Appeal No. UKEAT/0930/02/TM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	                   At the Tribunal
	      On 22 September 2003
Judgment delivered on 16 January 2004

Before
HIS HONOUR JUDGE J BURKE QC
MR P GAMMON MBE
MISS G MILLS

(1) BRITISH NURSING CO-OPERATIONS LTD 
(2) GOLDSBOROUGH HOME CARE NURSING SERVICES LTD	APPELLANTS

MRS J PETERSON	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR P STEWART
(of Counsel)
Instructed by:
Messrs Bates, Wells & Braithwaite
Solicitors
Cheapside House
138 Cheapside
London EC2V 6BB	
For the Respondent	MR M ZAMAN
(of Counsel)
Instructed by:
Messrs Irwin Mitchell
Solicitors
Imperial House
31 Temple Street
Birmingham
B2 5DB

HIS HONOUR JUDGE J BURKE QC

1	This is an appeal by British Nursing Co-operations Ltd against the decision of an Employment Tribunal, sitting at London South, chaired by Mr Houghton, and sent to the parties with Extended Reasons on 16 July 2002, that they had unfairly dismissed Mrs Joy Peterson.

2	Prior to 26 April 2001 Mrs Peterson was employed by Goldsborough Home Care and Nursing Services Ltd (“Goldsborough”) as a Regional Manager.  Goldsborough was a wholly owned subsidiary of BUPA, as were two sister companies, Primrose Care Ltd and Helping Hands Care Ltd (although the Tribunal suggested that Primrose Care Ltd might be a subsidiary of Goldsborough, its precise status is unimportant).  The business of all three companies was the provision of nurses, care workers and domiciliary care workers to nursing homes, hospitals and private individuals.  

3	Another well known name in the business of providing such workers is “BNA”; BNA is a trading name of British Nursing Co-operations Ltd, which is itself a wholly-owned subsidiary of Nestor Healthcare Group PLC (“Nestor”).  As everyone else has done so, we shall call the Appellant “BNA”.  

4	On 26 April 2001, as the Tribunal found, at the behest of their respective parent companies, the entire share capital of Goldsborough and of its two sister companies was sold by BUPA to BNA.  

5	Goldsborough had three Regional Managers, of which Mrs Peterson was one.  Primrose Care had four Regional Managers.  BNA had eleven Field Managers who reported to four Directors of Regional Operations.  The Tribunal found that, after BNA acquired the shares of Goldsborough and its two sister companies, BNA decided to retain the Goldsborough brand; and there was unchallenged evidence before the Tribunal that Goldsborough continued, after it came under the control of BNA, to trade in its own right, to employ staff and to enter into its own contracts.  However, with a view to making substantial cost savings, BNA decided to dispense with the Goldsborough and Primrose Care Regional Managers posts and to transfer their work to the Field Managers’ posts which were to be increased by one, from eleven to twelve.  It was intended that the existing holders of the eleven BNA Field Manager posts and those holding the Regional Managers’ posts should be invited to compete for appointment to the twelve new Field Manager posts.  These changes were explained to the managers at a meeting on 8 May 2001; and on the same day Mrs Peterson was given a letter informing her that, for reasons of re-organisation, there were to be changes in her existing terms and conditions of employment, that a two week period of consultation was to start and that her job was at risk.  The Tribunal concluded that the letter understated the true position.  

6	On 11 May Mr Baker, BNA’s Human Resources Adviser, wrote to Mrs Peterson inviting her to a “consultation selection interview” on 16 May for appointment to one of the new Field Manager jobs.  For reasons which, for present purposes, need not be set out, Mrs Peterson did not attend that interview.  The new Field Managers, not including Mrs Peterson, were appointed; and by a letter of 18 May, but not posted until 22 May, Mr Baker informed Mrs Peterson that her employment would be terminated by reason of redundancy with effect from 25 May.  She was invited to contact Mr Baker in order to arrange a meeting on 23 May at which options of alternative employment could be discussed; but she did not receive the letter in time; no such meeting took place; and her employment came to an end. 

7	The Tribunal found that Goldsborough employees at management level were, after the acquisition of Goldsborough, put on to BNA’s payroll; in a letter of 6 June BNA’s Senior Payroll Officer addressed Mrs Peterson as a “new employee to BNA” (although she had in fact been dismissed some days earlier).  

