MS S RALTON & OTHERS v HAVERING COLLEGE OF FURTHER & HIGHER EDUCATION [2001] UKEAT 660_00_2706

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 660_00_2706Case No Appeal No. EAT/660/00Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MS S RALTON & OTHERSAPPELLANTHAVERING COLLEGE OF FURTHER & HIGHER EDUCATIONRESPONDENT
Before
Mr Justice Charles Mr D Norman Mr J C ShrigleyDate 27 June 2001
[1]APPEARANCES For the Appellants MISS E SHARPSTON QC And MR P MOSER (of Counsel) Instructed By: A J Hows & Associates 81 New Road Harlington Hayes Middlesex UN3 5BG For the Respondent MISS M TETHER (of Counsel) Instructed By: Norton Rose Kempton House Camomile Street London EC3A 7AN MR JUSTICE CHARLES : Introduction This is an appeal from a decision of an Employment Tribunal sitting at Stratford the Extended Reasons for which were sent to the parties on 12 April 2000. The appeal is against the dismissal by the Employment Tribunal of the Applicants' claim for a declaration under s 11 Employment Rights Act 1996. The hearing lasted 11 days before the Employment Tribunal followed by one day in chambers. We would like to pay tribute to the quality of the Extended Reasons.[2]The relevant background is set out in the Extended Reasons and they should be read with this judgment.[3]The Applicants (the Appellants before us) are three employees of the Respondent (Havering College) which is a statutory corporation established under the Further and Higher Education Act 1992 and the body responsible for running and maintaining a college of further and higher education. Prior to 1 April 1993 the college was maintained by the London Borough of Havering. On 1 April 1993 a statutory transfer took place. It is accepted that that transfer was a relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment ) Regulations 1981 (TUPE) and Council Directive 77/187/EEC (the ARD). It is also accepted that Havering College is an emanation of the State.[4]It is therefore common ground that the Appellants can rely directly on the ARD and the focus of the arguments on this appeal has been on the ARD rather than TUPE. The most relevant provisions of the ARD are Articles 3 and 4 thereof. At the time of the transfer (and thus before the amendments made by Directive 98/50/EC) the most relevant parts of these articles are set out in paragraph 26 of the Extended Reasons and are in the following terms: "Article 3 1. The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, within the meaning of Article 1(1) shall, by reason of such transfer, be transferred to the transferee 2. Following the transfer, within the meaning of Article 1(1), the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement. Member States may limit the period for observing such terms and conditions with the proviso that it shall not be less than one year. Article 4 1. The transfer of the undertaking, business or part of the undertaking or business shall not in itself constitute grounds for dismissal by the transferor or the transferee. This provision shall not stand in the way of dismissals that may take place for economic, technical or organisational reasons entailing changes in the workforce. Member States may provide that the first subparagraph shall not apply to certain specific categories of employees who are not covered by the laws or practice of the Member States in respect of protection against dismissal. 2. If the contract of employment or the employment relationship is terminated because the transfer within the meaning of Article 1(1) involves a substantial change in working conditions to the detriment of the employee, the employer shall be regarded as having been responsible for termination of the contract of employment or of the employment relationship.[5]Prior to the transfer date (1 April 1993) all three applicants were employed by the Local Education Authority and their contracts of employment expressly incorporated the terms of a collective agreement called the Silver Book. A copy of this was before us and the Employment Tribunal. A short timetable[6]In our judgment it is important to remember the sequence of events before and after the statutory transfer:(1) Prior to the transfer Two of the Appellants (Ms Humphrey and Ms Allen) were employed by the Local Education Authority under fixed term contracts which expired on 31 August 1993 and the third Appellant Ms George was so employed under a contract of indefinite length which could have been terminated by notice. All the contracts expressly incorporated the Silver Book terms.(2) On the transfer Section 26 Further and Higher Education Act 1992 had the same effect as Regulation 5 of TUPE. As a result of that section (alone or together with Regulation 5 of TUPE) there was a statutory transfer of the contracts of employment of all three Appellants and they all became employees of Havering College on the same terms as those on which they were previously employed by the Local Education Authority. Thus their terms of employment by Havering College incorporated the Silver Book terms.(3) The first new contracts with Ms Humphrey and Ms Allen after the transfer On the expiry of their fixed term contracts which had been the subject of the statutory transfer they both entered into new fixed term contracts for the period 1 September 1993 to 31 August 1994. In the case of Ms Humphrey a change in her terms of employment was that she moved from part time to full time employment. Both these contracts incorporated the Silver Book terms.(4) The first new contract with Ms George after the transfer This was a fixed term contract for her employment as a Temporary Senior Lecturer between 1 September 1993 and 31 August 1994. It was common ground before us that at the end of this contract it was agreed that she would revert to her former post as a lecturer on a contract for an indefinite term. The Silver Book terms were incorporated into that fixed term contract.