Loughborough Solicitors


Loughborough Solicitors

Wain and others v Guernsey Ship Management Ltd

The six employees were among 12 or 13 who, prior to September 2004, were employed on short-term contracts by WGL, which supplied personnel for ferry operations run by W, an associated company. The short-term contracts were renewed from time to time so that the employees continued to work for WGL through the winter. They were paid less than permanent employees, provided to W by WGL, who did the same work. The employees filled different positions with W, and each worked on a different vessel. The respondent supplied seasonal summer workers to W, pursuant to a contract. After negotiations during the summer of 2004 with the trade union recognised by WGL, W agreed that, for the summer season of 2004, the short-term contract workers (including the employees) would be paid at the same rate as the permanent workers. Meanwhile, WGL had written to the employees advising them that, as the summer season was coming to an end, its requirements for staff would reduce and their employment would terminate on 26 September. In fact WGL had decided that, in future, it would only employ permanent staff, and that its requirement for short-term staff would be supplied by the respondent. The respondent was told that there was a pool of labour available, which comprised the 12 or 13 short-term WGL employees. Accordingly, the respondent offered the employees employment to work on W’s ferries with effect from 27 September. The respondent rostered the employees to fill their old positions on their usual W vessels. The employment offered was described as ‘seasonal’ although in fact the offer was for employment until 6 January 2005. However, the rates of pay offered by the respondent were lower than the rates of pay for the permanent workers, which WGL had just agreed should also be paid to short-term contract workers for the summer season of 2004. The employees made complaints to an employment tribunal, alleging that there had been unlawful deductions from their wages. They claimed that their employment had been transferred from WGL to the respondent pursuant to the transfer of an undertaking to which the Transfer of Undertakings (Protection of Employment) Regulations 1981,SI 1981/1794, applied and that they were entitled to receive the same rate of pay after the transfer as before. The tribunal rejected the claims, holding that there had been no transfer of an undertaking to which the Regulations applied, because the sub-group of short-term employees which concluded the claimants could not constitute an economic entity. That decision was upheld on appeal by the Employment Appeal Tribunal. The employees appealed.

The appeal would be dismissed.

Although, on the one hand, the claimants could be said to belong to a group which could be identified because all members had short term contracts and fulfilled a specific role in WGL’s business, on the other hand they all did different work, on different vessels. Neither factor was conclusive and the tribunal was entitled to hold that, taking both factors into account, the group was not an economic entity.

Re Leeds United Association Football Club Ltd
Fleming and others v Healy and others

Paragraph 99 of Sch B1 to the Insolvency Act 1986, so far as material, provides: ‘(1) This paragraph applies where a person ceases to be the administrator of a company (whether because he vacates office by reason of resignation, death or otherwise, because he is removed from office or because his appointment ceases to have effect)…(4) A sum payable in respect of a debt or liability arising out of a contract entered into by the former administrator or a predecessor before cessation shall be …(a) charged on and payable out of property of which the former administrator had custody or control immediately before cessation, and …(b) payable in priority to any charge arising under sub-paragraph (3)…(5) Sub-paragraph (4) shall apply to a liability arising under a contract of employment which was adopted by the former administrator or a predecessor before cessation; and for that purpose …(a) action taken within the period of 14 days after an administrator’s appointment shall not be taken to amount or contribute to the adoption of a contract …(b) no account shall be taken of a liability which arises, or in so far as it arises, by reference to anything which is done or which occurs before the adoption of the contract of employment, and …(c) no account shall be taken of a liability to make a payment other than wages or salary …(6) In sub-paragraph (5)(c) “wages or salary” includes …(a) a sum payable in respect of a period of holiday (for which purpose the sum shall be treated as relating to the period by reference to which the entitlement to holiday accrued)…(b) a sum payable in respect of a period of absence through illness or other good cause …(c) a sum payable in lieu of holiday …(d) in respect of a period, a sum which would be treated as earnings for that period for the purposes of an enactment about social security, and …(e) a contribution to an occupational pension scheme.’

The applicants were the administrators of Leeds United Association Football Club Ltd (the club). The respondents were players employed by the club. The respondents had not, as of the date of the instant application, entered into an agreement varying the terms of their contracts of employment so as that all or part of the remuneration due to them was deferred until either the administrators were confident that they could pay all or part of the deferred remuneration, whether as an expense of the administration or under the relevant regulations applying to the transfer of undertakings. If the administrators did not adopt the respondents’ contracts, the club would lose its most valuable assets: if the contracts were adopted, the club might subsequently incur substantial liabilities if the respondents were not paid. Accordingly, the administrators issued the instant proceedings by which they sought various declarations in relation to, inter alia, the effect of paras 99(4)-(6) of Sch B1 to the Insolvency Act 1986 on any future liabilities for damages for wrongful dismissal to footballers employed by the club

One of the issues that fell to be determined was whether, in addition to the matters specified in para 99(6) of Sch B1 to the 1986 Act, ‘wages’ or ‘salary’ also included sums payable in respect of damages for wrongful dismissal. If so, subject to para 99(5)(b) of Sch B1 to the 1986 Act, those sums would be payable in priority to all other expenses of the administration and the administrators’ own remuneration. It also followed that those sums would be payable in priority to the unsecured creditors.