8	Originally Mrs Peterson named BUPA, Nestor and BNA as respondents to her unfair dismissal claim; it was asserted on her behalf in her Originating Application that there had been a transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“TUPE”) of the employees referred to in sub-paragraph 4 of paragraph 11 of the Originating Application (but that paragraph did not identify any employees) and of numerous other assets of Goldsborough’s business; the transferee was not specifically identified.  The claim was put on the basis that Mrs Peterson had been automatically unfairly dismissed because the principal reason for her dismissal was the TUPE transfer or a reason connected with it; alternatively, it was asserted that there was no true redundancy situation and that she had been substantively unfairly dismissed.  

9	The Originating Application was amended more than once; ultimately it asserted a TUPE transfer to BNA of the undertaking of Goldsborough; and BUPA and Nestor ceased to be parties.  

10	The Originating Application also contained a claim that BUPA or Goldsborough had failed to inform and consult with Mrs Peterson as to the transfer in breach of the requirements of Regulation 10 of TUPE and that the dismissal was wrongful in that Mrs Peterson was not given three months’ notice of termination of her contract of employment.  

11	In a brief and seemingly not professionally drafted Notice of Appearance, put in on behalf of Nestor and BNA, it was asserted that Nestor had purchased the share capital of the Goldsborough Group from BUPA and that there had been a change of ownership and no TUPE transfer; by subsequent amendment the Notice of Appearance asserted that BNA had purchased the share capital of the Goldsborough Group - as indeed was the case.  That amendment of the Notice of Appearance took place after the Originating Application had been amended to add Goldsborough as a Respondent; the claim against BUPA was thereafter dropped.  

12	Before the Tribunal Mrs Peterson was represented by Mr E Hutchin of Counsel; Goldsborough and BNA, the latter being admittedly the owner of the whole of the former, were jointly represented by a solicitor, Mr Garnett.  

13	The only claim which was resolved by the Tribunal was the unfair dismissal claim.  The claim under Regulation 10 of TUPE was left over by the Tribunal to be determined at the remedies hearing in respect of the unfair dismissal claim.  

The Tribunal’s Decision
14	It was not in dispute before the Tribunal that there had been the share transfer to which we have referred and that the change of ownership of Goldsborough’s shares did not and could not of itself amount to a TUPE transfer.  However it was asserted by Mr Hutchin on behalf of Mrs Peterson and denied on behalf of Goldsborough and BNA that there had been some form of transfer of the undertaking or part of the undertaking of Goldsborough from Goldsborough to BNA to which TUPE transfer applied.  We say “some form of transfer of undertaking” because there has been a hotly contested issue between the parties, ever since the Tribunal’s Decision was promulgated, as to the scope and nature of the transfer for which Mr Hutchin, on behalf of Mrs Peterson, was contending before the Tribunal.  It is BNA’s case that Mr Hutchin put Mrs Peterson’s case on the basis that the economic entity which was transferred from Goldsborough to BNA consisted of Goldsborough’s managerial employees, i.e Mrs Peterson and her two Regional Manager colleagues; it is Mrs Peterson’s case that Mr Hutchin did not restrict his argument in that way and that it was open to the Tribunal to consider the transfer of Goldsborough’s business to BNA on a broader basis.  

15	The Tribunal found, so far as is material for present purposes, that:
(1) immediately following the share purchase, Mrs Peterson, along with all other Goldsborough employees, together with those of the subsidiaries (by which we take the Tribunal to have been referring to the employees of Primrose Care Ltd and Helping Hands Care Ltd) became employees of BNA (paragraph 16).
(2) This was not a case merely of transfer of shares in Goldsborough to BNA; the share sale was followed by a separate transfer of the Goldsborough undertaking to BNA which was a relevant transfer from Goldsborough to BNA for the purposes of TUPE (paragraph 33).  
(3) The dismissal of Mrs Peterson was for an economic or organisational reason falling within Regulation 8(2) of TUPE; and therefore Mrs Peterson was not automatically unfairly dismissed (paragraph 34).
(4) However, Mrs Peterson had been substantively unfairly dismissed; BNA had acted unreasonably in the respects set out in paragraph 36; and therefore:-
(5) the case should be re-listed for a remedies hearing at which the Regulation 10 claim would also be determined (paragraph 37)

The appeal.  
16	By their Notice of Appeal BNA have attacked the Tribunal’s decision that there was a TUPE transfer of Goldsborough’s undertaking to BNA on two broad fronts: 
(1) Mrs Peterson’s case had never been advanced on the basis of such a transfer as opposed to the limited transfer of a so-called undertaking or part of an undertaking consisting only of the Regional Managers.
(2) In any event the Tribunal could not, on the evidence, have found that there had been a transfer of the whole of Goldsborough’s undertaking to BNA and that the Tribunal’s conclusion that there had been such a transfer was based on an error of law.  