(5) The second new contracts with Ms Humphrey and Ms Allen after the transfer At the end of March 1994 they were both offered new contracts of employment by Havering College which provided for employment for an indefinite period commencing on 1 August 1994 (i.e. before the expiry of their fixed term contracts) subject to termination by notice. Ms Humphrey accepted her new contract on 20 June 1994 and Ms Allen accepted hers on 16 August 1994. The Employment Tribunal found that they did not protest before they entered into those contracts and that they have worked under them and had the benefit of pay rises (paragraph 27(xv) Extended Reasons). However Ms Humphrey and Ms Allen assert (and this is common ground) that if they had not accepted the new contracts on the terms offered they would have had to have found new jobs elsewhere. It is thus common ground that the new contracts were entered into against a common understanding that these fixed term contracts would not be renewed on their expiration and if the Appellants did not accept the new contracts their employment by Havering College would not be renewed and would therefore be terminated. The new contracts did not incorporate the Silver Book terms and it is common ground that Havering College would not have entered into new contracts with Ms Humphrey or Ms Allen that did.(6) The second new contract with Ms George after the transfer On 26 August 1994 Ms George accepted a promotion and a new contract which did not incorporate the Silver Book terms. She was well aware that the new contractual terms were the only ones on offer and thus that Havering College would not offer her the promotion and thus the new job on terms that incorporated the Silver Book terms. The Employment Tribunal found (paragraph 27(x) of the Extended Reasons) that there is no evidence that she expressed any protest at the time that she accepted the promotion and new contract. It is common ground that if Ms George had not accepted this promotion and new contract she would have remained as a lecturer on her contract for an indefinite term.(7) The petition All three Appellants were signatories to a petition bearing the date 28 September 1994 which asserted that the terms of their new contracts represented a serious breach of the whole spirit and purpose of the ARD and may be unlawful under Community law (see paragraph 24 of the Extended Reasons).[7]Overall therefore the position is that:(i) on and following the transfer each of the Appellants worked for Havering College on the same contracts (incorporating the Silver Book terms) as they had worked for the Local Education Authority,(ii) following the transfer all three Appellants entered into new fixed term contracts with Havering College which incorporated the Silver Book terms, and(iii) prior to the expiry of those fixed term contracts all three Appellants entered into new contracts of employment which excluded the Silver Book terms.[8]It is accepted and asserted by both sides that terms of the new contracts entered into which excluded the Silver Book terms are fundamentally different to the earlier contracts of employment. This is not based only on the exclusion of the Silver Book terms. In the cases of Ms Humphrey and Ms Allen it is also based on the change to contracts for an indefinite term and in the case of Ms George on her promotion.[9]A distinction between Ms George and the other two Appellants is that if she had not accepted her present contract she would have reverted to her contract for an indefinite period as a lecturer which would have incorporated the Silver Book terms. Another distinction is that she was promoted. We comment that in these circumstances we see considerable force in the view that her acceptance of the promotion means that her change from Silver Book terms was, or should be treated as being, entirely voluntary.[10]The Appellants rely on the following points, which were not disputed:(a) in respect of the fixed term contracts on which two of them were employed by the Local Education on Silver Book terms: (i) their renewal was automatic, without interview, (ii) as early as Spring in one year the Appellants would be involved in planning courses to be taught in the next academic year, (iii) there was never any real doubt that their employment would be carried forward in successive years, and (iv) their other employment rights (e.g. pension and protection from unfair dismissal) accrued on the basis that they were in continuous employment;(b) there has been no break in their employment either at the time of the transfer or subsequently; and(c) the United Kingdom has not pursuant to Article 3(2) ARD put any limit on the period for observing the terms and conditions of a collective agreement.[11]We add that as appears from, for example, paragraphs 16 and 18 of the Extended Reasons after the transfer there were attempts to negotiate nationally and some negotiations between the Colleges' Employers' Forum (CEF) and the unions. It was no part of the argument before us and the Employment Tribunal that the National Recognition and Procedure Agreement between CEF and the two unions (referred to in paragraph 16 of the Extended Reasons) or negotiations based thereon (or otherwise) resulted in any termination or expiry of the Silver Book or the entry into force or application of another collective agreement within Article 3(2) of the ARD. The contractual position under English Law – termination of contract – variation of contract[12]There was no dispute between the parties as to the contractual position under English law if the effect of the ARD (and in particular the mandatory provisions thereof) is left out of account.[13]In the cases of Ms Humphrey and Ms Allen:(a) the fixed term contracts in existence at the date of the transfer that were transferred expired and terminated,(b) the new fixed term contracts were terminated and were replaced by new contracts which did not include Silver Book terms, and(c) the only existing contracts of employment are the new contracts for indefinite terms which do not include the Silver Book terms.[14]In the case of Ms George:(a) her new fixed term contract and the contract for an indefinite term that was transferred were terminated and replaced by her new contract which does not include Silver Book terms, and(b) the only existing contract of employment is the new contract for an indefinite term which does not include the Silver Book terms.