AEEU v GEC Alsthom ESL [1996] UKEAT 779_95_0307

EAT
AEEU v GEC Alsthom ESL
[1996] UKEAT 779_95_0307 · 1996-07-03
MR JUSTICE MUMMERY (PRESIDENT): This is an appeal by the Amalgamated Engineering & Electrical Union ("the Union"), against the decision unanimously reached by the Industrial Tribunal held at Reading on 15 May 1995. The Respondents to the application by the Union, and to this appeal, are GEC Alsthom ESL ("GEC").The Extended Reasons for the decision were sent to the parties on 13 June 1995. They explained why the Union's application to the Tribunal under Regulation 11 of the Transfer of Undertakings Regulations 1981 failed. The Union served a Notice of Appeal on 20 July 1995. The Respondents served an answer on 11 August. That was later amended on 29 February 1996.The case at the Industrial Tribunal was argued on behalf of the Union by a Representative, Mr Wheaton. It was argued by Mr Robertson of the ECIA, on behalf of GEC. On this appeal we have had the benefit of excellent arguments from Mr Carr, on behalf of the Union, and Mr Linden, on behalf of GEC.An appeal to this Tribunal is limited to questions of law arising from the decision of an Industrial Tribunal. It is our function to decide appeals which raise legal questions. It is not our function to decide the facts of the case. That is the exclusive function of the Industrial Tribunal.Against that background we have examined this decision. The Union's claim in the Originating Application presented on 24 December 1994 was a simple statement in Box 10 of the IT1 form:
"GEC have a contract for Messrs.Joint European Torus (JET) at Culham Oxfordshire. [We shall refer to that as JET Joint undertaking]
They recently dismissed as redundant 13 workers and consulted with me as representative of the Signatory Union on the question of redundancy only.No consultation took place as per the terms and conditions to be set for employment with sub contractors.

This is in breach of the transfer Regulations Sections 10 & 11."

Regulation 11 provides:
"(1) A complaint that an employer has failed to inform or consult a representative of a trade union in accordance with Regulation 10 above may be presented to an industrial tribunal by that union."
That regulation gives the Tribunal jurisdiction to hear this case.Regulation 10 imposes the duty to inform and consult trade union representatives in relation to a relevant transfer. The relevant parts of the Regulations provide:"(1) In this Regulation and Regulation 11 below "an affected employee" means, in relation to a relevant transfer, any employee of the transferor or the transferee (whether or not employed in the undertaking or the part of the undertaking to be transferred) who may be affected by the transfer or may be affected by measures taken in connection with it; and references to the employer shall be construed accordingly.(2) Long enough before a relevant transfer to enable consultations to take place between the employer of any affected employees of a description in respect of which an independent trade union is recognised by him and that union's representatives, the employer shall inform those representatives of__ [then there are specified under (a), (b), (c) and (d) certain matters which it is not necessary to repeat for the purposes of deciding this appeal](5) Where an employer of any affected employees envisages that he will, in connection with the transfer, be taking measures in relation to any such employees of a description in respect of which an independent trade union is recognised by him, he shall enter into consultations with the representatives of that union [with a view to seeking their agreement to measures to be taken].

(6) In the course of those consultations the employer shall__

(a) consider any representations made by the trade union representatives; and(b) reply to those representations and, if he rejects any of those representations, state his reasons."The case brought by the Union was formulated by Mr Wheaton, the Union official, and was contested by GEC. In the Notice of Appearance dated 6 February 1995, they set out the facts upon which they relied. They said that:
"The Respondent held a single contract to maintain and install equipment at the joint European Torus ("JET") site. As a result of a competitive tendering process initiated by JET in May 1994 this work was split into two separate contracts. The Respondent tendered for both contracts but was only awarded one of them. As a result the Respondent lost a significant amount of work and consequently 14 of its employees on the JET site were given notice of dismissal for redundancy. The Respondent consulted fully with the recognised trade union on these redundancies and selection for redundancy was strictly in accordance with the requirements of the National Agreement. The second contract was negotiated wholly by JET with a number of employment agencies who then became responsible for supplying labour on demand for the JET site. The Respondent had informed the recognised union during redundancy consultations that JET would seek to recruit further labour as required via the to be contracted employment agencies. Of the 14 individuals made redundant by the Respondent 13 are now working on the JET site having been offered this work through two employment agencies. Of this number 12 were recruited through Roxborough Engineering (one of the employment agencies), of this 12, it is understood that 8 or them work on the JET site on a self-employed basis."