At the outset of his Skeleton and of his oral argument, Mr Stewart, on behalf of BNA, identified these two broad issues as the issues which had to be decided in the appeal.  BNA further contended that, if the Tribunal had erred in finding that there had been such a transfer, the Tribunal would have to reconsider the issue of substantive unfair dismissal because such dismissal must have been by Goldsborough and not by BNA.  

17	It is necessary to point out, although it perhaps has emerged clearly enough from what we have already said, that, subject to the last point, whether there was or was not a TUPE transfer of Goldsborough’s undertaking to BNA is now a somewhat barren question.  Both Goldsborough and BNA are wholly owned by Nestor; both are apparently trading and are solvent; there is no suggestion that either Goldsborough or BNA would not be able to meet any award of compensation or to comply with any other Order made at a remedies hearing by the Tribunal.  It is easy to understand why Mrs Peterson’s advisers were anxious to establish a TUPE transfer; they sought thereby to succeed on the basis that Mrs Peterson was automatically unfairly dismissed, irrespective of the general merits; but in the light of the Tribunal’s conclusion, which has not been challenged, that Mrs Peterson was dismissed for an economic or organisational reason falling within Regulation 8(2) of TUPE, thus ruling out any question of success on the basis of automatically unfair dismissal, and their further conclusion that she was substantively unfairly dismissed, having regard to the general merits (which conclusion is only challenged to the extent referred to above), one may be forgiven for asking why it is still important to BNA or Goldsborough to establish that Goldsborough and not BNA should be regarded as responsible for the unfair dismissal of Mrs Peterson, the former, Goldsborough, being a wholly owned subsidiary of the latter, BNA.  We were told that the outcome of the other cases may turn on the transfer issue.  We therefore turn to that issue.  

The transfer issue	
18	There can be no doubt that the disagreement as to how Mrs Peterson’s case that there had been a TUPE transfer was put before the Tribunal has consumed much of the time and energy of the parties’ legal teams; there has been a great deal of correspondence between the parties; we have before us affidavits from Mr Hutchin and Mr Garnett as to what was or was not said before the Tribunal; the Tribunal Chairman, at the request of the Employment Appeal Tribunal made at a preliminary hearing, has answered specific questions and has provided notes of the cross-examination of BNA’s witnesses and of the parties’ final submissions - which notes, it has to be said, do not resolve the conflict.  The majority of the argument before us was devoted to submissions by the parties as to how this conflict should be resolved.  

19	However, it seems to us that the sensible and pragmatic course which we should take is to put that material on one side, at least at this stage of our judgment, and to consider first the criticisms made by Mr Stewart on behalf of BNA of the Tribunal’s conclusion that there was a transfer of the whole of Goldsborough’s undertaking to BNA on the hypothesis (but without at this stage deciding) that Mrs Peterson’s case was either positively put on the basis of such a transfer or was not put only on the basis of a much more limited transfer so as to exclude the Tribunal’s consideration of transfer on a wider basis.  If we decide on that hypothesis that the Tribunal erred in law in reaching the conclusion that there was a transfer of the whole of Goldsborough’s undertaking, it will not be necessary for us to consider further the highly contentious issue of fact between the parties as to how Mrs Peterson’s case was put by Mr Hutchin.  If, however, we decide that the Tribunal did not so err, it will be necessary for us to seek to decide whether that hypothesis represents what actually happened before the Tribunal.  

20	We have referred to the parties’ agreement before the Tribunal, as before us, that there had been a transfer from BUPA to BNA of the shares in Goldsborough and its sister companies, and that that share transfer or change of ownership could not of itself amount to a transfer of undertaking falling within TUPE.  As the Employment Appeal Tribunal said in Brookes -v- Borough Care Services Ltd [1998] ICR 1198 at 1210H:

“It is, we understand, widely recognised that a transfer of shares, as distinct from a transfer of business, is outside the scope of the Regulations and, indeed the Acquired Rights Directive.”

In order to establish a transfer falling within TUPE, the party asserting such a transfer must show that there was a transfer from one person to another of an undertaking or part of an undertaking situated in the United Kingdom; see TUPE Regulation 3(1).  The transfer must be of the undertaking, or part of it; a transfer of the ownership is not a transfer of the undertaking - see Brookes.

