Curling & Ors v Securicor Ltd [1992] UKEAT 40_90_2807

EAT
Curling & Ors v Securicor Ltd
[1992] UKEAT 40_90_2807 · 1992-06-23
MR JUSTICE KNOX: Eight persons ("the Employees") lately employed by Securicor Ltd ("Securicor") appeal against the unanimous decision of an Industrial Tribunal sitting at Brighton on 13, 14 and 15 June and 25, 26 and 27 September 1989, sent to the parties on 20 November 1989, whereby it was held first, that none of the Employees was dismissed by Securicor but, secondly, if that was wrong, that they were all dismissed for redundancy, no offer of suitable alternative employment was made to any of them save perhaps one, Mr Evans, whose refusal to accept it was not unreasonable and that there was no transfer of undertaking under the Transfer of Undertaking (Protection of Employment) Regulations 1981 ("the Transfer Regulations") so that, on this alternative hypothesis that they were dismissed by Securicor all the Employees were entitled to redundancy payments. The employees appeal against the finding that none of them was dismissed. Securicor cross-appeals against the alternative finding that the Employees were dismissed by reason of redundancy, the finding that the Transfer Regulations did not operate to transfer the relevant undertaking to a third party and the finding that there was no suitable offer of alternative employment and that there was no unreasonable refusal to accept suitable alternative employment.It will be convenient to deal with the appeal first but in doing so all the facts found by the Industrial Tribunal fall to be taken into account. The decision appealed from is in two parts; the first part, consisting of paragraphs 1 to 20, deals with the question whether the Employees were dismissed by Securicor, and the second part consisting of paragraphs 21 to 48 deals with the situation assuming that the conclusion reached on the first part is wrong and contains the findings and conclusions which are the subject of the cross-appeal. It is not possible in our view to isolate these two parts of the decision and deal with the appeal solely on the basis of the findings contained in the first part of the decision since there are findings of fact in the second part which in our view have nothing hypothetical about them and are of major significance in relation to the conclusions reached in the first part.The facts found by the Industrial Tribunal include the following. All the Employees were employed by Securicor at a detention centre for immigrants at Gatwick called "the Beehive". Securicor had a contract with the Home Office of long standing for running that centre and others, notably at Heathrow, with which we are not concerned. The Home Office in early 1988 put the future management of the centre at the Beehive (inter alia) out to tender and as a result the contract was awarded to Group 4 Total Security Ltd. ("Group 4") with effect from 1 January 1989. Correspondingly Securicor's contract ended on 31 December 1988.The Employees' contracts of service all included the following clause:
"Should the interests of the Company demand it, you may be required to serve at the Company's Head Office in London, or at one of the Company's branches and the particular nature of your employment may be changed at the Company's discretion. Any moves made in this connection will not affect our right to terminate your employment under the normal requirements of this letter of employment."
We shall refer to that clause as "the mobility clause". Both before the Industrial Tribunal and before us it was accepted by Securicor that it would only permit transfer of an employee to another branch so far as was reasonable. Although we were referred to Rank Xerox Ltd v. Churchill [1988] I.R.L.R. 280, in the light of that concession it is not necessary to consider whether we should follow or apply that decision.Securicor had entered into a memorandum of agreement with the Union to which the Employees belonged, The Managerial, Administrative, Technical and Supervisory Association, section of the General, Municipal, Boilermakers' and Allied Trade Union ("MATSA"). That agreement provided for redundancy among other subjects. Its provisions included the following:-a) A preamble stating that Securicor had a responsibility to clearly demonstrate to the Union that redundancies were necessary and that if the likelihood of redundancies was foreseen Securicor would inform the Union as soon as possible and in negotiation with the Union try to prevent redundancies. Failing this
"and in the need to declare redundancy it shall be on the basis of "last in - first out", all other things being equal."
