Loughborough Solicitors

 

Loughborough Solicitors

Adult Learning Inspectorate and others v Beloff

Section 273 of the Trade Union and Labour Relations (Consolidation) Act 1992, so far as material, provides: ‘(1) The provisions of this Act have effect (except as mentioned below) in relation to … persons in Crown employment as in relation to other employment and other workers or employees. (2) The following provisions are excepted from subsection (1) … Chapter II of Part IV (procedure for handling redundancies). (3) In this section ‘Crown employment’ means employment under or for the purposes of a government department or any officer or body exercising on behalf of the Crown functions conferred by an enactment.’

Paragraph 16 of Sch 6 to the Learning Skills Act 2000 provides: ‘[the first respondent] is not to be regarded as a servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown.’

The first respondent inspectorate, which employed the appellant and others, was a body funded largely by government to carry out inspection work nationally in respect of further education and vocational and work-based training pursuant to the Learning Skills Act 2000. The appellant claimed that the first respondent had failed to consult him as an elected representative for negotiations in respect of a proposal to make redundancies that arose out of the government’s decision to merge the first and second respondent to make the third respondent. He complained to an employment tribunal that the failure to consult had been contrary to s 188 of the Trade Unions and Labour Relations (Consolidation) Act 1992 and the Transfer of Undertakings (Protection of Employment) Regulations 1981 and 2006. The question of the jurisdiction of the tribunal under the legislation was tried as a preliminary issue. It concluded that it did not have jurisdiction under the Regulations, but that it did have jurisdiction under the Act. Although it found that the first respondent discharged the administrative functions conferred by the 2000 Act on behalf of the Crown, it ruled that, having regard to the purpose of s 273 of the 1992 Act, that provision only applied to employers who enjoyed the benefit of the common law doctrine of Crown immunity, and para 16 of Sch 6 to the 2000 Act made it clear that the first respondent did not enjoy Crown immunity. The respondents appealed.

An issue arose, inter alia, as to whether the appellant and the other members of the workforce were in ‘Crown employment’ such that, by the operation of s 273 of the Act, the procedure for handling redundancies in that Act did not apply.

The appeal would be allowed.

The common purpose was to ensure that employees’ representatives were given information and could undertake meaningful consultation about the effect of the relevant change on those whom they represented. On the true construction of s 273 of the 1992 Act, the focus was not on the issue of Crown immunity, which was not mentioned in that provision, and which was different from the concept of ‘Crown employment’ for the purposes of that provision. Having regard to para 16 of Sch 6 to the 2000 Act, to carry out functions on behalf of someone was not the same as being that person’s servant or agent. The ownership of property was not relevant to determining whether or not functions had occurred on behalf of the Crown.

Why should an employee representative be entitled to complain about the absence of consultation in respect of plans that involved redundancies, when he could not complain about such a lapse in respect of the same plans that involved a relevant transfer of an undertaking? A body could carry out functions on behalf of the Crown and not enjoy Crown immunity or be regarded as the Crown’s servant.

Having regard to the tribunal’s findings under the Regulations, the appellant’s employment was under and for the purposes of the first respondent, which exercised functions on behalf of the Department for Education and Skills, or it was for the purposes of the Department for Education and Skills. Paragraph 16 of Sch 6 to the 2000 Act did not apply; in the case of the former, it did not matter that the appellant’s employer was ‘not to be regarded as’ having any special status, and in relation to the latter, the first respondent was clearly not the servant or agent of the Crown. It followed that the appellant’s employment with the first respondent was Crown employment and excluded from the statutory redundancy procedure by s 273 of the 1992 Act.

Accordingly, the tribunal had no jurisdiction to hear the complaints, which would be dismissed.

Juuri v Fazer Amica Oy (Case C-396/07)

J worked for R from April 1994 as an employee in the staff canteen.  The metal industry collective agreement applied to her employment relationship.  On 31 January 2003, the last day of validity of that metal industry collective agreement, the canteen undertaking was transferred from R to AM.  AM informed J that as from 1 February 2003 the collective agreement for the accommodation and catering sector, binding on AM, would apply to her employment.  J insisted, however, that a metal industry collective agreement should continue to apply to her.  When AM did not agree to that, J terminated her contract of employment on 19 February 2003 with immediate effect.  J then brought an action claiming that AM should pay compensation in lieu of notice in an amount corresponding to four months’ pay; compensation for holiday leave in respect of the notice period; and compensation for unlawful termination of the employment contract in an amount corresponding to 14 months’ pay.  During the course of the proceedings, the national court stayed the action in order to make a reference for a preliminary ruling to the Court of Justice of the European Communities.

