THE
HONOURABLE LADY SMITH
Introduction
1.
This is an appeal from the judgment of an Employment Tribunal sitting at
Glasgow, (Employment Judge W Muir sitting with members), registered on
9 February 2012, finding that the Claimant Mr Cook was unfairly
dismissed by Liddell’s Coaches Limited (“Liddell’s”), that his contract of
employment had not been transferred to Abbey Coaches Limited (“Abbey”) by means
of the Transfer of Undertakings (Protection of Employment) Regulations 2006
(“TUPE”) and that they had no jurisdiction to entertain Mr Gold’s
complaint of unfair dismissal as he had not completed the requisite qualifying
period of employment. Mr Cook was found entitled to a monetary award of
£3,912.90. Mr Gold received an award in respect of notice pay.
2.
The Claimants were represented before the Tribunal but chose to rely,
the purposes of the appeal, on a written submission which was, essentially, to
the effect that they did not demur from the approach taken by the Employment
Tribunal.
3.
Liddell’s were represented by Ms Barnett, HR Consultant, before the
Tribunal and before us. Abbey were represented by a director, Mrs Walker,
before the Tribunal and by Mr Templeton, Employment Consultant, before us.
Background
4.
Liddell’s’ business includes providing school transport services for
local authorities. Mr Cook and Mr Gold were employed by Liddell’s as
coach drivers. Mr Cook also carried out other driving jobs during the school
holidays and worked in Liddell’s’ garage, where they valued his mechanical
skills.
5.
In August 2010, Liddell’s tendered for and were successful in being
awarded five contracts to provide transport services for children who had to be
decanted from Gargieston Primary School when it was discovered that that school
had been built over a mineshaft. The children thus suddenly required to be
‘decanted’ to other schools in the area. Gargieston is in the local authority
area of East Ayrshire Council; that council was the client in the five
transport contracts. Each of the five contracts was stated to be for a period
of one year.
6.
Prior to the end of the 2010/2011 Gargieston decant contracts, Liddell’s
tendered to provide a similar service for the following year, 2011/2012. On
the findings of the Tribunal, the client’s requirement was a finite one; a new
school was under construction at the old Gargieston site and was scheduled to
be complete by June 2012, within the relevant project schedule. The children
would, accordingly, be able to return to their old school for the start of the
2012/13 school session and there would be no further need for decant
transport. In a letter dated 26 January 2012, Mr Kennedy of East
Ayrshire Council wrote:
“…I would confirm that I see no reason for any further extension
of the current temporary transport contract for the decant of pupils of
Gargieston Primary and Nursery Class beyond June 2012.”
7.
Liddell’s were only successful in obtaining one Gargieston decant
contract for the year 2011/2012. Abbey tendered for and won three of those
contracts for that year. The contracts were stated to be for the period 17 July 2011 to 14 July 2012.
8.
The Tribunal found in fact that:
“It is unusual for contracts of one year’s duration to be
awarded. Typically local authorities, at least in the Glasgow, Ayrshire and
Dumfries & Galloway Regions, contract with coach operators for periods
between 3 and 5 years. At the present time they have entered into
18 contracts with East Ayrshire Council of
5 years duration and 4 of one year’s duration included in which is the
contract for Gargieston ...”
9.
Liddell’s terminated Mr Cook’s contract of employment on or about 22 July 2012. They thought that his employment would be transferring over to Abbey but
Abbey did not accept that Mr Cook had become their employee.
10.
We can deal with Mr Gold’s position shortly; it was not suggested that
the Tribunal were wrong to find that he did not have the requisite period of
service to support a claim for unfair dismissal. Thus all that was in issue in
his case was who was liable for his notice pay.
The Tribunal’s Judgment
11.
The Tribunal found that TUPE did not apply because the decant transport
contract was in relation to a single specific event and was of short term
duration. Parties were agreed that it related to a single specific event which
was the rebuilding of Gargieston Primary School and the Employment Tribunal
appear to have been content to proceed on the basis that that was correct; they
do not explain how the construction of a building can be an “event” but nor do
they question the appropriateness of parties’ agreement. They acknowledged
that interpretation of the relevant provisions was not without difficulty.
Under reference to a passage in the IDS Handbook on Transfer of Undertakings,
they observed that the government intended that any single specific event
founded on would require also to be of short term duration to be of relevance.