[15]It was thus (in our judgment correctly) accepted on behalf of the Appellants that under English law if the effect of the ARD (and in particular the mandatory provisions thereof) is left out of account:(i) the contracts that were statutorily transferred on the transfer have all been terminated rather than varied,(ii) when the existing contracts of employment not on Silver Book terms were entered into they were new contracts and the contracts of employment that were in force immediately prior thereto were terminated rather than varied,(iii) subject to an argument that Ms George resigned to accept her promotion when the existing contracts were entered into there was a dismissal as defined by section 98 Employment Rights Act 1996 (the ERA) upon which the Appellants could have sought to base a claim for unfair dismissal although they remained employed by Havering College under the new contracts, and(iv) if an employee is found to have been unfairly dismissed an order of re-engagement or re-instatement can be made. (However an employer does not have to comply with an order for reinstatement or re-engagement but if he does not do so an additional award of compensation may be made.)[16]Although there was a dispute as to the nature of the "trigger provisions" for a claim under Article 4 ARD and Regulation 8 TUPE and their application to this case, it was also common ground that if those trigger provisions were satisfied (and subject to the point as to whether Ms George resigned to accept her promotion) on such terminations of their contracts which included Silver Book terms (and notwithstanding the fact that they entered into new contracts of employment) the Appellants could have launched proceedings for unfair dismissal based on Regulation 8 TUPE and Article 4 ARD.[17]In respect of the above points we were referred to Sections 98 and 129 to 132 Employment Rights Act 1996, Morris v Baron & Company [1918] AC 1, British & Beningtons Ltd vNW Cachar Company [1923] AC 48, Meek v Port of London Authority [1918] 2 Chancery 96 and Pfaffinger v City of Liverpool Community College and Muller v Amersham & Wickham College [1997] ICR 142. The result sought by the Appellants[18]The result sought by the Appellants is an order that has the effect that Havering College has to employ them on Silver Book terms with appropriate pay increases, or alternatively simply on Silver Book terms.[19]The Appellants argue that in the absence of such an order they would not have an effective remedy for what they maintain are breaches of directly enforceable rights conferred by the ARD. They say that damages would not provide an adequate remedy and that the English approach that specific performance of a personal contract is not granted should not prevent such an order being made and, in this context, they point to the power under the ERA to order re-engagement or re-instatement.[20]Potential difficulties for the Appellants in this respect are that:(i) the result they seek would trigger questions as to what the position was between the entry into of the contracts excluding the Silver Book terms and the order they seek and what, if any, accounts or adjustments would have to be made, and(ii) if they had claimed unfair dismissal reinstatement or re-engagement would have been possible remedies had they succeeded. However these points go to remedy and we have not had regard to them. Also, and although the, or a, logical consequence of the Appellants' argument is that the new contracts excluding Silver Book terms were of no effect, we accept that a pragmatic solution to point (i) would probably be attractive to both sides and the courts. Also as mentioned above we accept that an employer does not have to comply with an order for reinstatement or re-engagement. The Appellants' main arguments[22]We were taken to a great number of authorities in respect of these arguments. We shall not mention all of them. The arguments developed during the hearing. Towards the end of her submissions in reply leading Counsel for the Appellants returned to, and reminded us of, the approach to be taken by us to the question whether to refer issues of Community law to the Court of Justice set out in the judgment of the Master of the Rolls (Sir Thomas Bingham M.R.) in Reg v Stock Exchange Ex p Else Ltd [1993] QB 534 at 545 D/G where he said:
"In relation to questions such as 1(a) and 2(a) I understand a correct approach and principle of a national court (other than a final Court of Appeal) to be quite clear: if the facts had been found and the Community law issue is critical to the court's final decision, the appropriate court is ordinarily to refer the issue to the Court of Justice unless the national court can with complete confidence resolve the issue itself. In considering whether it can with complete confidence resolve the issue itself the national court must be fully mindful of the differences between national and Community legislation, of the pitfalls which face a national court venturing into what may be an unfamiliar field, of the need for uniform interpretations throughout the Community and of the great advantages enjoyed by the Court of Justice in construing Community instruments. If the national court had any real doubt, it should ordinarily refer. I am not here attempting to summarise comprehensively the effect of such leading cases as H P Bulmer Ltd v J Bollinger SA [1974] Chancery 401, CILFIT (Srl) –v- Ministry of Health (case 283/81 [1982] ECR 3415 and Reg v Pharmaceutical Society of Great Britain ex parte Association of Pharmaceutical Importers [1987] 3 CMLR 951, but I hope I am fairly expressing their essential point."
This submission reflects a central point of the Appellants' argument, namely that they assert that Community law issues are critical to our decision and that we should refer those issues to the Court of Justice. Naturally we have taken account of, and sought to apply, this guidance in the Else case to the question of referral.[23]Additionally in considering the Community law issues raised by the Appellants and the question whether we can ourselves resolve them with complete confidence we have borne in mind the point recognised and confirmed in the above passage cited from the Else case and by Peter Gibson LJ in Governing Body of Clifton Middle School & Others v Askew [2000] ICR 286 at 296 E/G where he says:
"I acknowledge the force of these submissions, …………….. advanced as they were by Mr Linden. English courts have constantly to be on their guard against too insular an approach to the construction of European Community legislative instruments and the statutes and regulations giving effect to Community obligations. As Advocate General Sir Gordon Slynn said in Spijkers v Gebroeders Benedik Abattoir CV (CK 24/85) [ECR] 1119, 1121, in the context of transfer of undertakings: 'technical rules are to be avoided and the substance matters more than the form … A realistic and robust view must be taken and all the facts be considered'."
