Appeal No.	 EAT/256/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 14 May 1999

Before
HIS HONOUR JUDGE PETER CLARK
MR A C BLYGHTON
MR J A SCOULLER

MR P A BARNES & OTHERS	APPELLANTS

(1) BRUSH TRANSFORMERS LTD 
(2) BRUSH ELECTRICAL MACHINES LTD	RESPONDENTS

Transcript of Proceedings

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellants	MR B CARR
(of Counsel)
Instructed by
MESSRS ROWLEY ASHWORTH
Solicitors
247 The Broadway
Wimbledon
London SW19 1SE	

	HIS HONOUR JUDGE CLARK:	Although this case threw up a number of issues with which the Leicester Employment Tribunal was required to and did deal in a careful decision with Extended Reasons running to 17 pages, the appeal is focused on one point only.  It is not without significance.  

	For present purposes the material facts and findings of the Tribunal may be shortly stated.  “The Brush”, an old established engineering operation based in Loughborough, was at the relevant time divided into three operating companies, all wholly owned subsidiaries of the FKI Group.  One, Brush Switchgear is not material.  We are concerned with Brush Transformers Limited (Transformers) and Brush Electrical Machines Limited (Electrical), respectively the first and second Respondents below.

	The individual Applicants were all employed in Transformers’ fabrication shop.  A decision was taken at senior management level within the Group in about August 1997 to close the Transformers fabrication shop and to transfer the work of that shop to the Electrical fabrication shop.

	It was further decided that Electrical would need 21 new employees to handle the new Transformers fabrication work, which in the event formed about 25 percent of the overall work of the enlarged Electrical shop.

	The result was that of those employed in the Transformers shop, 9 were redeployed within Transformers business and 19 were found employment with Electrical in the enlarged fabrication shop.  The remaining 26 employees, including these Appellants/Applicants below, were dismissed.

	Throughout, the Respondents maintained that there had been no relevant transfer of a part of the Transformers undertaking, the fabrication function, to Electrical.  The Employment Tribunal rejected that case, and found that a relevant transfer had taken place.

	The Tribunal further found that the dismissal of the Appellants was for a reason connected with the transfer, but that the dismissals were not automatically unfair under Regulation 8(1) of the TUPE Regulations; they were for an economic technical or organisational reason within the meaning of Regulation 8(2).  The question then was whether the dismissals were fair or unfair under section 98(4) of the Employment Rights Act 1996.

	The material issue under section 98(4) arising in this appeal relates to the pool for selection for dismissal.  On the basis, so the Respondents believed, that no relevant transfer was taking place between Transformers and Electrical, the overall reduction in numbers of employees, from a total of 113 in both shops to 76 in the single, enlarged Electrical shop, was not based on the combined pool.  Redundancies fell only among those employed originally in the Transformers shop.   None amongst the original Electrical employees.

	The Employment Tribunal dealt with the question whether it was unfair to select only from the Transformers employees at paragraph 32 of their reasons.  They found that it was not.  The two units were quite separate producing a different product and had been run independently for a long time.  In advancing the appeal against that conclusion, which will affect the question of compensation for unfair dismissal, the Tribunal having found the dismissals unfair on the ground that no proper selection criteria were applied within the pool selected, that is, the Transformers employees, Mr Carr submits that in holding that it was fair to select only from the Transformers pool and not from the combined pool, the Tribunal was disregarding its own finding that a relevant transfer took place and that the Transformers employees were to be treated as if employed by Electricals following the transfer.  He contends that the material finding by the Tribunal in paragraph 32 of the reasons substantially undermines the protection given to employees under TUPE and allows an employer to discriminate between “old” and “new” employees on transfer.

	We bear in mind that under the redundancy cases determination of the selection pool is largely a matter for the employer.  It is difficult to challenge on appeal an employer’s determination upheld by the Employment Tribunal where the employer has genuinely applied his mind to the problem.

	However, we think it is arguable that in circumstances where the pool for selection was determined on a false premise, namely that the Transformers employees were not in fact transferring to Electrical, special considerations apply for the reasons advanced by Mr Carr.

	In these circumstances we shall allow this appeal to proceed to a full hearing.

	We understand from the Respondents’ PHD form that it is the intention of the Respondent to file a cross-appeal, we believe against the finding that a relevant transfer took place.  In these circumstances we think that the proper listing is for a full one day hearing, Category B.  There will be an exchange of skeleton arguments between the parties not less than 14 days before the date fixed for the full appeal hearing.  Copies of those skeleton arguments to be lodged at the same time with this Tribunal.  There are no further directions, in particular there is no requirement for the Chairman’s notes of evidence in this case