The Employment Tribunal then explain, in paragraph 5, at pages 10-11 that, in
the circumstances – particularly that transport contracts were, typically, for
3/5 years rather than as short as for one year – they concluded that the
contract for 2011/12 was also of short term duration. Thus, the requirements
of reg 3(3)(a)(ii) of TUPE were not satisfied the effect of which was that Mr
Cook’s contract of employment did not transfer to Abbey. Regarding the
possibility that that sub-paragraph of TUPE did not require to be interpreted
so as to require any single specific event relied on to be of short term
duration, the Tribunal added:
“…for the sake of completeness and in the event that the
Tribunal has adopted the wrong approach, it did not regard a period of one year
as being inconsistent with the notion of short term duration.”
12.
That was in the context of the typical length of such transport
contracts being 3/5 years and one year being accordingly, in their view, short
term.
13.
We observe, in passing, that the Tribunal did not analyse the facts to
determine whether or not the other relevant provisions of TUPE were satisfied.
In particular, they did not address the question of whether or not the
activities carried out by Abbey for the client were fundamentally or
essentially the same as those which Liddell’s had carried out for the client
immediately prior to the transfer, they did not address the question of whether
or not Liddell’s had organised a group of employees by reference to the
client’s requirements under the five Gargieston decant transport contracts, and
they did not address the question of whether or not, if there was such an
organised grouping, it had had as its principal purpose the carrying out of
those requirements, all of which would have arisen if they had concluded that
the requirements of reg 3(3)(a)(ii) were satisfied.
14.
For the reasons we explain below, we find that the Tribunal did not err
in law in reaching their conclusion that reg 3(3)(a)(ii) was not
satisfied but had we concluded otherwise, the Tribunal’s reasoning would have
given us no assistance as to whether, on the facts, those other requirements of
TUPE had been met or not. We note that the Tribunal proceeded on the basis
that there was a relevant organised grouping of employees – indeed, they appear
to have perhaps pressured Mrs Walker into giving up on her primary
submission that it had not been shown that Liddell’s had any such grouping –
but they base their approach solely on the fact that Mr Cook spent more
then 20 hours per week on driving the ‘decant’ schoolchildren. That, however,
is beside the point. It may show that if there was a relevant grouping of
employees then Mr Cook was assigned to it (as reg 4(1) requires) but it
does not of itself show that there was a relevant grouping of employees or that
that group had the relevant activities as their principal purpose. The Tribunal
state, in paragraph 5, that the provisions of reg 3(3)(a)(i) were satisfied but
there is no sign of them having addressed these questions in the light of their
findings in fact; their conclusion seems to be based simply on Mrs Walker’s
concession. Had we had to consider the case on Mrs Walker’s first submission
(as recorded by the Tribunal at p.8 lines 5-7), we would not have been prepared
to regard it as conceded or withdrawn in these circumstances; the observation
of the Tribunal on which they pressed her did not relate to the entirety of the
point that she was seeking to make, namely that reg 3(3)(a)(i) as a whole had
not been shown to be satisfied.
15.
In the event, the Tribunal’s failure properly to address these other
issues which obviously arose does not matter but it would have been better if
they had set out their views and we would urge Employment Tribunals to set out
their analysis and reasoning on all the relevant issues in the case, not only
those on which they determine it. It also follows from these observations that
we consider that Employment Tribunals require to take particular care when
pressing a party’s representative to make a concession, particularly where the
representative concerned is a lay person.
The Appeal
Motion for Fresh Evidence
16.
Ms Barnett began with a motion to be allowed to submit fresh evidence. The
evidence in question was a bundle of documents which contained the invitations
to tender in respect of the provision of school transport services in East
Ayrshire for the school year 2012/13. They had come to light in or about
February 2012. They were said to show that some of the invitations were for a
contract period of one year only although it was accepted that others were for
longer. Ms Barnett submitted that it was relevant and that it could have
influenced the Tribunal when considering whether or not the contracts under
consideration were of short term duration.
17.
Mr Templeton opposed the motion. It was impossible to say whether the
documents would have been given any weight by the Tribunal. The motion came
far too late. Tender documentation for the relevant year could have been
recovered by Liddell’s prior to the hearing but that had not been done. No
application had been made to the Tribunal for review of its decision in
accordance with the guidance in Adegbuji v Meteor Parking Ltd UKEATPA/1570/09/LA.
18.
