Appeal No.	 EAT/1222/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 22 April 1997

Before
HIS HONOUR JUDGE D M LEVY QC
MR R JACKSON
MRS R A VICKERS

J MURPHY & SONS LTD	APPELLANTS

(1) MR M FOX
(2) NORWEST HOLST CONSTRUCTION	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR S REID
(of Counsel)
On behalf of 
Mr J Murphy
J Murphy & Sons Ltd
Hiview House
Highgate Road
London NW5 1TN	
For the Respondents	(1st Respondent)
MR B WENTWORTH
The Office Bureau
24 Hardman Street
Liverpool
L1 9AX

(2nd Respondent)
MR A AUDLEY
(Representative)	

	JUDGE D M LEVY QC:     On 11 March 1996 Mr Michael Fox sent a complaint to an Industrial Tribunal which was received on 13 March.  He claimed he had been unfairly dismissed by J. Murphy & Sons Ltd (“the Appellant”) on 2 February 1996.

	In their answer, dated 22 April 1996, J. Murphy said this:

“Immediately preceding the 7th January 1996, the Applicant [Mr Fox] was employed by the Respondent [Murphy] on its contract with British Gas on the Merseyside District.  The Applicant was unsuccessful in its tender for the renewal of this contract and accordingly from the 8th January 1996 Norwest Holst Construction Ltd took over this contract.  Accordingly the Applicant was transferred by virtue of the Transfer of Undertakings (Protection of Employment) Regulations 1981 on the 8th January 1996 to Norwest Holst Construction Ltd.  The Applicant [Mr Fox]  was never dismissed by the Respondent.”

	Subsequently, Norwest Holst was added as a Respondent to Mr Murphy’s application and they entered an appearance dated 7 June 1996.  Norwest Holst accepted that Mr Fox was one of the persons transferred to them with effect from 8 January 1996.  They also said that they had made him redundant and indeed, he had accepted redundancy pay.  Mr Fox did not accept that his employment had been transferred and accordingly there was a hearing before an Industrial Tribunal sitting in Liverpool on 31 July 1996.

	The decision of the Industrial Tribunal was sent to the parties on 30 August 1996.  The Tribunal decided that Mr Fox was unfairly dismissed by the Appellant.  They dismissed Norwest Holst from the action and said that the matter would be re-listed for the consideration of remedy.

	It is from this decision that the Appellant appeals.  Norwest Holst have paid no part in the appeal though there has been a representative of the Company in Court.  Mr Fox, who represented himself below, has had the advantage of Mr Wentworth, an Employment Law Adviser, assisting us here on his behalf.

	The basic facts are found in paragraphs 6 to 16 of the Reasons in extended form.  They read as follows:

“6.  Mr Fox was employed by Murphy from 1986 as a general operative.
7.  For the last 7 years of his employment, up to roughly October 1995, he had been part of a two-man ‘gang’, assisting a fitter, Mr Hughes.
8.  Their work had taken them to various parts of the country.  Until October 1995 Mr Fox had hardly (if ever) worked at Murphy’s [the Appellant] yard at Golborne, their main depot.
9.  For some time before October 1995, Murphy had had a contract for the maintenance and servicing of the facilities of British Gas.  In the course of his employment, Mr Fox had hardly, if ever, undertaken work in connection with that contract.
10.  In mid-October 1995 Mr Fox had gone to work at the Golborne depot.  For the bulk of the period between that date and the end of the year, he spent his time in the yard undertaking various general duties.  In particular, he was involved in the construction of an extension to a garage which was to be used for storage and service of Murphy’s vehicles and equipment.
11.  In December 1996 Mr Fox received from Murphy 2 letters dated 12 and 19 December.  These were at pages 7 and 8 of the bundle R1 - 1.  Briefly, they inform him that Murphy had lost the contract with British Gas, which had been awarded to Norwest Holst.  The letters tell him that the Transfer of Undertakings Regulations apply, such that as from 8 January he will become an employee of Norwest Holst.”

