Highams Park School v Odger & Ors [1994] UKEAT 519_93_2101

EAT
Highams Park School v Odger & Ors
[1994] UKEAT 519_93_2101 · 1994-01-21
MR JUSTICE MUMMERY (PRESIDENT) Introduction The question in this case is whether the employment of three school cleaners (Mrs Odger, Mrs Lamprell and Mrs Crudgington) was transferred from the London Borough of Waltham Forest (the Council) to the Governors of Highams Park School (the Governors) on that school's acquisition of Grant Maintained Status on 1st September 1991 pursuant to the provisions of the Education Reform Act 1988 (the 1988 Act).The dispute has generated a clutch of conflicting contentions which may be summarised as follows:(1) The Governors They contend that none of the school cleaners became their employees. The cleaners all remained employees of the Council which accordingly bears responsibility for dismissals which have taken place.(2) The Council It contends that none of the school cleaners remained its employees after the date of transfer (1st September 1991). Thereafter the cleaners became employees of the Governors, either by virtue of S.75 of the 1988 Act or by virtue of the Acquired Rights Directive 77/187/EEC.(3) The Cleaners Caught in the cross-fire of the conflict between the Governors and the Council, the cleaners' case is that -(a) either there was a transfer of their employment from the Council to the Governors, so that the Governors bear the responsibility for dismissals; or(b) there was no transfer of employment from the Council to the Governors, in which case they are entitled to succeed against the Council, as there was no qualifying reason for their dismissal under the Employment Protection (Consolidation) Act 1978.The Industrial Tribunal held at London (North) heard claims brought against the Governors and the Council by the Cleaners for unfair dismissal. After a four day hearing the Industrial Tribunal held in its Decision, notified to the parties on 20th May 1993, that -(a) the Cleaners were dismissed by the Governors;(b) the decision to dismiss the Cleaners was not by reason of redundancy and was unfair.The Governors were dissatisfied with that decision. They appealed by Notice of Appeal dated 30th June 1993 on the ground that the Industrial Tribunal erred in law in its construction of S.75(1)(b)(i) of the 1988 Act and in concluding that the Cleaners' contracts of employment were transferred from the Council to the Governors by virtue of the Acquired Rights Directive.On this appeal, which we shall dismiss on the ground that there was no error of law in the Reasons of the Industrial Tribunal, the interested parties took up their positions as summarised.

The factual background

Although the Full Reasons for the decision run to 14 closely typed pages plus a schedule of 21 authorities considered by the Tribunal, it is possible for the purposes of this appeal to state the relevant facts and conclusions more briefly.(1) The Cleaners were employed by the Council as school cleaners, Mrs Odger from 14th April 1986, Mrs Crudgington from 15th November 1979 and Mrs Lamprell from 22nd February 1977.(2) In 1989 the Direct Services Organisation (DSO), a department of the Council, secured a contract for cleaning the school under the Competitive Tendering Procedure.(3) The school was on a site called the Higham's Park Site which comprised not only the school, but also a Youth Centre, a Primary School and two Nursery Schools.(4) Mrs Odger and Mrs Crudgington did not work at all outside the Higham's Park Site. Except for occasional work in the school holidays in the nursery on the site, they worked only at the school.(5) Mrs Lamprell spent 60% of her time in normal cleaning work at the school and 40% of her time on charge-hand duties, some of which were performed on other areas of the site apart from the school. She was away ill from April 1989 onwards, but was paid by the Council up to 29th August 1991.(6) On 19th December 1991 the Personnel Unit of the Council supplied each of the cleaners with new contracts of employment.

In a covering letter sent to each cleaner it was stated -

"The terms and conditions of employment for staff employed in the Building, Cleaning, Direct Services Organisation (DSO) have been negotiated with the Trade Unions. I am pleased to offer you employment in the DSO with effect from 1st January 1990 and enclose your new contract of employment, further particulars of employment and a job description. The contract should be signed by you and returned within 10 working days to the Personnel Unit at the above address.
If you have any queries relating to the attached documents, please see your supervisor in the first instance. On behalf of the Acting Director of Works, I should like to thank you for your work in the past and I trust you will provide your full cooperation and best efforts to ensure the continued survival of the Building, Cleaning DSO."

