Pickwell & Anor v Lincolnshire County Council & Anor [1992] UKEAT 123_92_1109

EAT
Pickwell & Anor v Lincolnshire County Council & Anor
[1992] UKEAT 123_92_1109 · 1992-09-11
MR JUSTICE WOOD (PRESIDENT) In proceedings before an Industrial Tribunal at Nottingham on 21st November and 13th December 1991, the Applicants claimed redundancy payments and alleged unfair dismissal. Each of them had given substantial years of service at St George's County Secondary School, Sleaford (the School). Mrs Pickwell, as the cook, was virtually in charge of catering there, and Ms Thomas was a kitchen assistant and till operator.The Respondents were the Lincolnshire County Council and the present Governing Body of the School.Until 31st December 1990 the School had been maintained by the County Council and its Education Committee had been responsible for its management. During the early part of 1990 the Board of Governors had applied for direct grant-maintained status under the provisions of the Education Reform Act 1988 (the 1988 Act). Although information was received during the summer of 1990 that the application might well succeed, it was not until 26th November that this was officially confirmed. Transitional powers were granted to the prospective Governors which will merit the most careful scrutiny in any further consideration of this, or indeed any, similar case. As from that date the existing Governing Body of the School continued to act, but a prospective Body came into existence, possessing those transitional powers.The date of transfer was 1st January 1991.A decision had been made by the prospective governors that thereafter the catering should be contracted out to a catering firm, Gardner Merchant. The Spring term started on Tuesday 8th January 1991 and the kitchen staff first attended on Monday 7th. Ms Thomas entered into a contract with Gardner Merchant to start work with them on that date. So also did the other ladies who had previously worked in the School's kitchen. Mrs Pickwell ultimately decided not to take up employment with Gardner Merchant as a catering manager. She opted either for early retirement or redundancy. There are issues about this which require further investigation in the future.The Applicants are supported by their Trade Union, the National Union of Public Employees (NUPE), the County Council was represented throughout by its Legal Department and before us each was represented by Counsel. Throughout, both before the Industrial Tribunal and before us, the Governing Body has represented itself through Mr Hodgson, who was at all material times the Headmaster.We are told that this present case has become the subject of wide-spread interest because of the number of schools seeking grant-maintained status. This does not surprise us as there must be thousands of people whose employment situation will be affected by the provisions of the 1988 Act.This Industrial Tribunal made two important findings of fact. In paragraph 4 of its Decision the following is said -
"The mechanics of such a change are dealt with in the 1988 Act and as a result there can be no doubt that the Local Education Authority ceased to employ Mrs Pickwell and Mrs Thomas as from 31 December 1990. This fact is not in dispute. ..."
We have read this to mean that the liability of the County Council for its employees under their contracts of employment ceased on that date.The second finding of fact is in paragraph 12 where it is stated,
"... It is of course true that the first respondent did nothing to terminate the applicants' contracts. ..."
What then is the position in law where immediately before the date of transfer under the 1988 Act an employee is employed by the County Council at this School?Section 74 of the Act deals with transfer of property to the governing body of grant-maintained schools, but its provisions are excluded from any right or liability under any contract of employment by subsection (3).It is therefore to S.75 that we must look for guidance.

"75Transfer of staff to grant-maintained school

(1) Subject to subsection (3) below, this section applies to any person who -

(a)... (b)immediately before the transfer date in relation to a grant-maintained school - (i)is employed by the local education authority by whom the school is maintained to work solely at the school; or(ii)is employed by that authority to work at the school and is designated for the purposes of this section by an order made by the Secretary of State.(2)...

(3) This section does not apply to -

(a)any person employed as mentioned in subsection (1)(a) or (b) above whose contract of employment terminates on the day immediately preceding the transfer date; (b)any person employed as mentioned in subsection (1)(b) above who before that date has been - (i)appointed or assigned by the local education authority concerned to work solely at another school as from that date; or(ii)withdrawn from work at the school with effect as from that date.(4) A person who before the transfer date has been appointed or assigned by the local education authority by whom the school is maintained to work at the school as from that date shall be treated for the purposes of this section as if he had been employed by that authority immediately before that date to do such work at the school as he would have been required to do on or after that date under his contract of employment with that authority.

(5) References below in this section to the former employer are references -

(a)in relation to a person to whom this section applies by virtue of subsection (1)(a) above, to the governing body of the school immediately before the transfer date; and (b)in relation to a person to whom this section applies by virtue of subsection (1)(b) above, to the local education authority by whom the school is maintained immediately before that date.(6) The contract of employment between a person to whom this section applies and the former employer shall have effect from the transfer date as if originally made between him and the governing body of the grant-maintained school.

(7) Without prejudice to subsection (6) above -

(a) all the former employer's rights, powers, duties and liabilities under or in connection with a contract to which that subsection applies shall by virtue of this section be transferred to the governing body of the grant-maintained school on the transfer date; and (b)anything done before that date by or in relation to the former employer in respect of that contract or the employee shall be deemed from that date to have been done by or in relation to that governing body.(8) Subsections (6) and (7) above are without prejudice to any right of an employee to terminate his contract of employment if a substantial change is made to his detriment in his working conditions, but no such right shall arise by reason only of the change in employer affected by this section.

(9) ..."

