Appeal No.  UKEAT/0121/09/JOJ
UKEAT/0122/09/JOJ

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 8 September 2009

Before
HIS HONOUR JUDGE MCMULLEN QC
(SITTING ALONE)

MARTELLO PROFESSIONAL RISKS LIMITED 	APPELLANT

(1) MR P BARNES
(2) PARABIS LAW LLP 	RESPONDENTS

AND

MR P BARNES	APPELLANT

(1) MARTELLO PROFESSIONAL RISKS LIMITED & OTHERS	
(2) PARABIS LAW LLP 	            						      RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR P BARNES
(The Appellant in Person)	
For Respondent (1)

For Respondent (2)	MR A BURNS
(of Counsel)
Instructed by:
Messrs Eversheds LLP Solicitors
1 Callaghan Square
Cardiff
Glamorgan
CF10 5BT

No appearance or representation by or on behalf of the Respondent.	

SUMMARY
PRACTICE AND PROCEDURE: Review
TRANSFER OF UNDERTAKINGS: Consultation and other information
The Employment Judge correctly held a review when he and the Respondents were under a misapprehension as to the nature of the hearing. On review with full evidence the Employment Judge was entitled to hold that as AMICUS was recognised by the Respondent to any extent, the Claimant as an affected employee did not have the right to make the kind of complaint he did under TUPE 2006 Reg 15 as to the consultation which occurred. 

HIS HONOUR JUDGE MCMULLEN QC

1.	This case is about Employment Tribunal procedure in conducting a review and, as a matter of substance, is about the right to be consulted in advance of a transfer under the Transfer of Undertaking Protection of Employment Regulations 2006.  I will refer to the parties as the Claimant and the Respondent (Martello).

Introduction
2.	It is an appeal by the Claimant in those proceedings against the judgment at a review of Employment Judge Dr Auerbach sitting alone at London Central, registered with reasons on 6 January 2009. 

3.	The Claimant, who is a solicitor, represented himself.  The First Respondent was represented by a solicitor and the Second Respondent did not appear and was not represented.  Today, the First Respondent, Martello, is represented by Mr Andrew Burns of Counsel, the Second Respondent wishes to associate itself with the submissions which he makes pursuant to a skeleton argument drafted by leading Counsel which he adopts.

4.	The judgment itself was the product of a two-day hearing and two days’ private consideration by the judge.  Since it was a review judgment, it followed a judgment he had given following a one-day hearing, registered with reasons on 3 June 2008.  Between the two hearings, the judge turned 180 degrees. At the first hearing, he found in favour of the Claimant, at the second, he acceded to applications made by both Respondents for a review and, at the review, it is common ground (although not expressed) that the first judgment and order were revoked and replaced by the second.

5.	The proceedings had commenced with four case management orders.  Of particular relevance is a CMD on 11 January 2008 where Employment Judge Leslie gave directions: 
“6 A Pre-Hearing Review will be held to determine whether the Tribunal has jurisdiction to consider the claim under Regulation 15(1)(d) of the TUPE Regulations. 
7 Neither party intends to call any witnesses at the Pre-Hearing Review.  The matter will be determined on the basis of the documentation.” 

Both Respondents were represented and the Claimant was in person.  So it was that the parties came together at the first PHR.

6.	The judge found in favour of the Claimant. The Respondents launched a Notice of Appeal.  In due course, a review resulted in the judgment which is the subject of the appeal. The Claimant lost and so it is his appeal.  It is common ground that, if I am against him on his appeal, it is unnecessary for me to deal with the Respondents’ appeal against the finding against them in the first judgment for, logically, there is no life in the first judgment if the second is upheld.

The issues
7.	The issues can be divided into two: procedural and substantive.  The first is whether the judge should have acceded to the request for a review and secondly, as a matter of substance, whether he Claimant was entitled to bring proceedings under TUPE 2006.  Broadly speaking, the central issue is whether or not the trade union AMICUS, as it then was, was recognised by Martello so as to invoke the right to be consulted ahead of a relevant transfer.

8.	The Claimant appeals against the second review judgment and directions sending this appeal to a full hearing were given by HHJ Richardson.