The contract is headed

"London Borough of Waltham Forest

Works Department

Contract of Employment (Manual and Craft Employees)" .Each contract provides that the date of commencement of employment is 1st January 1990. In the case of Mrs Odger and Mrs Crudgington, they are appointed to the position of Cleaning Operatives and their place of reporting for duty is the Higham's Park Site. In the case of Mrs Lamprell, she was appointed to the position of Charge-hand Cleaner and her place of reporting for duty was Higham's Park. The contract contains details of wages and normal hours of work Clause 12 of each contract provides -
"As an employee of the Building, Cleaning Direct Services Organisation you may be required to cover work on other sites local to your place of employment."
(7) Mrs Odger and Mrs Crudgington worked continuously solely at the school. The few hours they spent working outside the school were de minimis and not of great importance. The Tribunal therefore concluded that their employment was transferred to the Governors under S.75(1)(b)(i) of the 1975 Act.(8) The principle of de minimis could not be applied to Mrs Lamprell's employment which was not, accordingly, transferred to the Governors under the 1988 Act. The Tribunal held, however, that Mrs Lamprell's contract of employment was transferred to the Governors, as were Mrs Odger's and Mrs Crudgington's, under the provisions of the Acquired Rights Directive. The Tribunal held that there was a legal transfer of the school, which was funded from the public purse and subject to governmental control, whether it was part of the Local Education Authority or was grant maintained. It was, therefore, an "emanation of the State" within the meaning of the Directive. There is no appeal against that part of the decision.(9) The Tribunal also held that the Cleaners performed an integral function in the running of the school. The school had to be cleaned. The DSO supplied the cleaners. The DSO was part of the Council. The school, and the cleaning activities with it, were transferred from the Council to the Governors. The cleaning activities were continuous and the cleaners who performed those services were in continuous employment. The Tribunal therefore held that the Acquired Rights Directive applied to the transfer from the Council to the Governors the employment of all three Cleaners.(10) The Cleaners were dismissed when they were not appointed to the position of cleaners in the school on the transfer to the Governors. Mrs Odger and Mrs Crudgington turned up for work at the school, but no work was provided for them and they were sent home. Mrs Lamprell submitted a sick note which was not accepted. The return of the sick note amounted to a dismissal of Mrs Lamprell pursuant to S.55(2)(a) of the 1978 Act.

It is common ground on this appeal that -

(a) If the Cleaners' contracts of employment were transferred to the Governors, the dismissals of the Cleaners were unfair.(b) If the provisions of the Acquired Rights Directive apply to the transfer of the Cleaners' contracts, those provisions are directly enforceable by the Cleaners. It will, therefore, be unnecessary on this appeal to give separate consideration to the effect of the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 made to implement the provisions of the Acquired Rights Directive.