The Article 3 argument A starting point[24]The Appellants accept that the ARD does not give them a right to compel Havering College:(i) to employ them at the expiry of the fixed term contracts that were transferred on 1 April 1993, or(ii) otherwise to continue to employ them (on Silver Book terms or other terms) at the expiry or termination of any of the Appellants' contracts of employment.[25]This means that the Appellants accept that the obligations of the Local Education Authority arising from(i) their contracts of employment,(ii) the employment relationships referred to in Article 3(1) ARD, and(iii) the Silver Book and thus the relevant collective agreement referred to in Article 3(2) ARD do not include any such obligations (i.e. obligations to renew and thus re-employ after the termination of existing contracts of employment).[26]Thus the Appellants accept (in our judgment correctly) that even if as they contend the terms "employment relationship" and "collective agreement" should be given a Community law meaning they did not:(a) create or impose any obligations to renew and thus re-employ after the termination of existing contracts of employment on either (i) the transferor employer (the Local Education Authority) before the transfer, or (ii) the transferee employer (Havering College) after the transfer, or(b) create or grant any mirror rights to be re-employed after the termination of existing contracts of employment on the employees in English or Community law. The argument[27]However the Appellants assert that because Havering College decided to continue to employ them and thereby to continue their respective "employment relationships" it was and is bound to do so on Silver Book terms. This assertion is based on the following lines of argument:(1) the nature, extent and effect of an "employment relationship" within Article 3 ARD is to be determined by Community law,(2) the nature, extent and effect of a "collective agreement" within Article 3(2) ARD is to be determined by Community law and, the Appellants assert, is as follows:
" A collective agreement is an agreement reached on a consensual basis following negotiations between representatives of workers and representatives of employers which governs, in law and fact, the employment relationship between workers and their employer either nationally or at a particular establishment. For the purposes of the ARD, such an agreement is binding and remains binding under EC law and overrides provisions of national law (such as s. 179 Trade Union and Labour Relations (Consultation) Act 1992) where there has been a relevant transfer; and continues in force unless and until it comes to an end in accordance with Article 3 of the ARD"
And, alternatively to (2), although by the end of oral argument this point was (in our judgment correctly) not pursued with any vigour (3) the transferor (the Local Education Authority) would have been bound to offer to employ the Appellants on Silver Book terms if there had been no transfer and it had employed the Appellants in the same circumstances.[28]On the basis of those arguments the Appellants assert that until the termination or expiry of the collective agreement contained in the Silver Book, or the entry into force or application of another collective agreement, and so long as:(a) Havering College elect to continue an "employment relationship" with them and therefore their "employment relationships" continue, and(b) any change from Silver Book terms is for a reason "connected with" the transfer, Havering College is bound to employ the Appellants on Silver Book terms.[29]In other words the Appellants argue that:(a) an obligation of their employment relationship and further, or alternatively, a term or condition of the collective agreement (the Silver Book) has the effect that so long as Havering College wishes to continue to employ the Appellants it has to offer and provide such employment on Silver Book terms, and(b) the points that the Appellants did not agree to the change from Silver Book terms on an entirely voluntary basis and the change was for a reason "connected with the transfer" have the consequence that they are entitled to relief that has the effect that they are, or are to be, employed on Silver Book terms.[30]It was accepted by the Appellants that this right and obligation was subject to the qualification at the end of Article 3(2) relating to the period during which a transferee is to continue to observe the terms and conditions of the relevant collective agreement. But the Appellants asserted that the Silver Book terms still applied to some employees who had transferred and therefore they still existed and that unless and until the employees' representatives (i.e. their union) agreed to their expiry or termination, or to another collective agreement that replaced them, they would continue in force.[31]As appears above it was also accepted by the Appellants that they could not assert that the ARD obliged Havering College to incorporate the Silver Book terms into any new or varied contracts of employment they offered to the Appellants if the reason for the changes introduced by Havering College was not sufficiently "connected with" the transfer. This point relates to the causal link to the transfer as to which there was argument between the parties (see in particular paragraph 40(a) and paragraphs 78 to 83 hereof). As appears below we do not accept the Appellants' argument that all they have to show is that the changes were "connected with" the transfer.[32]In her reply leading Counsel for the Appellants submitted by reference to the speech of Lord Slynn in British Fuels v Baxendale & Wilson v St Helens Borough Council [1998] ICR 1141 at 1164F to 1166G and Foreningen af Arbejdsledere i Danmark v Daddy's Dance Hall A/S (Case 324/86) [1988] ECR 739 that what had happened in this case was an impermissible variation of the mandatory rights of the Appellants under the combined effect of their employment relationships with Havering College and the Silver Book (the collective agreement referred to in Article 3(2) ARD). This submission clearly recognises that (as was the case) the Appellants did not rely on rights and obligations contained in their contracts of employment.[33]These arguments were the necessary basis for the Appellants' contention that (as the Employment Tribunal put it in paragraph 27(xiv) of the Extended Reasons) Havering College was not "at liberty" to offer them contracts which did not include Silver Book terms and the entry into of the contracts of employment between Havering College and the Appellants which excluded the Silver Book terms were impermissible, or were impermissible and "variations" which founded the relief sought by the Appellants The Article 4(2) argument[34]An alternative argument was advanced based on Article 4(2). It was asserted that Article 4(1) which refers to a " dismissal " involves a one way process namely a dismissal of an employee by an employer whereas Article 4(2) which applies " if the contract of employment or the employment relationship is terminated because the transfer involves a substantial change in working conditions to the detriment of the employee" involves a two way process of employer and employee and further, or alternatively, one that does not necessarily involve the employees losing their jobs and is thus wide enough to cover both the situations(i) when an employee continues to work but on altered terms, and(ii) when he refuses to do so and elects to put an end to the contract of employment or the employment relationship.[35]It was asserted that the Appellants were in the former situation and that Havering College was responsible for the imposition of the new terms which in the terms of Article 4(2) was a termination of the contract of employment and this founded the relief they sought because a remedy in damages (or for unfair dismissal) would not provide an adequate remedy.[36]As it was based on Article 4(2) this argument had to be based on an assertion that the change from Silver Book terms to non Silver Book terms was "because of the transfer" within that Article and therefore to succeed on it the Appellants had to also succeed on their argument that the finding of the Employment Tribunal that this was not the case was wrong (see paragraph 40(b) below).[37]But the Appellants' skeleton argument on this point ended with the following submission:
"where (as here) there was no dismissal, and the variation was connected with the transfer, then it is not open to the parties to agree to a detrimental variation, and the employees are entitled to their pre-transfer terms."