The legislation
9.	The relevant provisions of the legislation can be divided again into procedure and substance.  As to procedure, an Employment Tribunal is entitled to conduct a review against a substantive judgment if one of the conditions in Rule 34(3) is met.  For the purposes of the appeal it is common ground (and the Claimant expressly accepts) that the application made to the judge was under Rule 34(3)(e); that the interests of justice requires such a review.

10.	There was no explicit reference in the application to Rule 34(3)(d), which is new evidence becoming available, but the Claimant contends that use of the interests of justice is a way of evading what the Respondents acknowledge to be a major difficulty; that is, that they could not succeed in showing new evidence for, by definition, their case is that there was evidence; it was not heard.  Unless a judge decides that there is no prospect of success, there must be a review, see Rule 35.

11.	Other aspects of Rule 34 are not relevant for, although the judge decided against the Respondent that there may have been an administrative error, that is not pursued by the Respondents.  

12.	The powers of a judge on a review are to revoke, vary or affirm the judgment under review and it is common ground that what has occurred here is the judge has acceded to an application for review, conducted a review, revoked the first judgment and replaced it with the now current substantive judgment.

13.	As to the substantive issue, TUPE regulation 13 imposes a duty on an employer to consult representatives ahead of a TUPE transfer.  The hierarchy of who to consult is set out in regulation 13(3) which provides as follows: 
“(3) For the purposes of this regulation the appropriate representatives of any affected employees are—
(a) if the employees are of a description in respect of which an independent trade union is recognised by their employer, representatives of the trade union; or

(b) in any other case, whichever of the following employee representatives the employer chooses—
(i) employee representatives appointed or elected by the affected employees otherwise than for the purposes of this regulation, who (having regard to the purposes for, and the method by which they were appointed or elected) have authority from those employees to receive information and to be consulted about the transfer on their behalf;

(ii) employee representatives elected by any affected employees, for the purposes of this regulation, in an election satisfying the requirements of regulation 14(1).”

14.	There is also an obligation on the transferee to provide the transferor with such information as is necessary.  The right to make complaints about a failure to carry out the duty to inform or consult is provided in regulation 15.  Regulation 15(1) again sets out the parties who may make such complaints.  
“15. —(1) Where an employer has failed to comply with a requirement of regulation 13 or regulation 14, a complaint may be presented to an employment tribunal on that ground—
(a) in the case of a failure relating to the election of employee representatives, by any of his employees who are affected employees;

(b) in the case of any other failure relating to employee representatives, by any of the employee representatives to whom the failure related;

(c) in the case of failure relating to representatives of a trade union, by the trade union; and

(d) in any other case, by any of his employees who are affected employees.”

For the purposes of this case, the Claimant falls into 15(1)(d) and, as the judge found, he might also fall within 15(a).  

15.	Recognition has become a statutory term now found in the Trade Union and Labour Relations (Consolidation) Act 1992 section 178. Collective bargaining means negotiations relating to any of a range of matters set out in section 178(2).  Broadly speaking, they are terms and conditions of employment, discipline, negotiation, consultation, and other procedural matters.  Section 178(3) provides for recognition:

“(3) In this Act ‘recognition’, in relation to a trade union, means the recognition of the union by an employer, or two or more associated employers, to any extent, for the purpose of collective bargaining; and ‘recognised’ and other related expressions shall be construed accordingly.”

16.	It is important to emphasise the words “to any extent”.  Mr Burns submitted that, once a trade union has to any extent achieved recognition for any purpose, then it takes priority in the hierarchy of those who are to be consulted under TUPE regulation 13(3). So if the employees are in descriptions for which an independent trade union is recognised, then the representatives of that union must be consulted leaving it unnecessary for alternative forms of representation set out in regulation 13(3)(b) to be considered.

The facts
17.	The Claimant is a solicitor who was employed on 16 November 2003 by Martello, a small insurance business employing at the relevant time about 112 people until he was dismissed by the Second Respondent, the transferee in these proceedings, on 7 August 2007.  He was paid roughly £75,000 a year.

18.	RSA is a major insurer employing thousands.  It bought Martello by way of a share purchase on 1 December 2006.  On 21 January, AMICUS began to hold workshops with Martello employees.  AMICUS was a major independent trade union which had recognition for the purposes of collective bargaining within RSA.  It had agreements on terms and conditions and procedures. The arrangement within RSA was that it would recognise AMICUS for any business purchased by it if AMICUS achieved 40 per cent membership. 