We refused the application for fresh evidence. It came too late. It
did not relate to the period under consideration by the Tribunal and Liddell’s
did not appear to have made any attempt to recover and lodge documents relating
to that period.
Submissions for Liddell’s
19.
Ms Barnett departed from her first ground of appeal. She insisted only
on her second ground of appeal and part of her third ground.
20.
Her second ground of appeal was that the Tribunal had reached a decision
which was irrational and not a permissible option. Twelve months was not a
period of short duration. This was a case of a single specific event, namely
the building of the new school. That took place over a two year period and
could have taken longer than that. She did, however, accept that the Tribunal
had made no findings in fact about how long the construction of the school in fact
took. There was, she submitted, a need to give a meaning to transfer under
TUPE so as to protect employment. The Tribunal should have given consideration
not only to the length of time that Abbey contracted for but also the length of
time that Liddell’s had had the contract. Her submission seemed to be that the
two periods should have been added together. There was a lack of authority as
to what amounted to a short term duration. Twelve months did not automatically
amount to a short term duration.
21.
Turning to her third ground of appeal, Ms Barnett submitted that the Tribunal’s
findings at paragraph 3(f) showed that one year contracts were in fact typical;
they certainly existed. Her reference was to the fact that at the time of the
hearing before the Tribunal, Liddell’s had four one year contracts with East
Ayrshire Council.
Submissions for Abbey
22.
Mr Templeton submitted that whether or not a contract was short term or
long term was a matter of perspective. There had, he said, been some
excitement about the decision in a case called Denton v Kirwan
but he had not been able to find a report of it; it is difficult to understand
why he had any difficulty in that respect since it is readily accessible on the
EAT website. We refer to it in the ‘Relevant Law’ section below.
23.
Mr Templeton submitted that the question of whether or not the contract
was of short term or long term duration was a matter for the Tribunal as it was
a question of fact. They had not fallen into error. Their decision was not an
impermissible option on the wording of TUPE. Under reference to Eddie
Stobart Ltd v J Moreman and others [2012] UKEAT/0223/11/1702 at
paragraph 19 where Underhill J observed, at paragraph 19, that there is no rule
that the provisions of TUPE require to be stretched so as to achieve transfer
in as many situations as possible.
24.
Regarding the interpretation of reg 3(3)(a)(ii), he submitted that it
did not fall to be interpreted so as to require, for disapplication, the
circumstances to be both a single specific event and a task of short term
duration. Either would suffice. The Tribunal had, in any event, considered
both interpretations and on either view, TUPE did not apply. They had not
erred.
Cross Appeal
25.
We can deal with this briefly since, in the end of the day, the cross
appeal was academic. Mr Templeton’s submissions were that the Tribunal had
failed to consider the implications of some of the ‘organised grouping’
referred to being retained by Liddell’s, had failed to consider whether the
principal purpose of that grouping was the carrying out of the relevant
activities, failed to consider whether Mr Cook was assigned to that organised
grouping, failed to consider what were the implications when asking, for the
TUPE purposes, whether the activities said to be transferred were fundamentally
the same, of Abbey having been successful in securing only three of the five
contracts with Liddell’s retaining one of them, and that they had failed to
explain how there was a transfer when, according to the Tribunal, the operative
date for TUPE was 17 July yet Mr Cook was said to have continued in Liddell’s’
employment until 22 July. He also submitted that the Tribunal had misdirected
themselves in holding that, for TUPE to be disapplied, there required to be
both a single specific task and task of short term duration.
26.
In response, Ms Barnett accepted that the Tribunal’s reasons were vague
regarding the matter of organised grouping of employees but Mrs Walker had made
the concession to which we refer above. As to principal activities, the
findings showed that they were transporting the children to and from school on
account of the Gargieston decant. Regarding the nature of the activities
carried out by Liddell’s and Abbey, they were broadly similar. She accepted
that the disparity in dates as between 17 and 22 July was not explained. She
submitted that, for disapplication of TUPE by reason of reg 3(3)(a)(ii), there
did need to be both a single specific event and a task of short term duration.
Parties had agreed that the construction of the new school was a single
specific event.
Relevant Law
27.
In so far as material, TUPE provides:
“2. INTERPRETATION
(1) In these regulations –
…
references to “organised grouping of employees” shall include a
single employee;
…
“relevant transfer” means a transfer or a service provision
change to which these Regulations apply in accordance with regulation 3 and
“transferor” and “transferee” shall be construed accordingly and in the case of
a service provision change falling within regulation 3(1)(b), “the
transferor” means the person who carried out the activities prior to the
service provision change and “the transferee” means the person who carries out
the activities as a result of the service provision change;
…
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 had 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.