	We interpose here to say that this is the only mention of the Transfer of Undertakings Regulations to be found in the Extended Reasons of the Industrial Tribunal, and they clearly did not have the assistance we had of experienced Counsel on the subject this morning.  When questions of European Law arise and an Industrial Tribunal does not have the assistance of Counsel, clearly it is extremely difficult for the Tribunal to sift through the law which is applicable.  It must happen that, if they do not get the assistance from the appropriate authorities, errors may and indeed, will occur.  We continue:

“12.  On 8 January Mr Fox reported to Norwest Holst’s premises.  The position was somewhat confused at that stage and Mr Fox was simply sent home with instructions to report back when advised.
13.  On 15 January he did return and it was suggested to him that he might like to volunteer for redundancy, on the basis that Norwest Holst now had too many general operatives.  He did so but then raised the question of whether in fact he had been working on the British Gas contract before the transfer.
14.  On that basis Norwest Holst declined to put his name forward for selection (such selection had to be undertaken by British Gas, who would be bearing the costs of any redundancies) whilst they investigated the situation further with Murphy.
15.  They received from Murphy a letter dated 23 January indicating that prior to the transfer Mr Fox had been employed in their main depot in a support function to the British Gas contract.
16.  On that basis Mr Fox was asked [by Norwest Holst] to reaffirm his request for voluntary redundancy.  He did so and that request was actioned, resulting in his dismissal on 2 February.”

	Paragraph 17 reads as follows:

“The first question we had to ask ourselves was whether Mr Fox had been employed in the undertaking that had transferred to Norwest Holst.”

	At this stage it is necessary, as Mr Reid has helpfully done in his submissions, to look at the relevant law when there is a transfer.  The relevant law is found in the EEC Business Transfers Directive 77/187, the Transfer of Undertakings Protection of Employment Regulations 1981 (Statutory Instruments 1981/1794) and in particular, Regulations 3 and 5 and of course, there is the appropriate case law.

	Regulation 3 of the 1981 Statutory Instrument has as sub-rule (1) this:

“Subject to the provision of these regulations, these regulations apply to a transfer from one person to another of an undertaking situated immediately before the transfer in the United Kingdom or part of one which is so situate.”

	Mr Reid submitted that what the Tribunal had to do was look to see what was the transfer of the undertaking situated immediately before the transfer.  He submitted that what should be looked at is assisted by looking at the decision of the Court of Justice of European Communities in R E Botzen & Others v Rotterdamsche Droogdok Maatschappij [1986] CMLR 50, particularly as interpreted by the Employment Appeal Tribunal in Michael Peters Ltd v Farnfield & Another [1995] IRLR 190.  Giving the judgment the Employment Appeal Tribunal in that case, Tucker J said at paragraphs 19 and 20:

“  The question whether the respondent was part of the undertaking which was transferred was a point which, we are assured, was argued before the Industrial Tribunal.

But unfortunately the Industrial Tribunal were not referred to another decision of the European Court upon which much reliance has been placed before us.  That is the case of Botzen v Rotterdamsche Droogdok Maatschappij ... which was a case on Directive 77/187.  At page 57 the Court held that:
‘An employment relationship is essentially characterised by the link existing between the employee and the part of undertaking or business to which he is assigned to carry out his duties.  In order to decide whether the rights and obligations under an employment relationship are transferred under Directive 77/187 by reason of a transfer, therefore, it is sufficient to establish to which part of the undertaking or business the employee was assigned’.”

	If Mr Reid submitted, that passage was addressed by the Industrial Tribunal they would have asked these questions and provided these answers, having first found that the undertaking concerned was a contract with British Gas to construct and maintain gas, mains and services.
Q:  Where was it situated?  
A:  In the United Kingdom in the Merseyside area.
Q:  What was the position immediately before transfer?
A:  Immediately before transfer the undertaking was run by Norwest Holst.  This occurred by virtue of British Gas re-tendering that contract upon its expiry in December 1995.  See also Dines v Initial Health Care Services Ltd & Another [1994] IRLR 336.

	Mr Reid submitted those were the answers that the Industrial Tribunal should have reached.  Instead of that, the Industrial Tribunal asked different questions.  Another question the Industrial Tribunal should have asked was: “To which part of the undertaking was the assignee assigned or allocated?”.  That is what the Industrial Tribunal considered in Michael Peters Ltd.  If that happened here, on the evidence before them, the Industrial Tribunal would have had to come up with the answer that Mr Fox was employed on the British Gas contract.  Instead of this however, the Industrial Tribunal asked different questions.  We find these in paragraph 24 which goes back to paragraph 21 of the decision.  We find in paragraph 24 this:

“24.  The issue appears to us to turn on the reasonable expectations of the parties.  If Mr Fox had been told in October 1995 that henceforth he was to be regarded as a general operative within the depot i.e. that there was to be a radical and (at least for the foreseeable future) permanent change to his function, then the fact that he had only been in that position for a few weeks would not prevent him from being regarded as part of the undertaking.  He would simply have been unlucky as far as timing was concerned.”