19.	Mr Russell Shaw is employed by RSA and, on 24 January 2007, a meeting was conducted between him, representatives of AMICUS, representatives of Martello (principally the directorship including Jacqui Stern, its HR Director) and the Employee Relations Director of RSA. At that meeting, steps were taken and, in due course, it was reported to RSA that union presentations had been made to the staff in Martello.  The staff had been advised that if its membership in Martello reached 40 per cent there would be full negotiating rights with RSA and discussions could begin right away with management.  On 5 February 2007, AMICUS was claiming 62 out of a Martello workforce of 112 and meetings were sought to progress discussions on behalf of them.  Russell Shaw convened a meeting on 14 March 2007.  So far as I can tell, there was representation of Martello at this meeting.  The notes are produced.  A reference is made to a business called Plexus.  This, in fact, was the shelf name for the business which became the Second Respondent, Parabis.  

20.	By this date, it is clear that the Respondent was accepting the representations of AMICUS that it had over 50 per cent membership and so, in accordance with its arrangement, collective bargaining rights were automatically conferred upon it for Martello employees.  The notes show that the parties then descended into detailed discussions about TUPE, that is, the transfer of Martello to Parabis. Discussions were opened there and then.  Express reference was made to TUPE and it was agreed that the national officer of AMICUS would be involved to discuss matters relating to TUPE and communications.  The notes record that there is an agreement for full collective bargaining rights to be given to AMICUS on that date in respect of the employees of Martello.

21.	The Claimant thought he was a member of AMICUS; he had attended a presentation on 1 February 2007 with AMICUS, he was certainly, by the time of the transfer on 1 June 2007, having deductions from his pay in accordance with the arrangements which exist between AMICUS and RSA, and he plainly regarded himself as part of AMICUS.

22.	At a very late stage about a year later, evidence produced from head office of AMICUS indicates that they did not know him but there can be no doubt, from the deductions and from what he learned when hearing the presentation from AMICUS, that he was, for all intents and purposes, a member.  All I can conclude is that the left hand does not seem to know what the right hand is doing in AMICUS for it seemed not to have any record of employees in Martello where, according to the minutes on 14 March 2007, accredited officials of AMICUS were asserting that they had 62 members.

23.	The substance of the complaint made by the Claimant is that there was no consultation prior to the transfer to Parabis.  His complaint is not simply about procedure; he has indicated that he was dissatisfied with the way in which Parabis would deal with him and other solicitors on the one hand and administrative staff on the other.

24.	The purpose of the TUPE regulations on consultation is to give employees and their representatives a seat at the table so that, in advance of a transfer, they are in a position to ensure the best conditions.  It is, broadly speaking, public policy to encourage TUPE transfers but with proper consultation and information in advance.  

25.	The Claimant did not get a satisfactory solution to the issues which he had raised to do with solicitors’ regulation.  He refused to work for Parabis.  They disciplined him, warned him and dismissed him.  The complaint which he raises, however, is of a failure to consult him under TUPE.

26.	The procedural aspects of this case arise because of the volte-face by the judge. Following the tramlines of the CMD, no live evidence was heard at the first PHR; documentary evidence only being produced.  The Respondents thought that the hearing was a strike-out of the Claimant’s claim for which they applied under Rule 18 since they did not consider that he was entitled to bring the proceedings.  They also considered that there should be a deposit order if the claim was not struck out.  

27.	The Claimant considered that the central issue, which is about the recognition by Martello of AMICUS, was to be decided at that hearing.  When the Respondents received the disappointing news that not only was the claim not struck out but the judge had found against them, they applied for a review in the interests of justice.

28.	The judge considered the exercise of discretion and it is common ground that whether to hold a review and whether to revoke or vary an order at a review are matters of discretion for the judge where, as here, this is a judge alone case.  The judge decided that, having balanced the factors which were put before him, he would review and, having made that decision, proceeded to conduct a PHR on live evidence; therefore at variance from Judge Leslie’s original order.  