b) It was provided that employees who were to be declared redundant would receive minimum periods of notice in accordance with their length of service. The provisions of the Employment Protection (Consolidation) Act 1978 ("the 1978 Act") in that behalf were summarised.c) Under the heading "Alternative Employment" it was provided that employees affected by redundancy would be interviewed by Management with the Branch Secretary in attendance and that information would be given of the alternative employment available. It was also provided that those employees who accepted alternative employment would be given a minimum of four weeks written notice of their change of appointment and would be given any necessary retraining to fit them for any post that was available, and that where an employee accepted alternative employment a trial period of four weeks would apply. During that period if the employment was not suitable or if the employee was not found to be suitable by the Management redundancy would be "deemed as taking effect from the day of closure or move of the Branch or Department."None of the Employees was originally employed by Securicor to work at the Beehive and all had done at least one different job before going to Immigration. Their jobs at the Beehive were however to their liking.Group 4 arranged a meeting on the 12 November 1988 which was attended by all the Employees. The object of Group 4 was to recruit personnel to run the Beehive after December 1988. All the Employees were thus recruited except Mr Mitchell and with that exception they all accepted Group 4's offer by the 12th December or within a few days thereafter, received their Group 4 uniforms in December and started work for Group 4 from the commencement of its contract with the Home Office. The exception, Mr Mitchell, actively sought other employment well before December 1988. Securicor received applications for references about him in August and November 1988. Mr Mitchell took up a training course with an Assurance Company on 6 January 1989 and started work with them 10 to 14 days later.The question whether or not the Employees were dismissed by Securicor largely turns on the negotiations between them between 6 September 1988 and the end of that year. There were the following five significant stages:(1) On 6 September 1988 Securicor promptly upon receiving notification from the Home Office that the contract was to end on 31 December 1988 wrote a letter to the affected staff including all the Employees. The letter stated "the last day of operations will therefore be the 31st December 1988" and continued as follows:
"Regretfully this places you in a potential redundancy situation.
Under the terms of the Memorandum of Agreement between the Company and the Union, every effort will be made to find suitable alternative employment.To this end, the Company and the Union are discussing this situation and you will be kept informed of developments."(2) On 14 September 1988 Mr Cowden, General Manager, Personnel, in the presence of Mr Weeden, Area Manager South-East, spoke to all staff at Gatwick, including the Employees. He spoke in accordance with a text which was before the Industrial Tribunal. The Industrial Tribunal found that he was endeavouring to "sell" to those present the advantages of staying with Securicor, compared with taking employment with Group 4 and that he referred to jobs being available within Securicor both locally and further afield and said that financial assistance would be considered if there was relocation.(3) After negotiations with the Union MATSA a five page letter with 7 pages of appendices, called before the Industrial Tribunal "a negotiated package document" and dated 20 October 1988, was sent to each of the Employees. It set out Securicor's proposals. Under the heading "Redundancy" it was stated to be Securicor's aim to retain in its employment as many as possible of its employees at (inter alia) Gatwick. The letter continued:
"c) At each individual interview, to be conducted jointly by Management and T.U.representative, staff will be asked as to what decision they have made as to staying with or leaving the Company.
d) For those who decide to stay, discussions will then be held to determine the alternative employment, its location and arrangements to be made accordingly.e) Those staff who indicate that they would prefer to leave will have their cases considered further and jointly by the Management and the T.U.in order to determine the whole question of the reasonableness of any alternative employment offered and the effect of its refusal upon redundancy pay."There were set out in the appendices job descriptions of available alternative employments together with detailed examples of the weighting proposals whereby pay would be increased in order to compensate for reductions of earnings in the new post. Finally, there was a list of 15 locations where it was stated that vacancies would be made available together with a statement of the jobs available at each such location. The total was 35 types of jobs in the various locations. Some were obviously aimed at employees at Heathrow, e.g. at Hayes and West Drayton. Others were equally clearly most suitable for employees based near Gatwick e.g at Redhill, Croydon and Salfords. Others were not particularly close to either e.g. Dartford and Newbury.All the Employees received this letter or a copy of it.(4) All the Employees were interviewed individually at Gatwick in the first fortnight of November 1988 by Mr Oatts, Securicor's Assistant Manager London and South-East, with the Union Branch Secretary present, save in one case where she was indisposed. Mr Oatts entered the names of five of the Employees in pages headed "Gatwick Redundancy" and three in pages headed "Gatwick Possible relocation" .(5) Securicor decided it was going to reject the requests which the Employees all made to it for redundancy payments and by a letter dated 12 December 1988 said (inter alia):
"Having regard for all the elements included in the comprehensive package put together with your Trade Union representatives, the whole range of employee benefits enjoyed within Securicor and the selection of alternative jobs we agreed to make available; the company, after further discussions with Trade Union officials, has decided that your request for both Statutory and Supplementary Redundancy has been rejected."