21	At paragraph 9 of their decision the Tribunal described, at least in part, the effect of the share transfer; referring to the real property and registered intellectual property rights of Goldsborough and its sister companies they said:
“As a result of the transfer of shares that property fell under BNA’s control”
The share transfer would also have given BNA the right as the sole owner of Goldsborough’s shares to dictate and control the manner in which Goldsborough carried on its business and, indeed, whether Goldsborough continued to carry on its business at all.  Similarly BNA acquired the means to influence and control Goldsborough’s policies and decisions as to the employment and retention of staff.  Goldsborough had, by reason of the share purchase, become a part of the BNA stable.  However, of course, the fact that by reason of the share transfer BNA had become the owner of the shares in Goldsborough and had thus acquired the ability to decide, in effect, whether Goldsborough carried on in business did not have the effect that Goldsborough’s undertaking was transferred to BNA and, if it did, how it would carry on its business.  Although we do not have full notes of evidence, we have the witness statements of the two witnesses for BNA, Mr Baker and Ms Jayaraj, BNA’s Director of Regional Operations; and we have the Chairman’s notes of the cross-examination, re-examination and questioning by the Tribunal of those witnesses.  There appears to have been no evidence as to whether, upon the share transfer, the Directors of Goldsborough were replaced by BNA nominees or continued in office; as a result of the share transfer, whatever the position as to the Board, Goldsborough would have had to have acted as BNA required.  None of that control indicates that Goldsborough’s business or part of it (as opposed to the ability to control that business) had been transferred to BNA.  

22	The Tribunal set out, at paragraphs 26 to 31 of their decision their self directions as to the relevant law.  Although in paragraph 29 they referred to Regulation 8 of TUPE, in paragraph 30 to a decision on that paragraph and in paragraph 31 the effect of Regulations 10 and 11 of TUPE, they nowhere directed themselves as to the law in relation to whether or not a transfer of undertaking was established.  The only authority to which they appear to have been referred on that issue is Allen -v- Amalgamated Construction Company Ltd [2000] ICR 426 in which it was established that there may be transfer of an undertaking falling within The Acquired Rights Directive (and therefore a practice within TUPE) between two subsidiary companies in the same corporate group which have common ownership and management and are engaged in the same work.  At paragraphs 16 and 17 of its judgment in that case, the European Court of Justice said:

“16   The Directive is therefore applicable where, following a legal transfer or merger, there is a change in the natural or legal person responsible for carrying on the business, who by virtue of that fact incurs the obligations of an employer vis-à-vis the employees of the undertaking, regardless whether or not ownership of the undertaking is transferred ……
17   It is thus clear that the Directive is intended to cover any legal change in the person of the employer if the other conditions it lays down are also met and that it can, therefore, apply to a transfer between two subsidiary companies in the same group, which are distinct legal persons each with specific employment relationships with their employees.  The fact that the companies in question not only have the same ownership but the same management and the same premises and that they are engaged in the same work makes no difference in this regard.”

Those propositions, set out in terms of the Acquired Rights Directive, and their applicability to the present case, were not in issue before the Tribunal or, indeed, before us.  

23	The European Court of Justice in Allen went on to set out the criteria for determining the existence of a transfer of an undertaking; but it is more helpful, in our judgment, to refer to the decision of the Employment Appeal Tribunal in Cheesman -v- R Brewer Contracts Ltd 2001 IRLR 144 in which the Employment Appeal Tribunal, presided over by Lindsay P, distilled from Allen and three other cases, two subsequent decisions of the European Court of Justice - Francisco Fernandes Vidal SA Gomez Perez [1999] IRLR 132 and Sanchez Hidalgo -v- Associacion de Servicios [1999] IRLR 136 - and the decision of the Court of Appeal in ECM (Vehicle Delivery) Services Ltd -v- Cox [1999] 559, a valuable and important set of propositions as to whether or not what was allegedly transferred should be regarded as an undertaking and as to whether there has been a transfer of an undertaking.  It has not been suggested to us that the guidance set out in Cheesman has been rendered less authoritative by any subsequent decision upon TUPE issues of the Employment Appeal Tribunal or of the Court of Appeal; and since that guidance incorporates the thrust of the European Court of Justice’s decision in Allen, together with that of the other decisions which we have identified, for present purposes it is sufficient to regard the guidance in Cheesman as setting out the principles which an Employment Tribunal should apply in deciding whether there has been a transfer of an undertaking and where an issue or issues arise to which the guidance is relevant.  

24	On the hypothesis upon which we approach the transfer issue that Mrs Peterson’s case was that there was, in addition to the share transfer from BUPA to BNA, a transfer of Goldsborough’s business (and not only a tier of Goldsborough’s employees) to BNA, no issue arises as to whether Goldsborough’s business amounted to an undertaking capable of being transferred under TUPE; it is not and could not sensibly be suggested that Goldsborough’s business was not an identifiable and stable economic entity whose activity was not limited to performing a specific works contract or that it did not otherwise satisfy the criteria set out by the Employment Appeal Tribunal in paragraph 10 of its judgment in Cheesman.  