29.	As to the substantive points he found that the Claimant did not have a claim to bring under regulation 15. His approach was identified in the following way: 
“Application of Regulation 15(1) in this case
58 As to whether the effect of regulation 15(1) was that the Claimant was not entitled to present his claim, I have set out above the arguments for saying that this complaint raised an issue which fell, if not within category (a), at least within category (d), and that, in either event, the Claimant was entitled to present the claim, as he was an effected employee.  I conclude that he was so entitled.  In relation to the above arguments, I think the only point of legal doubt concerns whether (a) applies to a case where there has been no election at all.  On balance, I think it does not, but, if so, the complaint is undoubtedly within category (d).  This claim raises an issue of whether or not the Respondents, in dealing with AMICUS, had dealt with the correct representative, or whether they should have been dealing with elected employee representatives of affected employees (including the Claimant) for the purpose of regulation 13(3)?  As an affected employee the Claimant was entitled to raise that issue.  I therefore, as agreed with the parties at the review hearing, now turn to consider, and – definitively – determine, that issue.  The first element to be considered is whether AMICUS was recognised.”

The Claimant’s case
30.	In a detailed, scholarly and well-presented skeleton argument the Claimant contends that the judge was wrong to conduct a review, the conclusion he reached on the review was wrong and his legal conclusions as to the relationship between RSA, Martello and AMICUS was also wrong in law.  He complains with force that orders for case management should be observed and parties should know where they stand.  Finality is required in litigation and, once a hearing was conducted in this case, it should not be open to disappointed Respondents to seek to overturn the judgment.

31.	The judgment of the judge was perverse, both on procedure and on substance and, in practical terms, there was no consultation with anyone.  It is contended that the relationship purporting to be recognition was simply a sham.  He raises four questions which must be decided in respect of the substantive issue.  These are (1) did Martello recognise AMICUS at all (2) did Mr Shaw of RSA have Martello’s authority to do so (3) was AMICUS recognised for a description of employers who were affected (and on this he contends he was outside any agreement) and (4) was the relationship between Martello, RSA and AMICUS a sham or, to use the words of Buxton LJ in R (on the application of NUJ) v The Central Arbitration Committee [2006] IRLR 533, “a collapsed agreement”; in other words, it no longer had any life.  All of those questions, he contends, the judge answered incorrectly as well as in his allowing the application by the Respondents for a review.

The Respondent’s case
32.	I did not find it necessary to receive submissions from Mr Burns in relation to the procedural point; these points are developed in the skeleton argument and indicate that the judge had power by way of an open discretion in the interests of justice to correct the errors.
		 
33.	It was submitted that only at this stage did it become clear what the specific remit of the PHR was, being incorrectly diagnosed by the parties in front of Judge Leslie, adopted by the Claimant and run before Employment Judge Auerbach first time around. 

34.	As to the four questions posed by the Claimant, Mr Burns contends that AMICUS was recognised.  These are questions of fact, there was material upon which the judge could make a decision and none of the decisions he made was perverse.  Recognition was accorded to AMICUS.  Mr Shaw had authority to do so in respect of Martello.  AMICUS’s recognition was not limited except, as Mr Shaw conceded in cross‑examination, in respect of the very high-ranking directors of Martello, and the serious allegation that AMICUS was engaged in a sham with RSA or a collapsed agreement was confounded by the facts found.

The legal principles
35.	The first legal principle is to observe that an appeal to the EAT on a question of law alleging perversity has a high threshold to surmount; an overwhelming case must be shown that the judge was wrong.  See Yeboah v Crofton [2002] IRLR 634.

36.	Findings as to what was in the mind of any particular witness are matters pre-eminently of fact for the judge to decide.  As a matter of discretion the judge who receives an application for a review, unless he is convinced it has no prospect, must conduct a review.  The interests of justice is a wide category and is not restricted to exceptional circumstances. It is a different category from the other provisions relating to new evidence or administrative error.

37.	As to the substantive issue, the purpose of TUPE is to ensure consultation takes place ahead of a transfer with representatives, if there are such and, if not, with those who are affected.  Complaints may be made but broadly speaking the complainants, where a trade union is recognised, or where employee representatives are engaged, the union or those representatives.