Job fact sheets were enclosed giving what was called a number of jobs available. It was also stated that, given the range of jobs offered and the fact that almost all employees affected by the loss of the Home Office contract could be relocated in an establishment close to their homes, Securicor considered:"..... the alternative employment offered to be more than suitable and reasonable within the meaning of the current Employment Legislations" sic.The letter went on:
"Accordingly, you are required to notify the company of your job selection by 5.00 p.m., on 23 December 1988, in order that arrangements may be made for the appropriate induction and training activities to take place during the extended trial period, as detailed in the agreed terms and that the compensatory elements also in those Terms may be actioned.
Should you not comply with this request and as a result, fail to report for duty on 3rd January 1989, then you will be deemed to have resigned from Securicor's employment, with effect from 31 December 1988."The Job Fact Sheets were those already sent as part of the negotiated package document of 20 October 1988, and the Terms referred to were the above-mentioned agreement between Securicor and MATSA.Three of the Employees did not receive the letter of the 12 December but they all except one, Mr Turnham, became aware of its contents and on the view we take of the matter nothing turns on the precise time and manner that they became aware of it. The other five Employees received it in due course of post.Several of the Employees wrote in asking for their applications for redundancy to be reconsidered and received exhortations to allow Securicor to assist them.None of the Employees was told to report to any particular place on 3 January 1989 but none of them asked where he was required to go. None of them did report for duty after 31 December 1988.The mobility clause was, the Industrial Tribunal found never mentioned at any stage before the hearing before the Industrial Tribunal when it was relied upon by counsel for Securicor. It was not even mentioned in Securicor's Notices of Appearance. The Industrial Tribunal stated, and we agree, that if an employer is going to rely on or avail himself of the benefit of a mobility clause in a situation of job or location changes, he must make his position clear in that respect. That was never done. This is the finding which is contained in the second part of the Industrial Tribunal's decision but which, in our view, is a highly material one also on the question whether the Employees were dismissed by Securicor which is dealt with in the first part of the decision.The Industrial Tribunal dealt with this first question by setting out the facts and referred to Doble v. Firestone Tyre and Rubber Co. Ltd. [1981] I.R.L.R.300 saying that the situation there was very similar to that which obtained in respect of the employees at the Gatwick Detention Centre. In Doble 's case the employer's board resolved that a factory would have to be closed on 15 February 1980 and the employee in question was told of this but he was also told that it was planned to maintain production until that date and that it was the employer's intention not to make anyone redundant until that date, that individual notices terminating employment would be sent out but that those plans would be kept under review. The employee got an offer of a new job elsewhere very soon and after failing to get an answer to his request for release from his employment gave a week's notice starting on Monday 12th December. He was held to have resigned rather than to have been dismissed. The original notification to the employee was held not to be a notice determining his employment since it was in terms only announcing a provisional decision. Doble 's case is clearly distinguishable from the present one in that there is no question here of any of the Employees having sent in a notice that they were leaving at any stage. On the other hand we accept that it lends support to the argument that the letter of the 6 September 1988 stating that there was then a provisional redundancy situation did not in itself amount to a notice terminating the recipient's employment on 31 December 1988. At that stage there was the prospect of a dismissal for redundancy but not a definitive decision to that effect. The authority referred to in Doble 's case Morton Sundown Fabrics Ltd. v. Shaw [1967] I.T.R. 84 , also alluded to by the Industrial Tribunal, is even further from the facts of this case in that there was no definite date set for the termination of the employee's contract. In Doble 's case it was pointed out that it does not follow from the proposition that a letter which does not specify a definite date for termination of employment cannot be a notice determining employment, that any letter which does mention a fixed date as a possible date for termination of employment does constitute such a notice. The rest of the letter as well as the date has to be looked at.Much closer to the present case and of greater materiality is the decision R.H. McCulloch Ltd. v. Moore [1967] 2 A.E.R. 290 where the employer wrote a letter saying:
"We regret that our contract with South Eastern Gas Board Sussex area terminates Apr 30, 1966: after this date we shall have no further work in the Sussex area, But we can offer you continuation of employment with similar conditions in the Reading/Aldershot area, East Midlands Area, Luton Area or Scotland."