The court ruled:

If a payment was not referable to an obligation on the employee under a subsisting contract of employment to render his services, it did not fall within the ordinary meaning of the word ‘wages’. It followed that if an employer terminated the employment (whether lawfully or not), any payment in respect of the period after the date of such termination was not a payment of wages in the ordinary meaning of that word.

In such a case, the payment would be a payment by the employer on account of the employee’s claim for damages for breach of contract. Evidently the damages payable to the employee would not be wages, and, accordingly, it followed that if, in the instant case, the administrators were to adopt the respondents’ contracts subsequently to dismiss them, the position was no different. In those circumstances, any such liability would not take priority pursuant to paras 99(4)-(6) of Sch B1 to the 1986 Act.

Accordingly, the declarations sought by the administrators would be granted.

Williams v Optical Express Ltd

The employee was employed as a multi-site practice manager of one of the employer’s predecessor’s branches. In January 2005, the employer bought all of the predecessor’s dental practices and her employment was transferred to the employer pursuant to the Transfer of Undertakings ) Protection of Employment) Regulations 1981, SI 1981/1794. Subsequently, the employer notified the employee that the dental clinic of which she was manager would close and her position would become redundant. It was suggested by the employer that she shed her multi-site responsibility without losing any of her salary. At a consultation it was suggested that the employee take the offered role for a four-week trial period, whereby her position would be protected by ss 136 and 138 of theEmployment Rights Act 1996. Part way through the trial period the employee’s solicitor wrote to the employer seeking confirmation that she could reject the role offered her. A further letter in similar terms was subsequently sent. The employer failed to respond to either letter. After the four-week period the employee tendered her resignation, and presented her originating application to the employment tribunal claiming, inter alia, a redundancy payment. The tribunal concluded that she had failed to give adequate notice under s 138(2) and (3) of termination, however, it continued to find that the employee had been constructively dismissed by the employer and was entitled to a statutory redundancy payment. The employer appealed.

The appeal would be allowed.

Where there was an offer and acceptance of a new contract of employment, in accordance with s 138 of the 1996 Act, the employee would not be regarded as dismissed by his employer by reason of the ending of his employment under the previous contract. Consequently, he was debarred, and could not assert constructive dismissal. That right was, however, re-granted if, within the trial period, the employee exercised the rights given to him by s 138(2) and (3).

In the instant case, as a result of the non-compliance with the statutory procedure under s 138, the tribunal had not been entitled to conclude that the employee’s right to a statutory payment survived.

Allen and others v UNISON

The female claimants had been employed by NUPE. They alleged that they were prevented from becoming members of NUPE’s occupational pension scheme by the terms and conditions of their employment, the rules of the scheme and/or policy. In about July 1993, the respondent trade union was formed as a result of an amalgamation of various unions, including NUPE, pursuant to the Trade Union and Labour Relations (Consolidation Act) 1992. From then on, the claimants were employed by the respondent. On various dates, all of which fell six months after the date of the amalgamation, the claimants presented claims under the Equal Pay Act 1970. The basis of their complaints was that they had formerly been clerical support and administrative staff employed by NUPE, and that they were excluded from the pension scheme whereas officers of NUPE had been allowed to join. It was alleged that the majority of NUPE’s clerical support or administrative staff were female and the majority of officers were male, and that, therefore, there had been indirect sex discrimination. A preliminary issue arose as to whether their claims had been brought within the six month time limit prescribed by the 1970 Act. The employment tribunal held that NUPE’s liability for pensions had transferred as part of the property transferred under s 105 of the 1992 Act, and that, consequently, the employment with NUPE and the respondent was the same employment within the meaning of s 2(4) of the 1970 Act. Accordingly, the claims were in time. The respondent appealed.

The principal issue that fell to be determined was whether the contracts of employment (including liability for pensions) could transfer by virtue of the transfer of property under s 105 of, or as part of engagements under s 97 of, the 1992 Act.

The appeal would be allowed.

(1) Contracts of employment could not naturally be described as an aspect of a trade union’s property held by its trustees for the purposes of s 105 of the 1992 Act. It was well established that slaves were property but employees were not. The provisions of the Transfer of Undertakings(Protection of Employment) Regulations 1981, SI 2006/246 (the regulations)(which had been in force at the material time) had not superseded that principle. Absent clear statutory language specifically including employees in the concept of property, employment contracts fell outside the definition.

(2) The employment contracts of trade union staff did not transfer merely by virtue of the merger legislation itself. Rather, they transferred pursuant to the regulations thereby leaving the pension obligations with the transferor.

In those circumstances, the claimants’ claims under the 1970 Act in the instant case had been out of time.

Accordingly, the claims would be dismissed.

Jackson v Computershare Investor services plc

Regulation 5(1) of the Transfer of Undertakings (Protection of Employment) Regulations 1981, SI 1981/1794 provides: ‘A relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee.’