Section 75 of the 1988 Act

The primary contention of the Governors is that the Industrial Tribunal misconstrued and misapplied S.75 of the 1988 Act and erroneously came to the conclusion that the Cleaners' contracts of employment were transferred from the Council to the Governors by virtue of those provisions.The 1988 Act is legislation on a large scale. The annotated Act in Vol.15 of Halsbury Statutes (4th Edition) occupies 300 pages of 238 sections and 13 schedules. Chapter IV of the Act is concerned with Grant-Maintained Schools. Section 75 is in a group of five sections (ss.74-78 inclusive) concerned with the transfer of property and staff to the governing body of the Grant-Maintained school on the incorporation of the school. Section 74 relates to the transfer of property. Section 75 relates to the transfer of staff.It is important to analyse the structure of the scheme for the transfer of staff as set out in S.75.(1) Where the section applies to a person, the contract of employment between that person and the former employer has effect from the transfer date as if originally made between him and the governing body of the grant-maintained school. All the former employers' right, powers, duties and liabilities under or in connection with such a contract are by virtue of the section transferred to the governing body of the grant-maintained school on the transfer date: see subsections (6) and (7).(2) It is next necessary to refer to the first four subsections of S.75 in order to decide who are the persons to whom S.75 applies. It is only contracts between those persons and the former employer that are transferred by the section. Subsection (1) identifies the principal persons to whom the subsection applies. It applies to persons who, immediately before the transfer date in relation to a grant-maintained school which is then an aided school, are employed by the governing body of the school. Section 75(1)(a). It is common ground that that provision does not apply to the Cleaners. The dispute in this case centred on the next provision, S.75(1)(b)(i). That provides that S.75 applies to any person who -
"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;"
(3) It is is common ground that none of the following subsections relate to this case.There is no dispute that the Council was the Local Education Authority by whom the school was maintained immediately before the transfer date. By S.235(7) the 1988 Act is to be construed as one with the Education Act 1944. The interpretation section of the 1944 Act (S.114(1) defines "Local Education Authority" as meaning, in the circumstances of this case, the Council.It appears from those provisions that the statutory question arising from the facts of this case is: Were the Cleaners employed by the Council to work solely at the school? The Industrial Tribunal answered that question in the affirmative in the case of Mrs Odger and Mrs Crudgington. The Governors submit that that answer to the statutory question is erroneous in law.

The Governors' submissions

Mr Sendall eloquently expounded a clear, well structured argument supported by a written outline. He submitted that the Governors' case was that none of the Cleaners was "employed to work solely" at the school. His argument in support of this submission may be summarised as follows:(1) The Industrial Tribunal misunderstood the administrative structure of the Council. The Council is divided into a number of entirely separate parts which are comprised of separate undertakings or parts of undertakings. The Local Education Authority and DSO are entirely separate undertakings or separate parts of an undertaking. They are regarded as separate for the purposes of compulsory competitive tendering. Special accounting requirements require them to account separately and produce their own balance sheets and they are obliged to reach financial objectives: see Local Government Act 1988, ss.6-10).(2) As the LEA, the Council does not employ any staff to clean its schools. The cleaning of schools is put out to tender. It is a quirk of fate that the cleaning contract for this school was won by the Council's DSO. If it had not been won by the DSO it would have been impossible for any of the cleaners who regularly cleaned the school to be transferred to the Governors, because they would not have been employees of the Council.(3) The cleaning of the school was entirely controlled by the DSO, not by the LEA. The LEA had a contract for cleaning services under which the DSO undertook a certain number of hours per week of cleaning at the school. Neither the school nor the LEA had any control over the identity, numbers, place, hours, terms or conditions or manner in which the cleaners undertook their work. Those were all matters controlled by the DSO.(4) The underlying purpose of S.75 was to ensure the transfer to the Governors of those employees of the Council who were "part and parcel" of the school. That appeared from the statutory requirement that the person to whom S.75 applied should be "employed to work solely at the school". The Cleaners were not part and parcel of the school or of the LEA. They were part and parcel of the DSO. They would remain employees of the DSO if for any reason the arrangements for cleaning between the LEA and the DSO terminated.(5) The contracts of employment made it clear that the cleaners were not employed to work "solely" at the school. The contracts only identified a "place of reporting for duty". The conditions of service made it clear that, although the appointment was made to a particular post, the Council could transfer the employee within the authority and require them to cover work "on other sites local to your place of employment". The Cleaners were therefore employed to work not only at the school but also at any sites local to the school.(6) The place of actual deployment of the Cleaners is irrelevant. It would not matter if they spent 100% of their time in fact working at the school and had never been called on to work elsewhere. The crucial question is whether or not they were " employed to work solely " at the school, not whether they were employed solely at the school in the sense of actually working there. In the case of each of the Cleaners they could be contractually required to work at places other than the school and from time-to-time they were in fact required to do so and did work elsewhere.In those circumstances the Industrial Tribunal erred in law in concluding that, on its true construction, S.75(1)(b)(i) as applied to the facts of the case, the Cleaners were employed work solely at the school. They remained employees of the Council.The above submissions were supported by reference to the decision of the Employment Appeal Tribunal in Northern General Hospital National Health Service Trust v. Gale [1993] ICR 638. The EAT held that, on the construction of similar provisions in the National Health Service and Community Care Act 1990 (S.6(1)(a)), a nurse was not "employed by a Health Authority to work solely at" a particular hospital immediately before it became a NHS Trust, unless the nurse's contract required him or her to work solely at that hospital. The contract of employment with the Area Health Authority had not required the nurse to work exclusively at one hospital. It had a mobility clause. Accordingly the contract of employment with the Health Authority was not transferred to the Hospital Trust. The Tribunal said in its decision at p.642G:
"We believe that the critical factor for the application of S.6(1)(a) is whether an employee's contract required him on the appropriate day to work solely at the relevant hospital. In our view, the applicant's contract did not."