There was a working rules agreement in force one of whose conditions read:
"At the discretion of the employer, an operative may be transferred at any time during the period of his employment from one job to another."
The employer sought to rely upon this to resist a claim to a redundancy payment. The Industrial Tribunal rejected that defence on the basis that there was to be implied a condition that the new employment was to be within an accessible distance from his current employment and that there was a custom to a similar effect. The Divisional Court approached the matter differently although it reached the same conclusion. Parker L.J. at p.292 said:
"The fact of the matter is that these employers did not seek to invoke the clause of the working rules agreement at all, and it may well be that they did not think it would entitle them to do what it suggested. Be that as it may, they did not invoke it. This is in my view a plain dismissal . . . ."
In our view that is authority for the proposition that the Industrial Tribunal in this case rightly enunciated that if an employer wishes to rely on a mobility clause he must make it clear that that is what he is doing.There are two quite different attitudes which an employer can take in a situation such as arose at the Beehive at Gatwick, of the closing down of a part of his business. The employer can invoke the mobility clause in the contract and require the employee to go to a new location or job, if the clause entitles him to so, whereupon no question of redundancy will arise. Alternatively, the employer can decide not to invoke the mobility clause and rely instead on alternative suitable offers of employment as a defence to claims to a redundancy payment. In the former example, the original employment continues, in the latter it ceases but is replaced in circumstances which, unless the employee unreasonably refuses the offer of suitable alternative employment, provide the employee with continuity of employment but relieve the employer of liability to make a redundancy payment. What the employer cannot do is dodge between the two attitudes and hope to be able to adopt the most profitable at the end of the day.In our view the Industrial Tribunal made an error of law in not applying the logic of its own views as to the mobility clause in considering the question whether Securicor dismissed the Employees. The only basis upon which the Employees could be said to remain employed by Securicor after 31 December 1988 was if Securicor was entitled to and did require them as a result of the mobility clause to take up other jobs with Securicor. That the Industrial Tribunal, rightly in our view, held did not happen. Securicor's attitude at least down to the sending of the letter of 12 December 1988 was to offer the Employees a choice between accepting alternative employment with Securicor and applying for redundancy which they might or might not get according to whether they had unreasonably refused suitable alternative employment. Redundancy in that context means and can only mean a redundancy payment. That is an attitude which is consistent and only consistent with the cessation of the original employment. It is inconsistent with the continuation of the original employment in a new location. It follows in our view that the Employees were dismissed by Securicor. We have in reaching this conclusion not so far taken into account the possibility of the Employees' employment coming to an end through frustration by the action of a third party, the Home Office, in terminating Securicor's contract to administer the Beehive. The Industrial Tribunal rejected an argument advanced on behalf of the Employees on this line on the ground that the existence of the mobility clause prevented the doctrine of frustration from applying. That may well be right but it is irrelevant in practical terms because frustration under s.93(1) of the 1978 Act is required to be treated as a termination of the contract by the employer. Accordingly if that is the correct analysis it does not avail Securicor.We therefore conclude on the findings of fact of the Industrial Tribunal that the Employees were dismissed by Securicor. The appeal is therefore allowed.The cross-appeal first challenges the finding that, assuming, as we have found to have happened, the Employees were dismissed by Securicor, the reason for that dismissal was redundancy. Securicor's case on this aspect is based entirely upon the mobility clause as providing the basis for the argument that the place where the Employees were employed was not limited to Gatwick but included all other places where they could be required to work so as to take the case out of s.81(2)(a) of the 1978 Act. It is not necessary to go into the question of the true construction of that provision because we do not consider that an employer who does not invoke a mobility clause can be heard to say that its mere existence entitles him to claim, after he has closed down the workplace where his employees were employed, that he might have required them to work elsewhere, although he did not effectively do so, and therefore they were not redundant. In our view the Industrial Tribunal was right to reject that argument.The next issue raised by the cross-appeal is whether the Industrial Tribunal was right to reject Securicor's defence based on the Transfer Regulations that there was a relevant transfer of undertaking so as to shift onto Group 4 the responsibilities attached to the pre-1989 service of the Employees and give continuity of employment. The Industrial Tribunal's analysis of the situation was that the relevant undertaking was that of the Home Office which entered into successive contracts with Securicor and Group 4 concerning its