25	The question for the Tribunal was, therefore, whether there had been a transfer to BNA of the undertaking consisting of Goldsborough’s business.  The guidance in Cheesman as to that issue is set out in paragraph 11 of the Employment Appeal Tribunal’s judgment in the following terms (so far as relevant for present purposes):-

	     11  As for whether there has been a transfer:-
(i)	As to whether there is any relevant sense a transfer, the decisive criterion for establishing the existence of a transfer is whether the entity in question retains its identity, as indicated, inter alia, by the fact that its operation is actually continued or resumed - Vidal paragraph 22 and the case there cited;  Spijkers -v- Gebrobroeders Benedik Abattoir C.V. [1986] ECR 1119 ECJ;   Schmidt -v- Spar-und Leihkasse [1994] IRLR 302 ECJ para 17;  Sanchez Hidalgo paragraph 21;  Allen paragraph 23.
(ii)	In a labour intensive sector it is to be recognised that an entity is capable of maintaining its identity after it has been transferred where the new employer does not merely pursue the activity in question but also takes over a major part, in terms of their numbers and skills, of the employees specially assigned by his predecessors to that task.  That follows from the fact that in certain labour intensive sectors a group of workers engaged in the joint activity on a permanent basis may constitute an economic entity - Sanchez Hidalgo paragraph 32.  
(iii)	In considering whether the conditions for existence of a transfer are met it is necessary to consider all the factors characterising the transaction in question but each is a single factor and none is to be considered in isolation - Vidal paragraph 29;  Sanchez Hidalgo paragraph 29;  Allen paragraph 26.  However, whilst no authority so holds, it may, presumably, not be an error of law to consider “the decisive criterion” in (i) above in isolation; that, surely, is an aspect of its being “decisive”, although, as one sees from the “inter alia” in (i) above, “the decisive criterion” is not itself said to depend on a single factor.
(iv)	Amongst the matters thus falling for consideration are the type of undertaking, whether or not its tangible assets are transferred, the value of its intangible assets at the time of transfer, whether or not the majority of its employees are taken over by the new company, whether or not its customers are transferred, the degree of similarity between the activities carried on before and after the transfer, and the period, if any, in which they are suspended - Sanchez Hidalgo paragraph 29;  Allen paragraph 26.
(v)	In determining whether or not there has been a transfer, account has to be taken, inter alia, of the type of undertaking or business in issue, and the degree of importance to be attached to the several criteria will necessarily vary according to the activity carried on - Vidal paragraph 31;  Sanchez Hidalgo 	paragraph 31;  Allen paragraph 28.
(vi) 	Where an economic entity is able to function without any significant tangible or intangible assets, the maintenance of its identity following the transaction being examined cannot logically depend on the transfer of such assets - Vidal paragraph 31;  Sanchez Hidalgo paragraph 31;  Allen paragraph 28.
(vii)	Even where assets are owned and are required to run the undertaking, the fact that they do not pass does not preclude a transfer - Allen paragraph 30.”
It is not necessary for us to set out sub-paragraphs (viii) to (xii) of that paragraph.  

26	The Employment Appeal Tribunal continued, at paragraph 12 of Cheesman:
“12.	More generally the cases also show:-
(i)	The necessary factual appraisal is to be made by the National Court - ECM page 1168 e;  Allen paragraph 28.
(ii)	The directive applies where, following the transfer, there is a change in the natural person responsible for the carrying on of the business who, by virtue of that fact, incurs the obligation of an employer vis-a-vis the employees of the undertaking, regardless of whether or not ownership of the undertaking is transferred - Allen paragraph 16.
(iii)	The aim of the Directive is to ensure continuity of employment relationships within the economic entity irrespective of any change of ownership - Allen paragraph 23 - and our domestic law illustrates how readily the Courts will adopt a purposive construction to counter avoidance - see Lord Oliver’s speech in Litster -v- Forth Dry Dock Co. Ltd [1990] 1 A.C. 546 at 562f-563c”.

27	The Tribunal was not referred to Cheesman or to any of the authorities on which the guidance in Cheesman is based, save for Allen.  