In those circumstances GEC deployed these defences to the claim by the Union. First, they denied that there was a transfer of an undertaking and that divided into two sub-points: they denied there was an undertaking within the meaning of the 1981 Regulations , and if, which they denied, there was an undertaking, they denied that there was a transfer of the undertaking. They are the points on which argument was addressed to the Tribunal. Another point was taken in paragraph 4 of the IT3:
"If, which is denied, there was a transfer of an undertaking there were special circumstances which made it not reasonably practicable for the Respondent to consult with the recognised trade union within reg 10 of TUPE. At the time of the alleged transfer there was no identifiable transferee. The Respondent contends it was therefore not possible to provide information and consult with the recognised union within reg 10 of TUPE where there was no identifiable transferee."
Those were the grounds on which GEC denied any breach of Regulation 10.The Tribunal heard evidence from only one witness, Mr Ward, on behalf of GEC. A bundle of documents was produced R1. We have been referred to some of the contractual documents in that bundle.It is important to note at this point a fact, not mentioned in the decision of the Industrial Tribunal, and on which light was only thrown during the course of argument on this appeal, that there are other proceedings in the Industrial Tribunal which have been stayed, pending the appeal by the Union against the Tribunal's decision that there was no transfer of an undertaking. Those other proceedings are brought by individuals, made redundant at the JET Joint Undertaking site, against GEC claiming unfair dismissal. In those claims they state that they wish to join the transferees under the alleged transfer of an undertaking. We have been shown examples of two of the Originating Applications. In one case brought by Mr Roger Nicholson, he has joined, as Respondents to his claim, (which includes a Wages Act claim), GEC Roxby (which we understand to be a reference to Roxborough Engineering) and the JET Joint Undertaking at Culham. Mr Neal Oglesby has also brought an Originating Application. That was presented on the same date as Mr Nicholson's, 3 March 1995. He names as the Respondents to his claim of unfair dismissal and Wages Act claims, GEC Benney's, (which we take as a reference to another employment agency) and the JET Joint Undertaking (which he says is at Abingdon).Their claims, made in standard form, are in these terms:
"I was made redundant by Messrs.GEC but was immediately re-employed by another contractor. The terms and conditions of employment with the new contractor are on inferior terms and conditions to those pertaining to the employment with GEC.