Discussion and conclusions
The review
38.	I will start with the attack on the decision to conduct a review.  What was exceptional about the first review hearing is that, not only were the two solicitors representing the two Respondents in a situation where they misunderstood what the proceedings were about but, to a large extent, that was shared by the judge.  I have considerable sympathy with the Claimant for he was not under any misapprehension about what was going on, apart from the running together of the two issues associated with recognition which were only explained in the judge’s second judgment.  He came out of the Tribunal with what he understood to be a final determination of his right and, if he is right about this, the only answer is that he is entitled to a maximum of three months’ pay, according to whatever failure it is the Respondents have been charged with.

39.	The unusual aspect is that the judge himself regarded the proceedings as having been conducted in part as a result of an error on his part.  The hearing was for a day, it was about a Strike-out, and his judgment indicates that so he, too, in part shared the misunderstanding of the Respondents.  There is no doubt that the Respondents had a considerable amount of material to produce in relation to the substantive issue (that is recognition and the right of the Claimant to bring proceedings) and they did not bring that because they regarded it as a hearing on a strike-out.

40.	The sole basis upon which I need to decide this is whether, in the light of that misconception by the Respondents and the judge, the interests of justice required a review.  I have no doubt it did.  True it is the finality of litigation is an important consideration but so is justice.  If the Claimant were to succeed in his appeal and if, in truth, the judge’s findings at the second review were correct then he would have a windfall; there would plainly be an injustice to the Respondents because the factual position would be misrepresented.

41.	The purpose of Rule 18 is to allow for procedural mishaps and errors which affect justice in the way in which cases have been developed.  The exercise of discretion is to be conducted judicially.  The judge in this case considered all of the arguments which were put to him together with the prejudice to the Claimant in having the judgment in his favour revoked and balancing the interests of the parties.  This was a very careful analysis of the circumstances facing the judge and of the powers.  I see no error in his decision to conduct a review and I see no error as a matter of principle in his decision to revoke his earlier decision.  No factor has been put in front of me by the Claimant which indicates that he considered immaterial factors or missed out of his consideration factors which ought to have been in.  He considered the balance of prejudice, the overriding objective, the finality of litigation and, most important, he accepted as a matter of fact what the First Respondent’s solicitor, Mr Thomas, told him about his belief as to the purpose of the proceedings.  The Second Respondent did not present any evidence.  That, I think, does not matter; if there is an injustice in the proceedings, then the proceedings must be set aside in respect of all of the parties.

42.	A misunderstanding as to what the nature of the proceedings was, genuinely held by a lawyer, is capable of being a ground upon which a judge can set aside on review an earlier judgment.  But in my view the important factor added to this (which is not in any of the authorities produced to me) is that the judge himself was also under a misapprehension.

TUPE
43.	I then turn to the substantive issue. I uphold the submissions in full of Mr Burns and I will take the four points which Mr Burns and Mr Barnes have advanced before me.  In doing so it is important to note that access to the Tribunal is not barred to the Claimant because he falls within regulation 15(1)(d); that is, he is an affected employee and he may present a complaint to an Employment Tribunal about, for example, whether the Respondent consulted the wrong organisation.  The sub categories in regulation 15(1)(b) and (c) deal with failures relating to consultation and only the specific respective representatives may complain of that.  But the use of the words, “In any other case” indicates that there are opportunities available to an affected employee to bring the claim.

44.	Did Martello consult the right party?  That is the central issue in this case.  The parties are exclusive; if there is a trade union recognised to any extent it supplants the employee representatives for the purpose of regulation 13(3) and so AMICUS would be the recipient if it were recognised.  I can then deal with the specific questions. 

45.	(1) Did Martello recognise AMICUS to an extent?  I have been taken in detail to the evidence of the meetings which I have described.  In my judgment, AMICUS was recognised by RSA.  There are agreements in evidence including a bespoke one dealing with what the parties do not call redundancy but that is what it is. It excludes consultation over TUPE but that does not mean that consultation over TUPE is not a right of AMICUS within RSA. 