The Applicants clearly fall within S.75(1)(b)(ii) and looking at the words of subsections (4), (6), (7) and (8), it seems to us clear that the contract of employment is intended to span the incidence of transfer and to be itself transferred so that the governors step into the shoes of the County Council.The exceptions to the application of S.75 are stated in S.75(3) and it is subsection (3)(a) which is applicable. To repeat the wording that is relevant:-
"This section does not apply to ... any person ... whose contract of employment terminates on the date immediately preceding the transfer date ..."
Had the contracts of employment of either of these Applicant terminated on that day, if that contract was then still existing?Let us take the case of Ms Thomas who returned to school on Monday 7th January 1991 but did so in order to work for Gardner Merchant. There is no indication on the facts that her contract of employment had terminated earlier.The answer given by the Industrial Tribunal to this question was, yes it did. The Tribunal decided that neither Ss.55 nor 83 of the Employment Protection (Consolidation) Act 1978 applied but it relied upon S.93(1),
"93(1) Where in accordance with any enactment or rule of law - (a)any act on the part of an employer, or (b)any event affecting an employer (including, in the case of an individual, his death),
operates so as to terminate a contract under which an employee is employed by him, that act or event shall for the purposes of this Part be treated as a termination of the contract by the employer, if apart from this subsection it would not constitute a termination of the contract by him and, in particular, the provisions of sections 83, 84 and 90 shall apply accordingly."This section seems to us to envisage such activities as insolvency, whether by winding up or bankruptcy, and death, where by statute or common law a contract of employment must come to an end and by operation of law quite independently of the parties involved.We are unable to find either in the provisions of the 1988 Act itself nor in the documents which have placed before us, any such independent operation of law terminating the contract, and the provisions of S.75 itself, to which we have already referred, clearly envisage the desirability of transfer. Indeed it gives the option in S.75(8) for the employee to refuse.In view of this we have reached the conclusion that the reasoning in paragraph 7 of the Decision cannot be sustained. We were at one stage minded to adjourn to seek the assistance of an amicus curiae, as this case is considered of such importance, but we are satisfied that our decision should not be longer delayed.In saying this we in no way seek to criticise Mr Hodgson in the way he has presented the case for the Governors. He himself realised the difficult position in which he was placed. Indeed, during his address a substantial body of fact came to the surface which may or may not be agreed ultimately, but which clearly indicates that this matter will need to be remitted for a further hearing.It would seem that for many years the Governors have had a happy and satisfactory relationship with the catering staff at this School. During the summer of 1990 informal discussions took place between both sides about the future of catering after transfer (if it should occur). The Governors wanted all the staff to remain, but were actively in discussion with Gardner Merchant, the catering company. It was suggested that Mrs Pickwell should join that Company as catering manager, but this did not appeal to her as the hours were longer and the paper-work would increase. She wanted the School to stay with its own catering. This was not acceptable and early retirement or redundancy was discussed.After 26th November discussions became crystallised and a member of Gardner Merchant visited.Ultimately, as we have said, Mrs Pickwell was the only one of the kitchen staff to decide against continuing to work at the School under the new regime.The Governors wished to protect Mrs Pickwell and took what they thought was every step to do so. There were communications with the County Council the details of which are not yet clear. There will almost certainly be documentation - both internal and between parties. Discovery will be important.We have reached the conclusion therefore that although in Ms Thomas' case there has been a transfer under S.75, the position in Mrs Pickwell's case is far from clear on the facts.We have therefore decided that all further issues must be remitted to be examined afresh. In reciting the story above we do not intend to bind the Industrial Tribunal in any way in the future nor to have purported to make any findings of fact ourselves, but have done so merely to explain why we have taken the course which we have.The industrial members, and I agree with them, have been somewhat troubled by the circumstances of this case which are unlikely to be unique. There must be many boards of governors, just like this one, who over many years have given sterling service as agents for the education authority and have at all times gone out of their way to look after their staff. Their experience in handling teaching and other staff on a day-to-day basis and the problems of teaching curricula may be extensive, but they suddenly find themselves in the jungle of employment law. The snares, the pitfalls are all around them. As Mr Hodgson said, it seems to him unfair that the Governors of a grant-maintained school whose budget is limited and is assessed on numbers of pupils, should have to make redundancy payments to staff who have for 20 or more years given faithful service to the County Council. It is the County Council which has had the benefit of those years of faithful service and yet it will be able to avoid that payment.That is not a question for us, but it seems to us all that an essential lesson from this case for all Governors finding themselves in similar situations is that they should take legal or accountancy advice or the advice of experienced industrial consultants and should enter into discussion with the local authority and also possibly with Trade Unions before the transfer date. Local authorities are large and most experienced employers. They, like the Trade Unions, are well versed in employment law and its rapid developments. Strong political views may be held on the desirability of the provisions of the 1988 Act, but despite all this we would hope that the best interests of staff, many of whom have given long and loyal service to the County Council are carefully considered by all parties at each juncture.Mr Hodgson argued that the prospective Governors, between 26th November and 31st December, could perhaps have dismissed on notice those existing members of the School staff who were to become redundant. This is issue is not before us, but it was for this reason (inter alia) that perusal of the transitional powers may well be necessary.The problems highlighted by this case merit the most detailed consideration by all interested in these transitional provisions.This appeal is therefore allowed and all issues will be remitted to an Industrial Tribunal for reconsideration in the light of the reasoning in this judgment.