This shows that the argument is one based on an impermissible variation and this formulation of it introduces and is based on the Appellants' argument that the Employment Tribunal erred on the test as to causation (see paragraph 40(a) below). The alleged variation relied on was not defined orally or in writing by the Appellants other than by reference to a change from Silver Book terms. An alternative argument on Article 4(2)[38]To be a completely separate argument from the argument based on Article 3 the argument based on article 4(2) has to exclude reliance upon the alleged obligation to employ on Silver Book terms if Havering College elect to offer a new contract and thereby continue the relevant employment relationship. It therefore has to rely on a variation or termination of(i) the fixed term contracts entered into between Havering College and Ms Humphrey and Ms Allen,(ii) the fixed term contract entered into between Ms George and Havering College or the transferred contract with her that would have "revived" on the termination of that fixed term contract, or(iii) the loss of Silver Book terms in the new contracts in the absence of any obligation on Havering College to offer or continue them. In our judgment correctly this alternative argument was not pursued by the Appellants before us. The argument by reference to paragraph 27(xiv) of the Extended Reasons[39]This paragraph is in the following terms:
"(xiv) In our earlier conclusions, we have held that the Respondent was at liberty to offer non-Silver Book terms to the two employees whose contracts were shortly due to expire; and to the promotee. If we were wrong in this conclusion, we have, next, concluded that these were not cases of variation. It is if we are wrong in this conclusion, as to any of the individual Applicants, that we understand further issues relating to variation to arise. Lord Slynn in Wilson , supra, at 1160 F, referred to 'permissible variation'. He dealt with this further at pages 1164F to 1166F. His opinion was that there can, on or after transfer, be a variation in contractual terms for reasons which are not due to the transfer. The central question is: was the variation by reason of the transfer: (see also Credit Suisse First Boston (Europe) Ltd v Lister [1998] IRLR 700, paragraph 21). We are of the view that the transfer in this case provided the general setting for the variation and that it marked a radical change in climate in the further education sector. But any variations in terms were not solely by reason of the transfer. They were proposed by the Respondent in order to meet the requirements of the new market, which included being able to cater for increased numbers of students, and to achieve greater perceived efficiency. There were other operational reasons for the variation. The transfer did not oblige the Respondent to offer new terms and we do not regard the transfer itself as being the reason why these employees were offered new terms and conditions. As we have noted in paragraph 20 above, the Governing Body regarded the new terms as essential for the medium to long-term survival of the college. We, therefore, consider the variations of contract, if such they were, to be permissible and not to fall foul of the principles enunciated by the ECJ in Daddy's Dance Hall , supra, and other cases."
As can be seen therefrom in this paragraph the Employment Tribunal consider the position on the hypothetical basis that their earlier conclusions were wrong and decide that the Applicants' case would fail because (by reference to the central question they pose) the variations (if that is what they were) were not "because of the transfer".[40]The Appellants argued that:(a) in this paragraph the Employment Tribunal erred in law in particular by considering whether the variations (if that is what they were) were solely by reason of the transfer because they submitted by reference to Litster v Forth Dry Dock Co Ltd [1990] 1 AC 546 and in particular at 554F (Lord Keith), 558H (Lord Templeman) but see also 577 G/H (Lord Oliver), and Warner v Adnet [1998] ICR 1056 in particular at 1064C (Mummery LJ) that the correct question is whether the variation is for a reason "connected with" the transfer, and(b) the conclusions reached by the Employment Tribunal on the facts in paragraph 27(xiv) of the Extended Reasons (and in earlier paragraphs thereof) that (i) the transfer was not the sole or main reason for the introduction of the change from Silver Book terms, and (ii) the sole or main purpose of the incorporation of the new Colleges by the Further and Higher Education Act 1992 was not the breaking of the Silver Book terms, were perverse or not properly explained. The argument on paragraph 27(viii) of the Extended Reasons[41]This paragraph is in the following terms:
"27(viii) Ms Tether submits for the Respondent that, in their cases, the employer was under no contractual obligation to renew temporary contracts on Silver Book terms at any time before the transfer. She refers to section 179 of the Trade Union & Labour Relations (Consolidation) Act 1992 and further submits that, in the case of the lecturers, there was no statutory underpinning of the collective agreement, such as is the case with schoolteachers. We consider that the submission is sound and we agree with it. Ms Sharpston countered it by falling back on the terms of Article 3(1), alternatively 3(2), of the Directive and by referring to Ny Molle Kro (Case 287/86). However, in our judgment these points do not negative the force of Ms Tether's submission. Indeed, paragraph 26 of Ny Molle Kro states: 'It follows that article 3(2) of the Directive is intended to ensure the continued observance by the transferee of the terms and conditions of employment agreed in a collective agreement only in respect of workers who are already employed by the undertaking at the date of the transfer, and not as regards persons who were engaged after that date.' We conclude that it is clear that employees of the Respondent at the time of the transfer had to be employed on Silver Book terms. In the case of Ms Humphrey and Ms Allen, they could have been lawfully offered non-Silver book terms before transfer on expiry of existing fixed-term contracts. It would have been open to them to accept or reject such different terms. Ms Tether goes on to submit that a failure to renew contracts on Silver Book terms would not amount to a breach of contract and she relies upon Pfaffinger v City of Liverpool Community College and Muller v Amersham & Wickham College [1997] ICR 142. We accept this analysis and we also observe in passing that, on the facts of that case, the two part-time lecturers at colleges of further education, although employed only for a single term at a time, were in a similar position to the Applicants in this case. Mummery J noted the mutual flexibility in the arrangement: 'If the employer college is under no legal obligation to renew the contract for another term, the part-time lecturer is under no legal obligation to return to teach the course the next term."