At the end of the decision the Tribunal expressed the view that

"...the absence of statutory continuity of employment between authorities and trusts is unfair to those nurses who take employment in trust hospitals within the area of the authority by whom they are trained and may even operate as a significant disincentive to their taking such employment. We hope that the position will be reconsidered."
This Tribunal was informed that an appeal against that decision is likely to be heard by the Court of Appeal in March this year.

The submissions of the Cleaners and the Council

Mr Langstaff, on behalf of the Cleaners, and Mr Radevsky, on behalf of the Council, joined forces in making submissions contrary to those of the Governors. The essence of the submissions was that the Industrial Tribunal had not erred in law in concluding that the cleaners were employed solely at the school immediately prior to 1st September 1991. They emphasised that the Tribunal found as a fact that Mrs Odger and Mrs Crudgington worked solely at the school and they would only fall outside the phrase "employed to work at the school" if their contracts of employment were such, that on their proper construction,(a) they were employed at a place other than the school and(b) regard was placed upon the terms of the contracts rather than on the factual position. It was submitted that the contracts could not be properly construed as contracts to work at any place other than the school. They also submitted that the use of the word "employed" in S.75 should not be equated to the expression "contracted as an employee". In the context of the 1988 Act the word "employed" was to be equated to "occupied in work" or "engaged in work" rather than "contracted to work". In so far as Mrs Odger and Mrs Crudgington had worked elsewhere that occupied less than 3% of their time and the Industrial Tribunal was entitled to regard that as de minimis.On behalf of the Council Mr Radevsky made a separate argument that the case of Gale should not be followed as it was wrongly decided. It was subject to an appeal shortly due to be heard in the Court of Appeal. It is unnecessary, however, for this Tribunal to accede to that submission or to go into any further detail on the submissions made on behalf of the Cleaners and the Council. The reason for this is that it emerged that the researches of Mr Langstaff's pupil over the mid-day adjournment on the second hearing day revealed for the first time what was previously unknown to the legal advisers, the parties and to the Industrial Tribunal. The discovery was that S.235(3) conclusively answers the disputed question of construction of S.75 in favour of the Cleaners and the Council. Section 235(3) provides as follows:
"For the purposes of this Act - (a) A person employed by a local education authority is to be regarded as employed to work at a school or other institution if his employment with the Authority for the time being involves work at that school or institution; and (b) Subject to section 75(2|) of this Act a person employed by such an authority is to be regarded as employed to work solely at a school other institution if his only employment with the authority (disregarding any employment under a separate contract with the authority) is for the time being at that school or institution."

On the facts found by the Industrial Tribunal it is clear that -

(1) Mrs Odger and Mrs Crudgington were employed by the Council (as Local Education Authority).(2) The employment of each of them with the Council for the time being involved work at the school.(3) Both are to be regarded as employed to work solely at the school since their only employment with the Council was for the time being at that school.That is the short simple answer to the question of construction on S.75.

The Acquired Rights Directive

The purpose of the Directive is to provide for "the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded". Article 1 provides -
"This directive shall apply to the transfer of an undertaking, business or part of business to another employer as a result of a legal transfer or merger."

