London Borough Of Lambeth v UCATT & Anor [1997] UKEAT 115_96_0302

EAT
London Borough Of Lambeth v UCATT & Anor
[1997] UKEAT 115_96_0302 · 1997-02-03
"there were transfers of parts of an undertaking within the meaning of Regulation 3(1) of the Transfer of Undertakings (Protection of Employment) Regulations 1981 being the Housing and Maintenance and Repair Contracts let by competitive tender by the Respondent on 1 April 1994."
The parties to the proceedings were two Trade Unions, and the London Borough of Lambeth, whom we shall call the Council. The competitive tendering process related to the Housing Repair and Maintenance Service. Prior to 1994 this Service was organised on the following basis:The Borough was divided into three areas, A B and C. Each area had a number of neighbourhoods: A had 8, B and C each had 6. The work in relation to areas A and C was carried out by the Council's direct labour organisation ["DLO"]. In area A there were two depots from which all the relevant work was done and, in relation to area C, there was one depot servicing all the 6 neighbourhoods. Staff would be based at one or other of the depots. The Council decided to re-organise its work and that the work should be categorised by type: thus there was repair and maintenance, external painting, gas servicing and repairs and emergency services.In relation to the emergency work, there was to be one service for each area, instead of one such service for each neighbourhood, but in relation to the other three types of work, the work was divided up on a neighbourhood basis, and there were different arrangements.In the result, the DLO bid for and retained the two emergency services. In relation to Area A, the repair work was divided between 3 contractors; the painting work was divided between one contractor who covered 7 neighbourhoods, the DLO covered the remaining neighbourhood and the Gas work was all done by one contractor. In relation to Area B, the DLO retained the repairs work in five neighbourhoods, the remaining neighbourhood was covered by one outside contractor; the painting work for 4 neighbourhoods were retained by the DLO and one contractor covered the remaining two neighbourhoods; the gas work was all done by two outside contractors.The Respondents to the Appeal, the applicants at the Industrial Tribunal, are two recognised trade unions. They alleged that the Transfer of Undertaking Regulations applied to the transfers described above and that there had been a failure to consult with them in breach of Regulation 11.The Industrial Tribunal held that the Regulations applied as the work done under the various contracts was the same both before and after the transfer and that, although no assets, goodwill or employees were transferred each contract amounted to a separate transfer.It was the Council's case that because the DLO organised work on a depot basis in each area it was not possible to identify which employee worked in which neighbourhood area. Thus, because the work was put out to tender on a neighbourhood area basis the transfer regulations could not apply because it could not be said that any individual was assigned to that part of the undertaking which was transferred, assuming the regulations applied.The Industrial Tribunal approached the case in this way. They first asked what the economic entity was before the new contractual arrangements. They observed that the repair and maintenance work had been undertaken by the DLO in areas A and C and that each depot was serviced by a depot; in area A there were two depots, in area C there was one. The Tribunal rejected the submission made on the Council's behalf that, before transfer the economic entity was the Area. They concluded that the economic entity "was based on the [Council's] depots from which the employees worked on the particular work which they carried out. The neighbourhood structure was retained after the transfer and the tribunal concluded that the creation of specialist contracts did not alter the neighbourhood concept; before receipt of tenders it was difficult but not impossible to identify which individuals were to be assigned to the contracts but that after the successful bids the [Council] were able to identify which employees should be assigned to the contracts".One of the curious features of this case is that the Council submitted to the Industrial Tribunal an opinion which they had received from leading counsel as to the applicability of the Regulations to the events in question. It was not relevant to the question at issue whether the parties thought or believed the Regulations applied; nor was it relevant that the Council has been advised about their applicability. It is to be hoped that in future such advice will not be put in evidence: it is greatly to the Tribunal's credit that they did not allow the opinion to divert them from the task at hand.The submissions of the parties may be summarised in this way.For the Council it was submitted that the Industrial Tribunal had failed to identify the 'economic entity' and paid undue attention to the fact that the same work was being done before and after the transfer. Further, the question was not whether it would be possible for the employer to assign employees to particular contracts once the tenders had come in; rather the question was whether employees were assigned to the part of the undertaking being transferred.Mr Carr, on the respondent's behalf, submitted that the question at issue was of importance to the Unions. Regulation 10(1) identifies the affected employees in respect of whose representatives there must be consultation as:
"Any employees of the transferor or the transferee (whether or not 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."
Thus, consultation needs to be in relation not just to those who will be transferred but also in relation to those who will stay behind but hose work may be affected by the transfer. If it were a requirement of every transfer that employees should be identified as assigned to the particular business it would defeat the purpose of consultation. One of the matters to form the subject matter of the consultation would be the question as to which employees went across and which did not. The way the work was organised would reflect the skills of the individuals, so that some would be painters, some general maintenance men and so on.He submitted that the Industrial Tribunal had applied the correct test; that it for them to decide the facts; that whether there has been a relevant transfer is essentially a question of fact as is the secondary issue as to whether which, if any, of the employees could be said to be assigned to which type of work in which neighbourhood.We prefer the submissions of Mr Carr for the Unions. It is clear from a short summary of the facts that they were complicated and were for the tribunal to sort out. It seems to us to be logically untenable to assert that because the transfer of employees is a significant sign that a transfer may have taken place the fact that no employees transferred does not lead to the conclusion that transfer has not taken place. In our judgment, the transfer of employees is not a necessary condition for the application of the Regulations. The tribunal were right to note that the work done both before and after the transfer was the same; the employees were well able to identify their job being done by new contractors. It seems to us that Mr Carr is correct when he submits that the Industrial Tribunal have applied the correct tests and that their conclusions cannot be faulted.On this appeal we are not persuaded that the Industrial Tribunal can be said to have misdirected themselves and the appeal must be dismissed.