We consider that the position is the same if lecturers are employed for a year at a time as opposed to a term."[42]The Appellants argued by reference to the sentence: "We conclude that it is clear that employees of the Respondents at the time of the transfer had to be employed on Silver Book terms" that this paragraph was internally inconsistent and that the conclusions or assertions in the next sentences were wrong. The argument is linked to the argument based on Article 3 and in particular the position of the Local Education Authority before the transfer and if a transfer had not taken place. Our Approach[43]We shall deal with these arguments in turn under the sub-headings we have used above. The Article 3 argument The position of the Local Education Authority before and if there had not been a transfer[44]It was asserted on behalf of the Appellants that the transferor (the Local Education Authority) would have been bound to offer to employ the Appellants on Silver Book terms if there had been no transfer and it had employed the Appellants in the same circumstances as Havering College did. In other words, although it was accepted that the Local Education Authority was not, and if there had not been a transfer would not have been, bound to re-employ the Appellants (see paragraphs 24 to 26 above) it was submitted that if the Local Education Authority had elected to re-employ them it was, or would have been, bound to do so on Silver Book terms.[45]We accept that as a matter of practice(i) in the past the Local Education Authority had offered to re-employ on Silver Book terms, and(ii) if there had not been a transfer, and the Local Authority had decided to re-employ the Appellants it would (or probably would) have offered to do so on Silver Book terms. But this does not mean that they were bound to do so. Whether they were, or would have been, bound to do so is a matter of law. The relevant law for the past, and if there had not been a transfer, is English law and not Community law. Indeed, as we understood the arguments advanced on behalf of the Appellants, it was not suggested that Community law was relevant to the question what the position of the Local Education Authority was, or would have been if there had not been a transfer. (Further and in any event, as appears below in our judgment it is established that the extent and nature of the rights and obligations that transfer pursuant to the ARD is governed by National law - see below under the heading - Do the terms "employment relationship" and/or "collective agreement" have a Community law meaning?).[46]In our judgment it is clear as a matter of English law that:(a) before the transfer the Local Education Authority were not bound, and(b) if the transfer had not taken place would not have been bound, to offer to employ (or to employ) the Appellants on Silver Book terms after the termination of their existing contracts which included those terms (see s. 179 Trade Union and Labour Relations (Consolidation) Act 1992, National Coal Board v National Union of Mineworkers [1986] ICR 736 - in particular the references and citation at 757, and at 773G, and Regulation 6 TUPE - which reflects the position at English law and it has not been suggested that it fails to give proper effect to Article 3(2) ARD although the Commission brought infraction proceedings against the UK in relation to various other aspects of TUPE – see EC Commission v United Kingdom [1994] IRLR 412)).[47]Surprisingly during the course of the hearing the Appellants raised the point (we understand for the first time) that the Silver Book agreement was or might be binding in law on the basis that it was made on or after 1 December 1971 and before 16 September 1974 (see s. 34 Industrial Relations Act 1971 and paragraph 5 of Schedule 3 to the Trade Union and Labour Relations (Consolidation) Act 1992). When this point was raised Mr Norman pointed out that it was the normal, if not invariable, practice for collective agreements during that period to contain a provision to the effect that the collective agreement was not intended to be legally enforceable. Whether this was the case here was not looked into because the Appellants abandoned the point.[48]The practice referred to by Mr Norman accords with the points made in the extract from the report cited in the NCB case (at p 757) and is confirmed by the lengthy experience of both Mr Norman and Mr Shrigley that in this country both employers and unions have not wanted collective agreements to be legally binding. The effect of the conclusion in paragraph 46[49]The effect of this conclusion is that unless the Appellants can establish that because there was a transfer and the ARD applies they have or acquired the rights they assert their argument is based only on pragmatic considerations rather than legal obligations.[50]In our judgment it is clear that pragmatic considerations are not enough. The Appellants seek to establish that they have the legal rights they assert on the basis that the terms "employment relationship" and/or "collective agreement" in the ARD should be given a Community law meaning which in effect reflects and gives effect to the pragmatic position before the transfer.[51]It follows that if the Appellants' arguments are right their effect is that because of and after the transfer both the extent and effect of:(a) the rights and obligations arising from the transferred and continued employment relationships (or the transferred contracts of employment), and(b) the terms and conditions of the collective agreement are different to what they were before the transfer took place, and thus that as a consequence of the transfer ARD (and TUPE): (a) Havering College has different obligations to those which the Local Education Authority had under the transferred and continuing employment relationships (or the transferred contracts of employment), and (b) the observance by Havering College of the terms and conditions of the collective agreement would have a different effect.[52]In our judgment this would be a surprising result because:(a) it flies in the face of the language of Article 3(1) which refers (with our emphasis) to "rights and obligations arising from a contract of employment or an employment relationship existing on the date of the transfer" and of Article 3(2) which states (with our emphasis) that the transferor shall " continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement " . In making this point we acknowledge that a purposive approach should be taken to the construction and application of the ARD but in our judgment that wording (i) is relevant and important, and (ii) is reflected in the judgments of the ECJ as to the purpose of the ARD and the point that it is a partial harmonisation directive,(b) it flies in the face of the judgments of the ECJ (to which we refer below) that it is for the National law to decide (i) whether a contract of employment or an employment relationship exists, and (ii) what the rights and obligations thereunder are,(c) we were not shown (and given the extent of the research undertaken on behalf of the parties we are confident there does not exist) any authority to the effect that a purpose of the ARD is to alter the terms and/or the effect of a contract of employment, an employment relationship or a collective agreement,(d) in contrast we were shown both English cases and decisions of the ECJ which show that the purpose and effect of the ARD is not to alter the rights and obligations between employer and employee after a transfer but to safeguard and continue the existing rights and obligations for the protection of employees (see further paragraph 62 below), and(e) it flies in the face of the established practice and wishes in this country (which we have referred to in paragraphs 47 and 48 above) of both the employer side and the employee side of collective agreements which have been developed and implemented to promote and foster good industrial relations and we do not see why this should be a purpose or effect of the ARD, which as we have mentioned is a partial harmonisation directive.