The question referred was essentially whether art 4(2) 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, businesses or parts of undertakings or businesses) had to be interpreted as requiring member states, in cases where a contract of employment or an employment relationship falling within the scope of that provision was terminated, to guarantee employees the right to financial compensation, for which the transferee employer was liable, in accordance with conditions identical to the right on which the employee could rely where an employer unlawfully terminated the employment contract or the employment relationship, or, at least, on which he could rely by virtue of the notice period to be observed by an employer under the applicable national law where the employment contract was terminated on material and serious grounds.

The Court ruled.

Article 4(2) of the Directive had to be interpreted as meaning that, in cases where the termination of a contract of employment or an employment relationship was brought about because the conditions for the applicability of that provision had been met, independently of any failure on the part of the transferee employer to fulfil its obligations under that directive, the member states were not required to guarantee the employee a right to financial compensation, for which the transferee employer was liable, in accordance with the same conditions as the right upon which an employee could rely where the contract of employment or the employment relationship was unlawfully terminated by his employer.  However, the national court was required, in a case within its jurisdiction, to ensure that, at the very least, the transferee employer in such a case bore the consequences that the applicable national law attached to termination by an employer of the contract of employment or the employment relationship, such as the payment of the salary and other benefits relating, under that law, to the notice period with which an employer must comply.  It was for the referring court to assess the situation at issue in the case before it in the light of the interpretation of art 3(3) of the Directive as meaning that the continued observance of the terms and conditions agreed in a collective agreement which expired on the date of the transfer of the undertaking was not guaranteed after that date.

Whitehouse v Chas A Blatchford & Sons Ltd.

The employee had been employed as a prosthetic technician by S Ltd since 1975. From 1987 S Ltd had carried on business at a hospital disablement service centre under two successive five year contracts. When the contract came up for renewal, S Ltd was unsuccessful and the contract was awarded to the defendant, B Ltd. As part of the negotiations the hospital had specified that B Ltd would have to reduce its charges by cutting the number of technicians employed at the centre from 13 to 12. As a result of a staff assessment carried out by B Ltd shortly after it had taken over the contract, the employee was told that his employment would be terminated. He complained to an industrial tribunal, claiming, inter alia, that his dismissal had been in breach of the Transfer of Undertakings (Protection of Employment) Regulations 1981, SI 1981/1794, which had given effect to Council Directive (EEC) 77/187, and should therefore be deemed to have been unfair. B Ltd contended the reason for his dismissal had been an economic, technical or organisational reason entailing changes in the workforce within the terms of reg 8(2) of the 1981 Regulations. The industrial tribunal rejected the employee’s claim, and his appeal was dismissed by a majority by the Employment Appeal Tribunal. He appealed to the Court of Appeal on the ground that the industrial tribunal and the majority of the Employment Appeal Tribunal had adopted too wide a construction of the phrase ‘economic, technical or organisational reasons … (entailing changes in the workforce)’ in the 1981 Regulations and in the Directive. He submitted that the decision of Scott J in Wheeler v Patel [1987] IRLR 211, in which the word ‘economic’ was given the restricted meaning of being related to the conduct of the business in question, and not including broad economic reasons such as a desire to obtain an enhanced price or an agreement for the sale of the business, should be applied to the instant case.
The appeal would be dismissed.
The phrase ‘economic, technical or organisational reasons … (entailing changes in the workforce)’ in the 1981 Regulations and in the Directive clearly supported the conclusion that the reason for dismissal had to be concerned with the future conduct of the business as a going concern. However, the plain meaning of the word ‘economic’ was not so constrained as the employee submitted. The broad purpose of the Directive was to ensure that the transfer of an undertaking did not deprive an employee of his rights, and to protect him from dismissal solely by reason of the transfer, but was not to secure for him a right to continue in an indeterminable employment. If the dismissal was solely by reason of the transfer it had to be unfair, but if it was for an economic, technical or organisational reason the tribunal of fact had to decide whether that was the principle reason within reg 8(2). In the instant case, the employee had not been dismissed on the transfer of the contract which S Ltd had had with the hospital; his employment had continued and his right not to be unfairly dismissed had been preserved. B Ltd’s position after it had been awarded the contract had been that it only required the services of 12 rather than 13 technicians. That position would have been the same if S Ltd had been awarded the contract, or if B Ltd had been the previous contractor. In those circumstances, although the transfer was the occasion for the reduction in the hospital’s requirement from 13 to 12 technicians, it was not the reason for the reduction. The reduction was directly connected with the provision of services by B Ltd to the hospital, and was not in any way analogous to the position of the vendor of a business. It had accordingly been open to the industrial tribunal to hold that the transfer was not the reason for the employee’s dismissal, and further to infer that the decision to dismiss him was a proper business decision dictated by an economic, technical or organisational reason, and was therefore not to be deemed to be unfair under the provisions of the 1981 Regulations.