operation. Neither the contract between the Home Office and Securicor or that between the Home Office and Group 4 was adduced in evidence before the Industrial Tribunal. Where successive contractors are engaged by a person who owns premises upon which an enterprise is conducted it will in our view be a question of fact whether or not in all the circumstances there is a transfer of undertaking from the first contractor to the second. No absolute hard and fast rule can be laid down. An example where it was held that there was such a transfer from one contractor to another to which we were referred was Expro Services v. Smith [1991] I.C.R.577 where the Ministry of Defence, which had operated catering services at an officer's mess, put its operation out to tender and Expro Services was the successful tenderer, paying approximately £1m over three years for the right to prepare and serve food and beverages in the mess over that period. The food and ingredients were supplied by the Ministry of Defence. The report does not say so in terms but it seems an inevitable implication that the caterers were to keep the receipts from sales. The employee was employed successively by the Ministry of Defence and the caterers. She was held by the Employment Appeal Tribunal, reversing the Industrial Tribunal, not to have continuity of employment because the Ministry of Defence's operation of the catering services was not in the nature of a commercial venture and was therefore specifically excluded from the definition of "undertaking" for the purposes of the Transfer Regulations. See Reg.2 It was submitted to us that the inference to be drawn from the Employment Appeal Tribunal decision was that there was a transfer of an economic unit but because immediately before the transfer it was not in the nature of a commercial venture, and only because of that feature, the transfer fell outside the Transfer Regulations. We accept that inference but even so the decision is only authority for the proposition that a switch of a business from an owner of premises and business conducted upon it to a contractor who takes over the business but not the premises is capable of being a transfer of undertaking within the Transfer Regulations. Whether there is such a transfer depends on whether an economic unit has passed to the Transferee and that is a question of fact depending on all the circumstances and is not concluded by the fact that one or more employees do the same work in the same place both before and after the relevant change. It is to be noted in passing that even the Industrial Tribunal in Expro Services v. Smith , supra, which held that there was a transfer of undertaking within the Transfer Regulations said:
"We distinguish between the situation where one contract comes to an end and a new contract is thereafter awarded to a different contractor. In that situation, we would accept that the outgoing contractor owns nothing which is capable of being transferred or put another way there is no recognisable business capable of being transferred."
Two examples of the latter situation, one relatively old, the other relatively modern, are contained in decisions to which we were referred. The relatively old decision was Port Talbot Engineering Ltd. v. Passmore [1975] I.C.R.234 where there was a succession of firms contracting with the Steel Company of Wales to maintain and service their plant. Griffiths J. sitting in the Queen's Bench Division held, on appeal from an industrial tribunal that there was no transfer of the ownership of a business for the purposes of the Redundancy Payments Act, 1965, or the Contracts of Employments Act, 1972 , both of which in slightly different wording applied where there was a change in the ownership of a business. Griffiths J. applied the test formulated by Widgery L.J. in Kenmir Ltd. Frizzell [1968] 1 W.L.R. 329 at 335.
"In the end the vital consideration is whether the effect of the transaction was to put the Transferee in possession of a going concern the activities of which he could carry on without interruption"
A change of contractors was held in that case not to satisfy that test.The relatively recent decision in this field was O'Connor v. Brian Smith Catering Services E.A.T. 18 March 1992 where an employee who had been employed by caterers who operated catering services under contract with the Lord Chancellor's Department at Oxford Crown Court was taken on by a new firm of caterers who got the contract as a result of a successful tender. On an analysis of the facts of that case it was held that the decision of the Industrial Tribunal, which was upheld as a conclusion of fact, was that the business in question was not vested in the outgoing caterer but in the Lord Chancellor's Department. We would accept that that decision is not one that there can never be a transfer of undertaking within the Transfer Regulations between successive contractors but whether there is one or not is a question of fact for the tribunal of fact.We were referred to decisions of the European Court of Justice, Foreningen af Arbejdsledere I Danmark v. Daddy's Dance Hall A/S [1988] IRLR 315 . ("the Daddy's Dance Hall case"), Landsorganisationen I. Danmark v. Ny Molle Kro [1989] I.R.L.R.37 ("the Ny Molle Kro case") and P.Bork International A/S. v. Foreningen af Arbejdsledere I. Danmark [1989] I.R.L.R.41 ("the Bork" case). The Industrial Tribunal was referred to and discussed the Ny Molle Kro and Bork cases quoting the Article of the European Directive with which those decisions were concerned viz. para 1 of the Directive 77/187/E.E.C. which reads
"This Directive shall apply to the transfer of an undertaking, business or part of a business to another employer, as a result of a legal transfer or merger."