I believe that this is outwith my rights set out in the 1981 transfer regulations.The employer to whom I've been transferred is offering inferior terms and conditions to those that the transferor applied. I therefore make a wages act claim for my wages to be paid as per the previous contract of employment."Mr Nicholson added in manuscript rough calculations of his claim. Both of them ticked in Box 11 that they seek reinstatement, to carry on working in their old job as before. They are also seeking compensation.Those originating applications were produced to us during the course of the hearing as examples. As this case appealed before us is only concerned with the dispute between the Union and GEC, no-one today represents either the employment agencies or the JET Joint Undertaking.We have been shown an IT3 responding to Mr Oglesby's claim, in which GEC take a preliminary point that the claim is made out of time. The IT3 sets out in numbered paragraphs the defence, referring to the facts about the JET Joint Undertaking site, denying that there was a transfer of an undertaking; denying that Mr Oglesby was dismissed by reason of a transfer; and raising the question that, if he was dismissed by reason of a transfer, that dismissal was for economic, technical, or organisational reasons, namely redundancy. In having lost part of the JET work, there was a genuine reduction in GEC's requirement for employees to work on the JET site. It is also argued that the dismissals were reasonable in all the circumstances, as consultation took place with recognised unions. The redundancy selection exercise was carried out in accordance with the relevant collective agreement and GEC made reasonable attempts to find Mr Oglesby alternative work. When alternatives could not be found within GEC's business, he was told that there might be work on the JET site, if he registered with one of the "to be contracted employment agencies". As to the Wages Act claim, it was contended that that was a matter which solely related to the second Respondents, Benney Electronics, one of the employment agencies.We note those proceedings because we have reached the conclusion that this appeal should be allowed with directions affecting those other proceedings. There is an error of law in the Extended Reasons for the decision that there was no transfer of an undertaking. It is unfortunate that this case between the Union and GEC was decided ahead of, and separately from, the other cases brought by individual applicants against GEC and the alleged transferees, which raise a number of questions including a crucial question on this case, whether there was a transfer of an undertaking.It is regrettable that neither the parties, nor the Industrial Tribunal, considered consolidating all these cases and hearing them together with both evidence and legal argument. The order we propose to make on this appeal is that the appeal should be allowed; that the case between the Union and GEC should be remitted to a different Industrial Tribunal for re-hearing, in accordance with our directions, and that there should be consolidated with that case all the other cases brought by individuals against GEC and others, subject, of course, to any point that may remain for decision about those cases being brought within time. As we understand it, it is accepted that some of those cases have been brought in time, but it is contended that others have not been brought in time.Our view is that we should say as little as possible about the merits of the case, in law or fact, because we do not wish to influence unfairly the Industrial Tribunal which re-hears this case and hears the other cases with it. We firmly reject the forceful contentions made by Mr Linden that, by way of a "salvage operation", as he described it, we should either decide this case on what he claimed were agreed facts, or that we should give guidelines as to the proper legal test for the Industrial Tribunal to decide on what is an economic entity, for the purposes of the Transfer of Undertakings Regulations and the Directive.We have listened to Mr Linden's submissions. He has tolerated and responded to interruptions in his argument, pointing out the difficulties of the course that he was pursuing. He deployed an interesting argument. He said we should make a ruling, either by way of determining that there was no transfer of an undertaking, or, at least, providing helpful guidelines to the Industrial Tribunal. In essence, his submission was that, to be an economic entity, there must be an identifiable economic activity existing prior to the transfer. That economic activity must take place within an organisational framework. Within that framework there must be some degree of autonomy in the part to which the individual employees are assigned. When looking at the situation post-transfer, it has to be decided whether that activity has been continued or resumed by the transferee. He supported his submissions by reference to the cases of Council of the Isles of Scilly v Brintel Helicopters Ltd [1995] ICR 249 , in particular passages at 256E, 255 F-256 A, and 258 D. He referred to the decisions of the European Court of Justice in Botzen , was decided in 1985, and in particular to paragraphs 11 and 14: the case of Schmidt [1994] IRLR 302 , in particular the Advocate General's opinion at paragraphs 8, 12, 13, and 14; and to the most recent decision of the European Court of Justice on the Acquired Rights Directive, the case of Rygaard [1996] IRLR 51 , and in particular paragraph 16 of the Advocate General's opinion.We have considered those submissions. We express no concluded view on the correctness or otherwise of Mr Linden's formulation, with its emphasis on the need for an organisational framework, in order to find an identifiable