	That refers back to a passage in paragraph 21 where they say:

“The position is rather more difficult in respect of ‘support’ personnel such as the general operatives.  It is necessary to determine what the bulk of the work of each employee is rather than look at an overall assessment.  On balance, however, we believe that had Mr Fox been properly regarded as an integral member of the depot workforce, then since his work might properly be regarded as support work and since the bulk of it was attributable to the British Gas contract, it would be fair to regard him as employed in that undertaking.”

	Mr Reid submits that the Tribunal was wrong to look at the reasonable expectations of the employee.  He submitted that an objective test should be applied.  That is the effect of the regulation 12 , regulation 5(4a) giving an employee the right to object.

	It is not necessary to show that the party is exclusively involved in one undertaking, as is shown by the decision of this Tribunal in Buchanan-Smith v Schleicher & Co International Ltd [1996] IRLR 547:  “An employee can be assigned to one undertaking although engaged on others”.  Mr Reid submitted, correctly in our judgment, that the Industrial Tribunal wrongly considered the work which Mr Fox was doing before being transferred to the depot and whether his employment was permanent or temporary.  Regulation 3 provides that the employee need only be employed immediately before transfer.  There is no requirement for a long-term view of the previous employment.

	In paragraphs 25 and 26 of the decision, the Industrial Tribunals asks whether the employee was “integrated” into the undertaking that had been transferred.  That appears to refer to a paragraph in a decision, which we understand was not raised in any argument before the Industrial Tribunal, but appears in the judgment and the decision in Gale v Northern General Hospital NHS Trust [1994] IRLR 292.

	There the facts were that a trainee nurse (the Appellant on appeal) had been training at a hospital where the ownership of the hospital changed just before his training ended and he obtained an appointment after his training ended from the National Health Service Trust, Respondent to the appeal.  He sought to argue that the training and the contract were all from one employee.  The Master of the Rolls, giving a judgment with which the other members of the Court agreed, said:

“That would, as I read it, be of considerable assistance to Mr Allen’s argument if the whole of the undertaking of the Sheffield Health Authority had been transferred to the trust, but that is plainly not so and therefore one has to address the question:  ‘What if an employee is employed in a part of an undertaking and only a part is transferred?’  To answer that question, Mr Allen has referred us to the case of Botzen. ....  The effect of that decision is summarised in the headnote which reads:
‘Where only part of a business is transferred under the Business Transfer Directive (77/187), the Directive only applies to the employees who are assigned to that part’.
To give that decision any application to the present case one has to ask the question:  “Was Mr Gale assigned to the part of the health authority’s undertaking which was transferred?’  To that question I would for my part answer ‘no’.  He was undergoing a course of training, part of it academic, and part based on experience.  ...”

	And further down, at paragraph 13:

“Mr Allen posed the question:  ‘Was Mr Gale integrated into the part which was transferred?’  I would again answer ‘no’.”

	The learned Chairman of the Industrial Tribunal, in giving the judgment below, appears to have been considering only that second part of integration at paragraph 25 of the judgment and it seems to us, that the facts on Gale are so very different that it really is of no assistance here.

	The facts here are that Mr Fox was at the depot where the work was transferred and where most of the employees there were made redundant.  If the proper test had been undertaken and the proper questions asked, the question would not have been answered in the way the Tribunal answered it.

	The Notice of Appeal in paragraph 6 reads:

“In determining that the Respondent was not employed in the undertaking transferred, the Tribunal misapplied or misconstrued the authority of Botzen in deciding that the issue turned on the reasonable expectations of the party and/or whether or not the Respondent was integrated into the undertaking being transferred.”

	In our judgment, Mr Reid has made good this paragraph in his submissions to us and accordingly, the appeal must be allowed.

	On behalf of Mr Fox, Mr Wentworth has valiantly tried to uphold the judgment below, but in our judgment, his submissions came nowhere near answering the submissions made by Mr Reid on behalf of the Appellant.

	If he was wrong on the first point, Mr Reid sought to argue that the judgment of the Industrial Tribunal below was perverse.  As he has been successful on one ground of his appeal, it 
is not necessary for us to consider any submissions on this other ground.

	In the circumstances we allow this appeal.