Article 3(1) provides -

"The Transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer within the meaning of Article 1(1) shall, by reason of such transfer, be transferred to the transferee."
The Industrial Tribunal held that the Grant-Maintained school was "an emanation of the State" and that the Directive has direct effect upon emanations of the State. There is no appeal against that ruling. The Industrial Tribunal then held that the Articles quoted above applied to protect not only Mrs Odger and Mrs Crudgington but also Mrs Lamprell. It was submitted on behalf of the Cleaners and the Council that the Industrial Tribunal had not erred in law in holding that, by virtue of Articles 1 and 3 of the Directive, the rights and obligations arising under the Cleaners' contracts were transferred from the Council to the school. On behalf of the Council Mr Radevsky submitted that the Tribunal had found as a fact that there had been a legal transfer of the school from the Council to the Governors and that the Cleaners performed an integral function in the running of the school. The school had to be cleaned. The DSO supplied the cleaners. The DSO was part of the Council. The cleaning activity was part of the school transferred. The important point was that the Tribunal held that there had been transferred not only the buildings and equipment but also the staff who worked at the school. The school had been transferred as a going concern by the Council which also employed the staff who worked at the school, including both teachers and cleaners. It was irrelevant that the Council employed the Cleaners through the medium of the DSO. He relied, in particular, on the relevant factors identified in the decision of the European Court of Justice in Spijkers v. Gebroeders Benedik Abattoir CV [1986] ECR 1119 at 1128-9. There was no appeal to this Tribunal against the facts which had been found by the Industrial Tribunal. There was no error of law. Further, this Tribunal should bear in mind that, as emphasised in decisions of the European Court of Justice, effect must be given to the objective of the Directive, namely to safeguard employees' rights.In our judgment, there was no error of law on the part of the Industrial Tribunal in relation to the Directive. We reject the submissions made on behalf of the Governors as flawed by their misplaced emphasis on the separate nature of the undertaking of the DSO. Mr Sendall submitted, on behalf of the Governors, that prior to the acquisition of Grant-Maintained status the school was either an undertaking in its own right or was part of the undertaking of the LEA. Whichever was the position, the school was certainly a separate undertaking or part of an undertaking from the DSO. This submission rested on the wider submission that the Council consists of a large number of separate undertakings and each of the undertakings are separated into many parts of an undertaking. The Industrial Tribunal, it was submitted, failed to appreciate that the LEA function of the Council and the DSO function of the Council are entirely separate undertakings or are separate parts of the Council's undertaking. Mr Sendall emphasised the separateness of the DSO. The business of the DSO was to contract-out employees to clean buildings operated by some other entity, whereas the business of the LEA was to provide schools and education. The only undertaking, or part of an undertaking, transferred to the Governors was the school itself and the provision of education at it. There had been no transfer of the cleaning business of the DSO of which the Cleaners formed part. Mr Sendall contended that the Cleaners were employed in the DSO and not in the part of the undertaking transferred, namely the school. It was the DSO which provided the "organisational framework within which their employment relationship took effect"; see Botzen v. Rotterdamshe Droojdok [1986] CMLR 50 . The Council, as the Local Education Authority, and the school had no control over the Cleaners, whether as to their identity, their numbers, their place or hours of work or the terms and conditions under which they work or the manner in which they did their work. They were all the exclusive province of the DSO. The services which the Cleaners provided at the school were part of the separate economic undertaking, namely the DSO and there had been no form of transfer from the DSO to the school.We do not accept those submissions as disclosing any error of law on the part of the Tribunal. The Tribunal found facts in relation to the legal transfer of the undertaking and the nature of the undertaking transferred. Those findings of fact cannot be challenged on appeal. There was no error of law on the part of the Industrial Tribunal in concluding that, on the transfer from the Council to the Governors, there was a transfer of an undertaking which carried with the Council's rights and obligations arising from the contract of employment which, at the date of the transfer, it had with the Cleaners. The organisation of the Cleaners as part of the DSO did not affect the position that the school was part of the undertaking of the Council, as a LEA, and the Cleaners were employed by the Council to clean the school buildings transferred.For those reasons we shall dismiss the appeal on both points.