…
(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) Subject to paragraph (1),
these Regulations apply to -
…
(c) a
transfer of an undertaking, business or part of an undertaking or business
(which may also be a service provision change) where persons employed in the
undertaking, business or part transferred ordinarily work outside the United Kingdom.
…
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.”
28.
The Tribunal interpreted reg 3(3)(a)(ii) as meaning that if reliance was
placed on the “single specific event” part of the provisions, the event in
question required to be of short term duration before TUPE was disapplied.
Other than the IDS Handbook and a reference to what was understood to be the
government’s intention, the Tribunal found no helpful guidance. So far as we
are aware, the interpretation issue has not been authoritatively determined but
it was discussed by the President of this Tribunal, Langstaff J, in the case of
SNR Denton UK LLP v Kirwan and another
UKEAT/0158/12/ZT where, at paragraph 41, he said:
“41. I turn to the third argument, which is a further and
separate ground for allowing this appeal. It is that the Tribunal was in error
in its approach to determining whether Regulation 3(3)(a) was satisfied.
It is not necessary for me in approaching this to determine the interesting but
somewhat theological question of whether the draughtsman of the statute
intended the words “a single specific event” to be qualified by “of short‑term
duration” as well as the word “task”; that is a perfectly permissible way of
reading the sub‑paragraph, but so too is it on the face of it a
permissible reading to read “a single specific event” as standing on its own
and the words “of short‑term duration” to be linked to the word “task”
alone. If it were relevant to express a preference, mine would be for that
advanced by Mr Harris, which is that the “short‑term duration”
covers both events, and I would do so because it seemed to me that the point
here is essentially one of time and permanence. The context is employment; an
impermanent employment which is anticipated is unlikely to have the consequence
of the transfer Regulations being applied, but a single specific event might be
of very considerable duration. It is possible to think of several such
examples.”
29.
It is, of course, with hesitation that we would seek to disagree with
the President, but it respectfully seems to us that the term “single specific
event” stands alone. An ‘event’ is a single happening or occurrence; in
philosophical terms, it is an occurrence involving a qualitative or
quantitative change or complex of changes located in a restricted portion of
time. Further, “event”, of itself, connotes short duration; to refer to a single
specific event of short term duration is, we consider, tautologous. There was
no need for the draughtsman to apply the phrase “of short term duration” to
“single specific event”.
30.
Whilst we can think of “activities” related to “single specific events”
which may not be of short term duration – such as the provision of security
advice during the planning stages prior to a major event as referred to in the
DTI Guide - that, with respect, is a separate matter. The Olympics example
cited in the DTI Guide does not, we consider, demonstrate that TUPE would not
be disapplied in the first contract to which they refer.
The Olympic Games were plainly a single specific event; they opened on a
specific planned date (27 July 2012) and closed on a specific planned date (12 August 2012) seventeen days later. They were of short term duration. The example given
does not, we consider, show that a single specific event could be long term,
however lengthy or extended the period over which security advice referred to was
provided. There, the client intention is still shown to be that the security
advice activities were to be carried out in connection with a single specific
event which was of short term duration and TUPE is, accordingly, disapplied.
That is not surprising since, as we say, we cannot envisage anything that can
properly be characterised as being an event being other than of short term
duration. The fact that activities carried out in connection with an event are
to be long term does not make the event itself long term. The flaw in the DTI
thinking appears to us to be conflate “activities” and “event”. They seem to
think that TUPE will not be disapplied if the activities in question can be
shown to be long term but, whatever problems there may be with the wording of
reg 3(3)(a)(ii), on no view can it be read so as to qualify the word
“activities” with the phrase “of short term duration”. The grammar used does
not permit that interpretation.
31.
Regarding the matter of ‘short term duration’. In Denton,
Langstaff J continued:
“42. The reason why it is unnecessary to determine that in this
case is that both, as it seems to me, look to something that is of limited
duration. If it were necessary, and I do not think in this case it is, to
determine the scope of “short‑term duration”, i.e. to ask what length of
time is involved, then I have on the one hand the submission made by
Mr Reade that because by statute administration must be completed within a
year with an exceptional six‑month addition to follow, such that that is
inevitably short‑term, and that of Mr Harris, which is that one
should have regard to the context of employment law and employment
relationships as a whole within which to make the assessment.