ECM (Vehicle Delivery Service) Ltd v Cox and others.

Employment—Continuity—Transfer of trade, business or undertaking—Whether transfer of undertaking taking place—Whether European Court of Justice decision casting doubt on previous authorities—Transfer of Undertakings (Transfer of Employment) Regulations 1981—Council Directive (EEC) 77/187.
Axial had a contract with VAG under which Axial was to deliver cars on transporters from Grimbsy docks to delivery centres and dealers. Axial employed the drivers of the transporters. In 1993 Axial lost the contract with VAG to ECM. ECM decided not to employ ex-Axial workers. The drivers applied for unfair dismissal against ECM. The employment tribunal found that there was a discrete economic entity, namely the VAG contract itself and the activities which surrounded that contract, and that that economic entity retained its identity after the transfer. It therefore held that the Transfer of Undertakings (Transfer of Employment) Regulations 1981 applied, with the result that the applications succeeded. ECM appealed to the Employment Appeal Tribunal. The appeal tribunal indicated that it would dismiss the appeal for reasons to be given in due course. Before those reasons were given, the European Court of Justice delivered another ruling on the interpretation of Council Directive (EEC) 77/187 (the Acquired Rights Directive) in Suzen v Zehnacker Gebaudereinigung GmbH Krankenhausservice Case C-13/95 [1997] All ER (EC) 289. Thereafter the Court of Appeal in Betts v Brintel Helicopters Ltd (t/a British International Helicopters) [1997] 2 All ER 840 stated that Suzen represented a shift of emphasis, so that the reasoning of earlier decisions and perhaps the decisions themselves might have to be reconsidered. ECM invited the appeal tribunal to hear further argument, which they did, but they dismissed the appeal on the grounds that there was no error of law in the decision of the employment tribunal. ECM appealed, submitting that the tribunal had erred in law in its interpretation and application of the 1981 regulations when reviewed in the light of the recent decisions. They contended that where the only continuing feature was the nature of the activity itself and all that continues was the service itself, it was impossible to find that an undertaking or part of an undertaking had been transferred, and that all that had continued after Axial lost the VAG contract was the activity of delivering cars.
The appeal would be dismissed.
Although the Suzen decision had been described as involving a shift of emphasis or a clarification of the law, nothing had been said in that case which cast doubts on the correctness of the interpretation of the directive in the earlier decisions cited to and applied by the employment tribunal. The importance of Suzen had been overstated and the ruling should be seen in its proper context. The Court of Justice had not overruled its previous interpretative rulings in cases such as Spijkers v Gebroeders Benedik Abattoir CV Case 24/85 [1986] ECR 1119 and Schmidt v Spar- und Leihkasse der fruheren Amter Bordesholm, Kiel und Cronshagen Case C-392/92 [1995] ICR 237. That was clear not only from the citation of those cases in Suzen, but also from their continued prominence in the reasoning of the Court of Justice in its post-Suzen decision in Sanchez Hidalgo v Asociation de Servicios Aser, Ziemann v Ziemann Sicherheit GmbH Joined cases C-173/96 and C-247/96 [1999] IRLR 136. It was still the case that it was for the national court to make the ‘necessary factual appraisal’ in order to decide whether there was a transfer in the light of the criteria laid down by the Court of Justice. In the instant case, the tribunal carried out a full factual appraisal, applied the correct criteria and concluded that, despite changes in the organisation of the operation for the delivery of cars under the VAG contract, there was a continuation in the hands of ECM of the existence of the discrete economic entity previously carried on by Axial. The case was not affected by the limits to the application of the directive identified in Suzen. It was not a case (like Suzen) of the loss of a contract with one customer being asserted to amount to the transfer of an undertaking. Nor was it a case (like Betts) of the loss of a contract for one location being asserted to be a transfer of an undertaking. It was not a case of a transfer depending merely on a comparison of the similarity of the activities of Axial and ECM after the loss of the VAG contract by Axial; the transfer was established by the tribunal looking at all the relevant facts and concluding that that undertaking was based on the VAG contract and that it continues in different hands, even though no employees of Axial were appointed by ECM.