In January 1999 the employee joined Ci (UK) Ltd, which later became an associated company of CIS. There were no terms relating to enhanced redundancy or severance payments in the employee’s employment contract with Ci (UK) Ltd. In June 2004, the employee’s contract of employment was transferred to CIS, which had an enhanced severance pay scheme, pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 1981, SI 1981/1794 (TUPE). That scheme operated a dual system of redundancy terms, drawing a distinction between cases where the date of joining the company was pre-or post-1 March 2002. The pre-1 March 2002 terms were more favourable to employees. The employee was made redundant by CIS in 2005. She made a complaint to an employment tribunal, claiming unfair dismissal and enhanced severance pay. The tribunal upheld both claims. CIS successfully appealed to the Employment Appeal Tribunal against the decision in relation to enhanced severance pay. The employee appealed.

The key issue was whether the employee should be treated, with regard to enhanced severance pay, as a pre- or post-1 March 2002 joiner of CIS by virtue of her deemed continuity of employment with CIS as from 1999, reflecting the impact of reg 5(1) of TUPE.

The appeal would be dismissed.

The TUPE and acquired rights provisions were aimed at preventing the employee in an undertaking being prejudiced as a result of the transfer of the undertaking. It was not, however, their objective to confer additional rights on the employee or to improve the situation of the employee. Therefore, the true effect of the deeming provision in reg 5(1) was not to give a transferred employee access to employment benefits other than those to which the employee had been entitled before the transfer of the undertaking.

In the instant case, CIS, as transferee, was substituted for Ci(UK) Ltd, as the contracting party, and the prior obligations of Ci(UK)Ltd and the rights of the employee continued to have effect after the transfer. The fact that, when CIS treated Mrs Jackson as a new entrant post-1 March 2002, it calculated her severance pay on the basis of her deemed continuity of service from 1999, was irrelevant to the question whether she was or was not a new entrant within the meaning of the CIS enhanced severance terms. That question (ie new entrant or not) was determined by the date when, as a fact, she joined CIS. It was not determined by the direct or indirect application of reg 5(1), or by its alleged contextual effects or by the employee’s deemed continuity of service from 1999, her previous service with Ci (UK)Ltd having been carried across by TUPE on the relevant transfer to CIS in June 2004.

Jouini and others v Princess Personal Service GmbH (PPS) (Case C-458/05)

Mayer, a temporary employment agency, was last managed by the current business director of PPS, acting as managing director. He was married to the commercial director of PPS, who was also employed by Mayer. In 2001, the commercial director of PPS with her husband’s support developed an industry-specific concept. Mayer’s financial difficulties were already known. The spouses and a client then agreed to put the concept into operation in the framework of a new business to be set up, carrying out the same kind of economic activity. The spouses took on the respective roles of business and commercial directors. They gave instructions to Mayer’s branch manager to suggest to 40 employees assigned to that principal client that they transfer to PPS as soon as possible, which they did. That transfer did not result in any alteration to the activities carried out by those employees. Their employment relationships with Mayer ceased on 30 November 2002, and those with PPS commenced on 1 December. In total, PPS took on one-third of the personnel employed by Mayer before insolvency proceedings were commenced in respect of Mayer. The claimants in the main action, who were taken on by PPS, brought an action for payment by PPS of outstanding salary claims. The national court allowed the claimants’ action. PPS brought an appeal on a point of law. In the opinion of the court, a particular issue arose when determining whether there had been a transfer of a business. The court raised the question whether the approach developed for other undertakings, which relied in very large measure on the existence of an organisational entity in the sense of a ‘business’ or ‘part of a business’ could be applied in the same way to temporary employment businesses. They were also essentially distinguishable from undertakings entrusted with cleaning or security functions in that the assigned employees did not work in the employer’s business for a specific purpose which could help identify the part of the business. In those circumstances, the court decided to stay the proceedings and to refer to the Court of Justice the following question for a preliminary ruling.

The question was whether art 1(1) of Council Directive (EC) 2001/23 (on the approximation of the laws of the member states relating to the safeguarding of employees’ rights in the event of transfers of undertakings, business or parts of undertakings or businesses) applied to a situation in which there was a transfer of employees between two temporary employment businesses.

The Court ruled:

Article 1(1) of Directive 2001/23 had to be interpreted as applying to a situation where part of the administrative personnel and part of the temporary workers were transferred to another temporary employment business in order to carry out the same activities in that business for the same clients and – which was a matter for the referring court to establish – where the assets affected by the transfer were sufficient in themselves to allow the services characterising the economic activity in question to be provided without recourse to other significant assets or to other parts of the business.

The fact that the workers assigned on a temporary basis were integrated in the organisational structure of the client to whom they were assigned was not capable of precluding a finding that an economic entity had been transferred. Those workers were the essential assets, without which the temporary employment business would not be capable of performing its economic activity. A single grouping consisting of management personnel, temporary workers and know-how, could pursue an objective of its own, namely the provision of services consisting in the temporary assignment of workers to user undertakings in return for remuneration, and that such a grouping could constitute an economic entity which could operate without recourse to other significant assets or to other parts of the transferor.