[53]In our judgment this flaw in the approach of the Appellants (i.e. the reliance on pragmatic points rather than rights and obligations) also undermines their arguments on the facts as to the purpose of the transfer and the reason for the change from Silver Book terms. This is because a change from Silver Book terms is effectively no, or little, different from other changes in the management of Further and Higher Education Colleges and it therefore seems to us that(i) the emphasis the Appellants seek to place on it is not warranted, and(ii) the point (which we accept) that it would not have been practically or politically sensible to attempt to bring about the many changes in the management of Further and Higher Education Colleges that took place after the 1992 Act in the competitive and expanding market that then existed (see paragraph 13 Extended Reasons) if they had remained under the control of local authorities does not lead to the conclusions the Appellants espouse.[54]We add that in respect of the ARD and TUPE we see no real difference between the effect of this pragmatic or political point and the position when the employees can demonstrate that the board of the transferor company would not in practice have made the changes that were made by the transferee because of the political or personal views of its members or because of the transferor's sources of finance. Do the terms "employment relationship" and/or "collective agreement" have a Community law meaning?[55]We have concluded that we can say with complete confidence that they do not and therefore that we should not refer this question and "follow on" questions based on the possibility that the answer to it might be "yes" to the European Court of Justice.[56]In reaching this conclusion we have had regard to the points made in paragraphs 50 to 52 above.[57]In respect of this point we were referred to a number of passages in decisions of the European Court of Justice and the courts of this country both as to the purposes and objectives of the ARD and the matters thereunder which fall to be determined by national law. We make no complaint about this and accept that it was appropriate for us to be referred to the cases themselves rather than only to the citations therefrom in the British Fuels & Wilson cases. Understandably and sensibly the Employment Tribunal cite from the speech of Lord Slynn in that case in identifying the relevant authorities of the European Court of Justice. Like the Employment Tribunal we accept that the preliminary paragraphs of Lord Slynn's speech at [1998] ICR 1145F to 1146G are authoritative. We shall not repeat them. The Employment Tribunal add that the recital of the ARD also goes on to state that: "It is therefore necessary to promote the approximation of laws in this field while maintaining the improvement described in Article 117 of the Treaty" (see paragraph 27 (i) of the Extended Reasons).[58]At pages 1154F to 1159A of his speech Lord Slynn cites from a number of judgments of the European Court of Justice. We will not repeat them here. We were referred to most of those cases and additional passages from them including in some of them passages from the opinions of the Advocate General including for example the opinion of Advocate General Slynn (as he then was) in the Danmols case (Case 105/84 at in particular pages 2641 to 2644).[59]It is clear that Lord Slynn's compilation of relevant quotations carries considerable weight. We asked leading Counsel for the Appellants to identify any additional citations upon which the Appellants placed particular reliance. She helpfully did this as did Counsel for Havering College. We shall return to this identification and to additional points relied on by the Appellants.[60]Conclusions reached by Lord Slynn on the basis of the authorities he cites are at pages 1159H to 1162E, part of that passage is cited by the Employment Tribunal at paragraph 27(vi) of the Extended Reasons. In our judgment the whole of that passage is important but we shall not cite it. We respectfully agree that those conclusions are fully justified by the citation of authority in Lord Slynn's speech and the other authority cited to us. They include (with our emphasis) the following:(a) the overriding emphasis in the European Court's judgments is that the existing rights of employees are to be safeguarded if there is a transfer,(b) that means no more and no less than that the employee can look to the transferee to perform those obligations which the employee could have enforced against the transferor .(c) the employer, be he transferor or transferee, cannot use the transfer as a justification for dismissal, but if he does dismiss it is a question for national law as to what those rights (i.e. those referred to in subparagraph (b)) are. In English law there would as a general rule be no order for specific performance. The claim would be for damages for wrongful dismissal or for statutory rights including, it is true, reinstatement or re-engagement where applicable. It may be in other countries that an order for specific performance could be obtained under the appropriate domestic law and that on this approach different results would be achieved in different Member States. That is not surprising or shocking,(d) the ARD is to "approximate" the laws of the member states . Its purpose is to "safeguard" rights on a transfer,(e) the "rights" of an employee must depend on the national rules of law of contract or of legislation. (We add that this is a clear indication that the position of the employees in practice rather than in law is not relevant to the determination of their "rights"),(f) there is no Community law of contract common to Member States, nor is there a common system of remedies. The object and purpose of the Directive is to ensure in all member states that on a transfer an employee has against the transferee the rights and remedies which he would have had against the original employer . To that extent it reduces the differences which may exist in the event of a change of employer as to the enforcement by employees of existing rights,(g) the European Court of Justice has clearly recognised that the precise rights to be transferred depend on national law. But neither the Regulations nor the Directive nor the jurisprudence of the Court create a community law right to continue in employment which does not exist under national law,(h) where there is a transfer of an undertaking and the transferee actually takes on the employee the contract of employment is automatically transferred so that, in the absence of a permissible variation, the terms of the initial contract go with the employee, who though he may refuse to go, cannot as a matter of public policy waive the rights which the Directive and the Regulations confer on him,(i) where the transferee does not take on the employees who are dismissed on transfer the dismissal is not a nullity though the contractual rights formerly available against the transferor remain intact against the transferee . For the latter purpose, an employee dismissed prior to the transfer contrary to Article 4(1), i.e. on the basis of the transfer, is to be treated as still in the employment of the transferor at the date of transfer so as to satisfy the rule in Wendelboe as consistently followed, e.g. in Ny Molle Kro .,(j) the European Court of Justice has said that the employees' rights are safeguarded by "enabling them to remain in employment with the new employer on the terms and conditions