ECM (Vehicle Delivery Service) Ltd v Cox and others.

Axial had a contract with VAG under which Axial was to deliver cars on transporters from Grimbsy docks to delivery centres and dealers. Axial employed the drivers of the transporters. In 1993 Axial lost the contract with VAG to ECM. ECM decided not to employ ex-Axial workers. The drivers applied for unfair dismissal against ECM. The employment tribunal found that there was a discrete economic entity, namely the VAG contract itself and the activities which surrounded that contract, and that that economic entity retained its identity after the transfer. It therefore held that the Transfer of Undertakings (Transfer of Employment) Regulations 1981 applied, with the result that the applications succeeded. ECM appealed to the Employment Appeal Tribunal. The appeal tribunal indicated that it would dismiss the appeal for reasons to be given in due course. Before those reasons were given, the European Court of Justice delivered another ruling on the interpretation of Council Directive (EEC) 77/187 (the Acquired Rights Directive) in Suzen v Zehnacker Gebaudereinigung GmbH Krankenhausservice Case C-13/95 [1997] All ER (EC) 289. Thereafter the Court of Appeal in Betts v Brintel Helicopters Ltd (t/a British International Helicopters) [1997] 2 All ER 840 stated that Suzen represented a shift of emphasis, so that the reasoning of earlier decisions and perhaps the decisions themselves might have to be reconsidered. ECM invited the appeal tribunal to hear further argument, which they did, but they dismissed the appeal on the grounds that there was no error of law in the decision of the employment tribunal. ECM appealed, submitting that the tribunal had erred in law in its interpretation and application of the 1981 regulations when reviewed in the light of the recent decisions. They contended that where the only continuing feature was the nature of the activity itself and all that continues was the service itself, it was impossible to find that an undertaking or part of an undertaking had been transferred, and that all that had continued after Axial lost the VAG contract was the activity of delivering cars.
The appeal would be dismissed.
Although the Suzen decision had been described as involving a shift of emphasis or a clarification of the law, nothing had been said in that case which cast doubts on the correctness of the interpretation of the directive in the earlier decisions cited to and applied by the employment tribunal. The importance of Suzen had been overstated and the ruling should be seen in its proper context. The Court of Justice had not overruled its previous interpretative rulings in cases such as Spijkers v Gebroeders Benedik Abattoir CV Case 24/85 [1986] ECR 1119 and Schmidt v Spar- und Leihkasse der fruheren Amter Bordesholm, Kiel und Cronshagen Case C-392/92 [1995] ICR 237. That was clear not only from the citation of those cases in Suzen, but also from their continued prominence in the reasoning of the Court of Justice in its post-Suzen decision in Sanchez Hidalgo v Asociation de Servicios Aser, Ziemann v Ziemann Sicherheit GmbH Joined cases C-173/96 and C-247/96 [1999] IRLR 136. It was still the case that it was for the national court to make the ‘necessary factual appraisal’ in order to decide whether there was a transfer in the light of the criteria laid down by the Court of Justice. In the instant case, the tribunal carried out a full factual appraisal, applied the correct criteria and concluded that, despite changes in the organisation of the operation for the delivery of cars under the VAG contract, there was a continuation in the hands of ECM of the existence of the discrete economic entity previously carried on by Axial. The case was not affected by the limits to the application of the directive identified in Suzen. It was not a case (like Suzen) of the loss of a contract with one customer being asserted to amount to the transfer of an undertaking. Nor was it a case (like Betts) of the loss of a contract for one location being asserted to be a transfer of an undertaking. It was not a case of a transfer depending merely on a comparison of the similarity of the activities of Axial and ECM after the loss of the VAG contract by Axial; the transfer was established by the tribunal looking at all the relevant facts and concluding that that undertaking was based on the VAG contract and that it continues in different hands, even though no employees of Axial were appointed by ECM.