46.	The simple answer to this case is what I have seen to be a collective agreement reached on 14 March 2007.  It is reached by representatives of AMICUS, recognition is agreed by the management of RSA who are the owners of Martello. I assume, from the meeting which the leading lights of Martello attended on 24 January, that their intentions were plain.  RSA being the owners of Martello, they called the shots and extended recognition to AMICUS in respect of employees of Martello.  Employees of Martello are all affected by the transfer which was plainly envisaged on 14 March 2007, subject only to the refinement Mr Shaw injected during his cross‑examination that the directors are outside the recognition agreement.

47.	(2) Did Mr Shaw have authority to make that collective agreement?  In my judgment he did for the reasons I have just given.  Martello directors indicated at earlier stages they were part of the process.

48.	(3) Was AMICUS recognised for the description of affected employees?  It was.  Apart from the refinement in respect of the directors, there is no distinction and Mr Barnes, as a solicitor, is not in a specific category of his own.  There appears to be no distinction but the judge did examine distinctions as to trade and as to level of seniority and concluded, as a matter of fact, that the Claimant was not, by either of those methods, excluded from the category of affected employee.  It is plain they were all affected for they were about to go through a TUPE transfer and a national officer of AMICUS was to be called in to conduct the consultations.

49.	In the Governing Body for the Northern Ireland Hotel and Catering College and North Eastern Education and Library Board v National Association of Teachers in Further and Higher Education [1995] IRLR 83 the Northern Ireland Court of Appeal considered the construction of the corresponding articles of the Northern Ireland Order and Hutton LCJ, as he then was, said the following: 
“12 As a matter of construction it is clear, in my opinion, that in the phrase ‘an employee of a description in respect of which an independent trade union is recognised by him’, the words ‘of a description’ refer to a category of employee, and that the obligation to consult a trade union relates to an employee of a description or category in respect of which the union is recognised, whether or not that employee is a member of that particular union. 
13 I consider that to construe the words ‘of a description’ as referring to an employee who is a member of the trade union which is to be consulted would be to give the paragraph a meaning which it does not bear, and would necessitate the inclusion of additional words which it does not contain.  As Mr McDonald, counsel for the respondent union, submitted, if Parliament had intended to limit the requirement to consult to a case where the employee was a member of a recognised trade union, it would have been simple for the paragraph to have stated this in clear terms.”

50.	His Lordship also formed that opinion from a number of the eminent academic works on the subject.  That occurred in this case too and, in applying it, I consider that the Claimant was an affected employee; he was in the category of employees for which there was recognition.  Actually, he was a member of AMICUS, although their records appear to have gone awry thereafter.  AMICUS was in a position to make a claim to the Employment Tribunal irrespective of the length of membership of any of the employees of Martello, notwithstanding Rule 9 of the union rule book which provides for six months’ membership before the union will represent it in personal injury and employment matters.  But that is different from a claim made by a trade union.  As I indicated in debate, it will often be an important step for a union to take to launch proceedings if it is in a campaign for recognition to show to its newly-recruited members that it has some potency.

51.	(4) Was recognition a sham?  This is a very serious allegation to make.  There is no evidence whatsoever to indicate that AMICUS was not at arm’s length with RSA nor with Martello.  Plainly, RSA recognised AMICUS for its other groups of employees; there appears to be healthy collective bargaining and an open-minded approach by RSA to union recruitment in businesses which its mergers and acquisitions department acquires.  Access is given to AMICUS officials to give presentations to the incoming staff and that in no way indicates a cosy sham relationship or the existence of agreements which are not what they say.  The collective agreements which I have been shown in force at the time as “live instruments” as the employment judge put it, are just that.  The notes of the critical meeting on 14 March 2007 indicate accession by management to claims of union penetration of over 50%.  There is no evidence whatever to indicate that the agreements were no longer live.

52.	In all of those matters, the judge made decisions against the Claimant’s case.  They were questions substantially of fact and it is not open to me to interfere.  The Claimant has not made an overwhelming case that the judge was wrong.  This is a very careful judgment of an employment judge highly experienced in the law and practice of collective bargaining and he has done justice to the detailed case presented by the Claimant.

53.	Essentially, the one-day case which he heard at the outset turned into a four-day case (including two days in Chambers) and the judge has given the most exacting attention to all of the arguments.  I see no error in his decision to conduct a review nor in his approach to the factual issues relating to recognition. And so, with my thanks to both Mr Barnes and Mr Burns, I dismiss the appeal.