28	The Tribunal’s conclusions on the transfer issue, at paragraphs 32 and 33 of their decision, need to be set out in full.  They were:-

“32   Was there a relevant transfer?  The first question we must answer is whether a relevant transfer occurred on the facts before us.  It is necessary first to identify a stable economic entity consisting of more than a mere activity.  In our view the business carried on by Goldsborough was a stable economic entity and accordingly an undertaking for the purposes of the 1981 Regulations.  It was an organised grouping of persons and assets (including goodwill and its leasehold property) which enabled it to carry on, through a structured management, the economic activity of providing nurses and workers to the health care sector.  On 26 April 2001 the entire share capital of this stable economic entity was acquired by BNA.  It became a recurring theme throughout the hearing of this case that there could have been no transfer for the purposes of the 1981 Regulations because this was merely a transfer of the ownership of Goldsborough’s shares.  In our view it was this over-simplification which misled the Respondents into their belief that there could be no relevant transfer.
33  If there had been only a transfer of the ownership of Goldsborough’s shares to BNA their stance may well have been correct.  If Goldsborough’s activities had continued as before under the same management there is little doubt that the mere transfer of ownership of its shares would have been insufficient to demonstrate that there had been a transfer of that still autonomous undertaking into the hands of the new owners of its shares.  But in our unanimous view this was not a mere transfer of shares to BNA.  It is clear that even before the acquisition was completed the BNA management was finalising plans to restructure the Goldsborough operation, including the regional manager jobs, with a view to saving costs.  The BNA management, including Mr Baker and Ms Jayaraj, plainly took over Goldsborough’s day to day running immediately upon its acquisition.  BNA treated Goldsborough employees both in form and in substance as its own employees.  It was Mr Baker, on his own evidence a BNA employee, who in fact dismissed the Applicant.  He was unable to explain to the Tribunal why, if this were a mere change in share ownership, he had the authority to dismiss an employee of an entirely independent company.  There was, we think, plainly more than a mere transfer of ownership in shares when BNA acquired Goldsborough.  The share sale was accompanied by another entirely separate transfer of the stable economic entity which was the Goldsborough undertaking.  It obviously could, despite transfer of its shares, have survived as the same undertaking in the same hands after the change in share ownership.  But what happened in our view on 26 April 2001 was that along with the transfer of share ownership the entire management and control of the Goldsborough undertaking passed into different hands - BNA’s management structure.  The stable economic entity retained its identity, as seen from its employees, assets, goodwill and activities.  The significant thing which changed was that it now, independently of the change in share ownership, essentially the same undertaking under BNA’s management and control, in short, Goldsborough’s business was, from 26 April 2001, being carried on by BNA.  For the above reasons we conclude that on 26 April 2001 there was a relevant transfer from Goldsborough to BNA for the purposes of the 1981 Regulations.”

29	In considering Mr Stewart’s criticisms of the Tribunal’s conclusions which we have set out, we must and do keep at the forefront of our minds that it is for the Tribunal to make the “necessary factual appraisal”; and we accept Mr Zaman’s submission on behalf of Mrs Peterson that it was not her case that the share transfer of itself amounted to a transfer of Goldsborough’s undertaking and that the Tribunal concluded on the facts that there had been, following the share transfer and in addition to it, a transfer of Goldsborough’s undertaking to BNA.  The Tribunal were, therefore, correct to say in the last sentence of paragraph 32 that BNA’s reliance upon the share transfer, as excluding a transfer of undertaking, was an over-simplification.   

30	However, in our judgment, perhaps because they had not been referred to the principles which we have set out, the Tribunal did not direct themselves to consider whether the stable economic entity, consisting of the business of Goldsborough, not only came under the control of BNA by virtue of the transfer but could also, after all the features characterising the transaction in question had been examined, be said to have been transferred to BNA so that its operation after such transfer was continued in the hands of BNA - so that, in effect - Goldsborough itself had no business left.  It was essential for the Tribunal, in the context of the share transfer, in considering whether there was also a transfer of Goldsborough’s undertaking to BNA to separate out changes which were or might be attributable to the share transfer and in particular changes in the way in which the Goldsborough business was controlled and managed.  It was necessary for the Tribunal to consider whether the Goldsborough assets had been transferred, if not, whether Goldsborough was a labour-intensive business which could be transferred and could function without its assets, and whether, if assets were not transferred, the absence of such transfer did or did not preclude a transfer of Goldsborough’s undertaking.  

31	In our judgment, the Tribunal asked itself none of these questions.  There is no reference in paragraphs 32 or 33 to any consideration of the situation in relation to Goldsborough’s leasehold interests, intellectual property rights, offices or other assets.  In the Originating Application it was asserted that Goldsborough’s contracts, office equipment, clothing, stationery, telephones and other business equipment, client information, handbooks, policies and procedures were all transferred to BNA.  There are no findings of fact as to any such transfer.  