In all three cases the European Court has emphasised the need to identify an economic unit or entity and to see whether its operation is continued by the new employer. The fact that the change from one employer to another goes through more than one stage as with the forfeiture of a lease and a regrant to a new lessee with a short interval where the business ceased to function ("the Bork case") does not prevent the transaction from coming within the Directive. But in Bork's case the European Court of Justice said this at p.43 paragraphs 14 & 15
"14. It follows that when the lessee in his capacity as employer loses the capacity at the end of the lease and a third party subsequently acquires this capacity under a contract of sale concluded with the owner, the resulting transaction could fall within the scope of the Directive, as defined in Article 1(1). The fact that, in such a case, the transfer takes place in two stages inasmuch as the undertaking is initially re-transferred by the lessee to the owner, who then transfers it to the new owner, does not preclude the operation of the Directive provided that the undertaking in question retains its identity, which is the case where there is an economic entity still in existence, the operation of which is in fact continued or resumed by the new employer carrying on the same or a similar business.
15. In order to determine whether those conditions all exist, it is appropriate to take account of all the factual circumstances surrounding the transaction, which may include in particular whether the tangible and intangible assets have been transferred, as well as the major part of the staff of the undertaking, the degree of similarity between its activities before and after the transfer and the duration of any period of stoppage connected with the transfer."We also take into account the fact that in the Daddy's Dance Hall case , supra, the European Court of Justice at p. 317 para.9 said
"The Directive therefore applies as soon as there is a change, resulting from a conventional sale or from a merger of the natural or legal person responsible for operating the undertaking who, consequently, enters into obligations as an employer towards the employees working in the undertaking and it is of no importance to know whether the ownership of the undertaking has been transferred."
That was said in the context of a question whether the above quoted Article from the Directive had to be interpreted as meaning that it applied in a situation where, upon the termination of a non-transferable lease, the owner of the undertaking granted it to a new lessee who continued to operate the business without interruption with the same staff who had previously been dismissed upon the expiry of the first lease. The unimportance of the transfer of ownership has therefore to be understood as referring to the absolute ownership of the premises and undertaking because on any view there was a succession with regard to limited ownership and various assets of the business did pass . Later at para.10 the European Court applied the same yardstick as mentioned above in the phrase:

"So long as the economic unit retains its identity."

In the present case we can see no error in the Industrial Tribunal's decision on this issue. They considered carefully all the circumstances and concluded that the economic unit was that of the Home Office and not that of Securicor and Group 4. It cannot in our view be successfully contended that there was no factual material upon which such a conclusion can be based and we see no basis for interfering with the decision.Finally, there was the issue raised by the cross-appeal whether the Industrial Tribunal erred in law in finding that, with the possible exception of Mr Evans, there was no offer of suitable alternative employment. This is essentially an issue of fact. The Industrial Tribunal took each case and considered it individually. No useful purpose would be served by our doing likewise for that is a function of the fact finding tribunal. We should however deal with the submission made to us that Securicor could not be in a worse position as a result of offering a multiplicity of suitable jobs rather than a single one to each of the Employees. That is by itself of course true, but in our view it misses the point which was that the Industrial Tribunal concluded on the facts that no offer capable of acceptance was made. A multiplicity of insufficiently specific offers may well not be an adequate substitute for an offer of a single suitable alternative employment. The industrial members of this Tribunal consider that there was ample material upon which the Industrial Tribunal could conclude that not enough was done by the employer Securicor. For example only one, as opposed to the anticipated two, interviews took place. Here again we see no ground upon which to interfere.Mr Evans' appeal was stayed before us because he had unfortunately died since the date of the Industrial Tribunal decision and no specific instructions had been received from his personal representatives so the issue regarding his case, whether he unreasonably refused the offer made to him strictly does not arise but it may assist if we say that we have not been able to see any basis upon which a realistic distinction could be made between his case and that of the other Employees.The cross-appeals will be dismissed.