economic activity that can be described as an economic entity. In our view, the appropriate time and place for Mr Linden to address his submissions is before the Industrial Tribunal which hears the evidence and makes the findings of fact, to which it must then apply the correct legal test.In our view, there is sufficient guidance on the question raised by Mr Linden in the full decision given by this Tribunal in the Brintel case. If he wishes to raise some further point on that, that should be done in the Tribunal that finds the facts. If it is contended that they have reached an erroneous legal conclusion, the appropriate time at which this Tribunal should rule on it, is on an appeal. It is putting the cart before the horse to ask this Tribunal to make a ruling of law in advance of the proper adjudication of this case (and the associated cases) on the facts. No Industrial Tribunal has yet heard all the evidence that the Applicants and the Respondents in the individual Applicants' cases wish to adduce. They have not heard argument on it by way of submission on the facts or on law. It would be wrong for this Tribunal to fetter the future adjudication of the Industrial Tribunal on cases that have not yet been heard, namely the individual Applicants' cases.The reason why we allow this appeal is that, by concession from the Respondents, there are errors of primary fact in this decision. Those errors are so significant that they amount to a legally erroneous determination of the case. The errors which have occurred in this case are of central importance and are not in dispute.We accept the submission by Mr Carr that the Tribunal based their decision on a fundamental misunderstanding about the employment position of the members of the Union. The Industrial Tribunal proceeded on the basis, which is apparent from paragraph 4 of the Extended Reasons, that the workers, who were working at the JET Joint Undertaking site under a contract made in 1989 between GEC and JET Joint Undertaking, were employed by JET Joint Undertaking, and that this was therefore different from the function now carried out by the employing agencies. The error is contained in the first two sentences of paragraph 4:
"Under the former sole contract arrangement, [that is the 1989 contract] the client [JET Joint Undertaking] would advise the respondents [GEC] of the grade of personnel they required and the respondents would use their expertise and experience to assess applicants for the jobs. Once they were employed by the customer , [that is a reference in the context to JET Joint Undertaking] the respondent [GEC] would manage and supervise them."
That is incorrect. It was never asserted by the Union that JET Joint Undertaking were the employers of the relevant workers. It was accepted by GEC in the IT3 that the employees in question were employees of GEC, not of anybody else. It was recognised by the Tribunal in the preceding paragraph of the Extended Reasons that it was GEC who made the redundancies which gave rise to the complaints. That was a clear recognition, just as the 1989 contract terms are, that GEC was the employer, when the single contract was in force, of those members of the work force supplied to work under the 1989 contract.It is also accepted by Mr Linden, on behalf of GEC, that the first two sentences of paragraph 8 of the Extended Reasons are incorrect. These are important matters. It says there:
"However, the Tribunal has had regard to Article 1 of the new terms and conditions of contract at Section 10 of the bundle. [That was the new contract made between GEC and JET Joint Undertaking after the split.] What in effect has been transferred from the respondents is the right to assess and recommend the work force to the clients. [That is accepted to be incorrect.]"
In those circumstances, an error of law in the conclusion of the case is inevitable, because the Tribunal then applied what they understood to be the relevant test for determining the transfer of an undertaking, to what are conceded to be an incorrect understanding of the facts.Mr Linden's salvage operation really consisted in saying, first, that although those statements were incorrect and that they were key findings of primary fact, 85% of the decision was correct, and that if you looked at the documents, you would find that all the relevant facts were agreed. If you then applied the correct legal test to those facts, the decision that there was no transfer of an undertaking was plainly and unarguably correct. For the reasons already explained we decline to follow that route. It would be unfair to parties who are not represented today, to make a decision one way or the other, on a question which might be said to raise an estoppel against them in their associated proceedings that have not yet been heard on evidence or argument.We do not accept the submission of Mr Linden that because the individual Applicants are members of the Union, they have already had a chance to have their case argued in the context of the decision under appeal. In the Union's case, the complaint made was of an infringement of a different right. The Union were complaining of breach of duty in relation to information and consultation. The individual members who have brought their cases are complaining that the rights of continuity of contracts of employment have not been recognised and observed by the transferees pursuant to Regulation 5.It may be that at the end of the day, that there is no more of significance than is contained in these documents, but there may be. We do not know. For those reasons we allow the appeal; remit the case to a different Industrial Tribunal and direct that the other cases, which have been stayed pending the hearing of this appeal, be consolidated with and heard by the same Tribunal.