32	The Tribunal based their conclusions on four matters:
(1) that BNA management made plans to restructure the Goldsborough operation with a view to saving costs;
(2) that BNA management took over Goldsborough’s day-to-day running immediately upon BNA’s acquisition of Goldsborough;
(3) that BNA treated Goldsborough employees as its own employees;
(4) that Mr Baker, a BNA employee, dismissed Mrs Peterson and was unable to explain why, if there was only a change in share ownership, he had the authority to dismiss an employee of an entirely independent company.  

33	In our judgment those matters, individually and collectively, could not have been regarded as establishing a transfer of Goldsborough’s undertaking to BNA without the Tribunal’s stripping out from those factors the elements of control which BNA acquired by the share transfer and without the Tribunal’s considering what was the position in relation to the other assets of BNA, whether it was or was not still doing business in its own name and in its own right and what had happened to the non-management employees, i.e the care workers themselves (the numbers of whom the Tribunal neither identified nor considered).  BNA, as the new owners of shares in Goldsborough, were entitled as a result to restructure Goldsborough’s operations with a view to saving costs; it was a natural step for them to take, transfer of undertaking or not.  As rivals, BNA and Goldsborough had each had their own administrative and executive structure; it was natural for BNA, once Goldsborough had become part of the BNA stable, to seek to make changes in the way in which Goldsborough carried out its business.  As to the second point relied upon by the Tribunal, the fact that Mr Baker and Ms Jayaraj took over the day-to-day running of Goldsborough immediately upon acquisition could have been entirely consistent with BNA’s acquisition.  In his evidence-in-chief Mr Baker set out that Goldsborough continued to trade in its own right, to employ staff and to enter into contracts; that evidence was inconsistent with the transfer of Goldsborough’s business, as opposed to control of the way in which Goldsborough carried out its business, to BNA.  Mr Baker’s evidence showed - and as far as we are aware there was no evidence to the contrary - that prior to the share transfer, BUPA provided human resources and a centralised computer service to Goldsborough; the fact that after the transfer BNA provided what BUPA had previously provided, did not, in the context, indicate a transfer of Goldsborough’s undertaking.  

34	As to the third point, that BNA treated Goldsborough employees both in form and substance as its own employees, the facts set out in paragraph 9 of the Decision describe what happened to Mrs Peterson, but there was no evidence as to non-management employees; and Mr Baker’s evidence was that staff employed by all BNA subsidiaries were paid from the BNA payroll (we have referred above to BNA’s providing HR services to Goldsborough); that evidence does not appear to have been challenged.  

35	As to the fourth point, the Tribunal appeared to have drawn an inference that there was a transfer of Goldsborough’s undertaking from the fact that Mr Baker dismissed Mrs Peterson and was unable to explain how he had the authority to dismiss an employee of an entirely independent company.  In drawing that inference the Tribunal, in our judgment, lost sight of the fact that BNA had acquired control of Goldsborough; Goldsborough was not an entirely independent company after the share transfer (nor, indeed, had it been before the share transfer - it was controlled by a different owner).  There was no evidence or suggestion that Goldsborough had or had ever had its own HR function; and there was no reason in law or practice why Mr Baker should not have been able, as BNA’s HR adviser, to take the formal step of notifying Mrs Peterson of her dismissal; in so doing he would technically have been acting on behalf of Goldsborough - or at least might have been so acting.  These are all matters which the Tribunal appears not to have had in mind.  

36	In our judgment, the Tribunal, in reaching the conclusion that there was a transfer of Goldsborough’s undertaking to BNA on the basis of the four points to which we have referred, erred in law in failing to appreciate, that the share transfer enabled BNA in practical terms to control Goldsborough’s operation without any transfer of Goldsborough’s undertaking and failed to separate out the effects of the share transfer in considering whether there was a transfer of undertaking.  The Tribunal further erred, in our judgment, in failing to direct themselves as to the principles set out in Cheesman and in failing to consider all the factors which were relevant to whether or not there was a transfer and in particular whether or not there had been any transfer of assets and the effect, if there was no such transfer, of the absence of any such transfer of assets.  They did not consider whether Goldsborough was the type of economic entity which was able to function without any significant tangible or intangible assets in the hand of BNA and therefore one in which the absence of any transfer of assets might or might not weigh against the transfer of Goldsborough’s undertaking.  They did not consider, in the absence of any evidence of transfer of the assets or finding as to the transfer of the assets, whether, if there were assets required to run the undertaking, there was a transfer of undertaking nevertheless.  They appear to have concentrated on what had occurred to the few managerial employees of Goldsborough (although we accept that they found that all employees of Goldsborough became employees of BNA, seemingly on the basis of what they found had happened in the case of the managerial employees).  

