesirable outcome. I think that a reasonable and objective person would consider it to be unfair. Whilst I accept that it may well be that it was careless not to bring a claim against the second respondent at the time when the original claims were presented, this is but one factor to take into account, and the question is whether to visit that unsatisfactory state of affairs on the affected claimants by requiring them to seek redress in some other forum.
53. Having set out the factors I consider to be relevant, I must now weigh up the balance of hardship. I think Ms Motraghi is right to say that the balance of hardship is firmly in favour of the affected claimants. If I do not allow joinder they have no prospect whatsoever of pursuing claims for equal pay in respect of their employment with the first respondent, apart from claims for pension loss which, as noted above, the first respondent argues will not succeed because there is no loss. They are out of time and no extension is possible. As regards the prejudice to Housing 21 Ltd, as noted above that entity is already a party to these proceedings. Therefore the prejudice and hardship to Housing 21 Ltd would mainly arise if the respondents are unsuccessful in defending these claims. For the above reasons, my decision is to grant the application to join Housing 21 Ltd as respondent to the claims of the transferred Unite members.”
The Appeal
The impact of time bars
26. Mr Clarke has made specific reference to Gillick v BP Chemicals [1993] IRLR 437 and Drinkwater Sabey v Burnett and Kent County Council [1995] IRLR 238, cases on late joinder of a respondent which are directly in point. These decisions are part of a more general stream of authority on the question whether amendments may be made if the effect is to defeat an accrued limitation period. These authorities now establish that an Employment Tribunal has discretion in any case to allow an amendment which introduces a new claim out of time; there is no rule of law that an amendment cannot be allowed because it would, if presented as a fresh claim, be time barred. At the level of the Court of Appeal the cases include British Newspaper Printing Corporation (North) Limited v Kelly [1989] IRLR 222 and Ali v Office of National Statistics [2005] IRLR 201 (at paragraph 40). The cases were reviewed in some detail by Underhill J in TGWU v Safeway Stores Ltd [2007] UKEAT/0092/07 at paragraphs 7-13, followed in Enterprise Liverpool Ltd v Jonas [2009] UKEAT/0112/09 (see paragraphs 14-20). Most recently, the Appeal Tribunal has held that similar principles apply where there is an application in an equal pay claim to amend the claim to add a new cause of action: East Dunbartonshire Council v Trade Union backed claimants [2010] UKEATS/0005/10 at paragraph 20.
The “relation back” point
29. Mr Clarke is anxious to make it clear that in his submission the stance taken below was wrong, by virtue of Potter v North Cumbria Acute Hospitals NHS Trust [2009] IRLR 900. In that case the Appeal Tribunal (Slade J presiding) held that if an amendment was made to a comparator (which, on authority, introduces in an equal pay claim a new cause of action) the six year period would not be six years from the original claim, but six years from the date of the amendment: see paragraphs 115-116. Mr Clarke submits that this is the true position; and he signals that hereafter he will wish to argue this point.
The exercise of discretion