43. In case this particular point goes further, given the
outstanding appeals, I am told, in respect of both Hunter and De’Antiquis,
and, for that matter, the very recent currency of Edenwest, I should
perhaps say something of my conclusions. They are these, but tentatively
advanced for the reasons I have given. First, what is short‑term or long‑term
is inevitably a matter of perspective. Perspective depends entirely upon the
viewer. The view to be taken here in what is an avowedly employment context
is, it seems to me, that of the employee and not that of the historian for whom
short‑term duration may be a very much longer period. It cannot be so
short‑term as to suggest that it is of no great relevance to consider
whether there should be a transfer under TUPE or not; that suggests that a
length of time of more than a few weeks will undoubtedly still be capable of
falling within “short‑term duration”. But it seems to me that the
broader context is that of employment relationships as a whole, in which such
guidelines, as they are, are that at the time that the Regulations were made it
would take a year for an employee to obtain employment rights other than those
in respect of automatic dismissals, but similarly an employee might expect to
receive at the most 12 weeks’ notice from his employer and could in some
circumstances give as little as 1 week to him. He would have three months
within which to appeal a finding of unfair dismissal.
44. All these are capable of creating a context within which
“short term” may be judged, but it seems to me that there is more than just the
general employment context; there is necessarily the context of the particular
employment and the particular relationships. That must vary, inevitably, from
case to case. It will be, inevitably, therefore to some extent a matter of
fact and degree, and, providing the Tribunal has regard to the words of the
paragraph and the general context within which to place the particular facts of
the case, a finding of fact and degree is unlikely ever to be wrong.”
32.
On this matter, we are glad to be able to agree with Langstaff J. Whether
or not a client intends that certain activities will be carried out in
connection with a task of short term duration must be a matter of fact and
degree and very much for assessment by the tribunal of first instance in the
context of their findings in fact about the whole circumstances of the change
of service provision.
Discussion and Decision
33.
We are satisfied that this appeal is not well founded.
34.
Having heard the evidence, the Tribunal found that it was unusual for a
contract between local authorities and coach operators for the transport of
schoolchildren to be for as short a period as one year. That was not typical. Further,
they found that in this case, there was a particular short term purpose for the
Gargieston decant contracts. East Ayrshire Council had first required the
Gargieston decant service when an urgent short term need arose in August 2010,
for the school year 2010/11. The three contracts awarded to Abbey were only
going to be for one year because by June 2012, there was an assurance that the
new school would be ready and the children would return to Gargieston for the
2012/13 school session.
35.
In the context of those surrounding circumstances, it is not at all
surprising that the Tribunal concluded that the Abbey contracts were short term
in nature. Although they do not spell it out, applying the language of the
regulation, that means that they concluded that what the client (East Ayrshire
Council) intended under those contracts was that Abbey carry out their
contractual activities in connection with a task of short term duration namely
transporting the ‘decanted’ children during the 2011/12 school session.
36.
We would add that we are not persuaded that the finding that Liddell’s
had four one year contracts at the time of the hearing showed that the Tribunal
required to conclude that they were typical. To the contrary, Liddell’s’
overall position – which was that the vast majority of their contracts were for
significantly longer than that – supports the view that a one year contract was
atypical.
37.
The Tribunal also, of course, found that the activities were in
connection with a single specific event of short term duration. For our part,
we have difficulty in categorising the construction of a building as an ‘event’
although it is plainly a task. That does not, however, matter since the Tribunal
went on and concluded that the event in question was of short term duration
and, again, that was the only conclusion which, sensibly, they could have
reached in the circumstances. Regarding Ms Barnett’s submissions based on the
construction for the school being two years and there being a possibility of it
taking longer, it falls to be rejected as the Tribunal made no such findings of
fact.
38.
The cross appeal then becomes academic. We have, however, already
observed that a number of the questions raised by Mr Templeton were not
addressed by the Tribunal and would have required to be answered if TUPE had
not been disapplied by reg 3(3)(a)(ii). We cannot express a view as to what
would have been the outcome as there are insufficient findings in fact to
enable us to do so.
Disposal
39.
We will, in these circumstances, pronounce orders dismissing the appeal,
dismissing the cross appeal and upholding the judgment of the Employment Tribunal.