37	For these reasons we have no doubt that the Tribunal’s decision that there had been a transfer of Goldsborough’s undertaking to BNA was based on errors of law and cannot stand.  We have considered carefully whether we should substitute our own decision on this issue for that of the Tribunal; but we have come to the conclusion that we cannot be sufficiently certain, particularly in the light of the Tribunal’s finding as to the transfer of employees (whether there was evidence to support such a finding other than in the case of the managerial employees is a matter as to which we shall make no further comment) and the absence of any finding at all as to what happened to the assets of Goldsborough, to enable us to do so and that there must be a remission of the transfer issue to a fresh Tribunal.  We reach this conclusion with some misgiving because we regard it as highly unlikely that it can, in any practical sense, matter very much whether BNA or Goldsborough is liable to Mrs Peterson for unfair dismissal (not, of course, automatically unfair dismissal); but we see ourselves as having no proper alternative course open to us.  

Unfair dismissal
38	Mr Stewart did not, either in his Skeleton Argument or in his oral submissions, suggest that the Tribunal had erred in law in reaching the decision that they did that Mrs Peterson had been unfairly dismissed; the Tribunal directed themselves correctly as to section 98 of the Employment Rights Act 1996 in general and as to the correct test to be applied for the purposes of section 98(4) of that Act in paragraph 26 of their Decision.  Mr Stewart’s only argument on unfair dismissal was that if BNA did not dismiss Mrs Peterson, the fairness of the dismissal had to be reconsidered by the Tribunal because the position would have to be considered on the basis that Mrs Peterson was dismissed by Goldsborough and not by BNA.  

39	It is necessary to state that the underlying premise of this submission, namely that if there was no transfer of Goldsborough’s undertaking to BNA, Mrs Peterson was employed by Goldsborough when dismissed, is unsound; if there is ever a remitted hearing of the transfer issue, the Tribunal conducting that hearing will no doubt wish to consider Mrs Peterson’s employment status; but were it to be determined that she was employed by BNA immediately prior to her dismissal - as the Tribunal whose decision is now under appeal concluded - it would not follow that there had been a transfer of Goldsborough’s undertaking.  However it is not necessary to consider that point any further because we accept Mr Zaman’s submission that our conclusion that the Tribunal’s decision on the transfer issue cannot stand does not affect the Tribunal’s conclusion on the issue of unfair dismissal.  It is clear that most of the evidence and of the Tribunal’s findings of fact were directed to the unfair dismissal issue.  Those facts were comprehensively examined and assessed; and the Tribunal reached a factual conclusion that the dismissal of Mrs Peterson was unfair.  None of those facts requires any reconsideration in the light of our decision on the transfer issue; nor would they require any reconsideration if, on remission, a new Tribunal finds that there was no transfer.  If the reasonableness of the dismissal of Mrs Peterson were to be reconsidered, the same witnesses would give what would, presumably, be the same evidence about precisely the same events; the only technical difference might be that Mr Baker and Ms Jayaraj would, if there was no transfer, and if Mrs Peterson remained in the employ of Goldsborough have been acting on behalf of Goldsborough rather than on behalf of BNA in deciding to dismiss and in dismissing Mrs Peterson, as they did.  We can see no basis on which that difference would or might affect the ultimate decision as to the fairness of dismissal.  Mr Stewart fairly accepted in the course of argument that it could not, on any reconsideration of the fairness of the dismissal, be argued that Goldsborough’s resources were smaller than those of BNA - because, of course, all BNA’s HR resources were available to and indeed were being used by Goldsborough (assuming that Goldsborough was the dismissing employer).  In our judgment the Tribunal’s decision as to the unfairness of the dismissal of Mrs Peterson is in no way undermined by our decision on the transfer issue.  

Conclusion
40	BNA’s appeal against the Tribunal’s decision that there was a TUPE transfer of Goldsborough’s undertaking to BNA is allowed to the extent that the issue as to whether there was such a transfer is remitted for re-hearing by a fresh Tribunal.  However, insofar as BNA appeal against the decision that Mrs Peterson was unfairly dismissed, that appeal is dismissed.  If on remission it is decided that Mrs Peterson was dismissed not by BNA but by Goldsborough, the Tribunal’s Order can so state; and any remedies hearing would involve Goldsborough rather than BNA as the effective Respondent.