agreed with the transferor" ( Bork ) or by "making it possible for them to continue to work for the new employer on the same conditions as those agreed with the transferor" ( Katsikas ), or, so far as possible, safeguarding employees' rights by "allowing them to remain in employment with the new employer on the terms and conditions agreed with the transferor" ( Daddy's Dance Hall para. 9) ,(k) the emphasis is on the same terms and conditions applying if the employment is continued . Lord Slynn did not read, however, any of these expressions as meaning that the transferee is bound actually to take on an employee who has been dismissed, whether because of the transfer or for independent reasons, and to give him the same work as he had before, and(l) they mean that if he does take the employee he takes him on the terms of the employment with the transferor, i.e. there is a deemed novation by the two willing parties. If the transferee does not take the employee because the latter has already been dismissed by the transferor, or because he himself dismisses the employee on the transfer, then he must meet all of the transferor's contractual and statutory obligations unless (a) the employee objects to being employed by the transferee or (b) the or the principal reason for dismissal is an economic, technical or organisational reason entailing changes in the workforce. (We comment that this point falls a long way short of the assertion made by the Appellants by reference to what they assert are the Community law meanings of an employment relationship and a collective agreement and was, in our judgment correctly, not relied on by the Appellants as an isolated or particular point to support their arguments).[61]In our judgment the above points from the speech of Lord Slynn in the British Fuels & Wilson case:(a) found the points made and our conclusion in paragraphs 50 to 52 above that reliance on pragmatic points rather than rights and obligations is not enough and therefore to succeed the Appellants have to succeed in their argument that "employment relationship" and/or "collective agreement" have a Community law meaning that creates the obligations and rights they rely on), and also(b) strongly supports the point that the extent and meaning of the terms "employment relationship" and/or "collective agreement" and the rights and obligations created or imposed thereby is a matter for National law. As to point (b) the Appellants point out correctly that the British Fuels & Wilson case was not concerned with Article 3 or the meaning of "employment relationship" and/or "collective agreement". However in our judgment this does little to weaken its support for that point although it means that it is not of itself determinative. We return to this point in paragraphs 67 to 70 below.[62]Further in our judgment the above points from the speech of Lord Slynn in the British Fuels & Wilson (and in particular (a), (b), (e), (f), (g), (j), (k) and (l) thereof) provide strong support for the view that the purpose and effect of the ARD is not to alter the rights and obligations between employer and employee after a transfer but to safeguard and continue the existing rights and obligations for the protection of employees. Strong support for this is also found in the citations from paragraphs 26 and 27 of the Danmols case and paragraph 27 of the Rask case (cited and highlighted with underlining and in italics in paragraph 67 below).[63]In support of their arguments as to the purposes and objectives, and thus the underlying rationale, of the ARD and their argument that the terms "employment relationship" and/or "collective agreement" in Article 3 should be given a Community law meaning, in addition to the British Fuels & Wilson case and the citations of authority therein the Appellants directed our attention in particular to the following: (a) Danmols at paragraph 22 to 28 of the judgment and especially paragraph 27:
" … Directive 77/187 may be relied upon only by persons who are, in one way or another protected as employees under the law of the Member State concerned. If they are so protected, the Directive ensures that their rights arising from a contract of employment or employment relationship are not 'diminished' as a result of the transfer' [ emphasis added by the Appellants ]." (b) Commission v Italy at paragraph 17 to 23 of the judgment (especially in relation to 'effective protection' and see at paragraph 23: protection of '… all workers who might be effected by the transfer'), (c) Dr Sophie Redmond Stichting at paragraphs 10 to 11 ('objective of the Directive … is to safeguard employees in the event of a transfer of undertaking'), (d) Commission v UK at paragraphs 27 to 30 on effective protection, and at paragraphs 53 to 58 on proper deterrents and sanctions, (e) Spano at paragraphs 28 to 35 (protection even when undertaking in critical difficulties), and (f) Commission v Belgium at paragraphs 12 to 13 on protection for employees 'affected by a transfer' and by way of general principle at paragraph 17: "
The court has consistently held that the true meaning of rules of Community law can be derived only from those rules themselves, having regard to their context." In our judgment none of these citations are at odds with the points derived from the British Fuels & Wilson case and set out above and they do not provide any particular or significant assistance to the Appellants' arguments on the underlying rationale of the ARD or their arguments on this appeal.[64]The Appellants also reminded us by reference to paragraph 16 of the judgment in the Wendelboe case that although the ECJ had there said that the existence or otherwise of a contract of employment or an employment relationship on the date of the transfer must be established on the basis of the rules of National law that was subject however to the observance of the mandatory provisions of the ARD (see also paragraph 17 of the Bork case) and argued from that proviso that insufficient guidance had been given by the ECJ(i) on the issue whether the terms "employment relationship" and "collective agreement" were governed by Community or National law, or(ii) as to the effect of Community rules and the purposes underlying the ARD on the meaning and extent of those terms or the application of Articles 3 and 4 in the manner urged by the Appellants. We do not agree because: (a) the existence of mandatory provisions and thus of the proviso does not alter the point made expressly in both the Wendelboe and Bork cases that whether or not a contract of employment or an employment relationship is in existence is a matter for National law, (b) the point that there are mandatory provisions is recognised in the speech of Lord Slynn in the British Fuels & Wilson case (at 1159 C/D where he refers to other ECJ cases in addition to the Wendelboe and Bork cases to support the existence of such mandatory provisions) and with that in mind he goes on by reference to ECJ cases to decide that the rights of employees that are to be safeguarded must depend on national rules of the law of contract and statute, (c) Lord Slynn therefore did not accept this point advanced by the Appellants before us and if this point is a good one it would apply equally to the contractual rights under consideration in the British Fuels & Wilson case as to the rights the Appellants argue exist here under the employment relationship and/or the collective agreement, and (d) in any event in our judgment the ECJ has given clear guidance on these matters particularly in the Rask case.[65]In addition Counsel for the Appellants referred us to:(a) Preston v Wolverhampton Healthcare NHS Trust & Others [1998] ICR 227 in particular at 236 C/D, 237A/E, 239 B/F and 240 E/G in which the House of Lords found that a reference should be made to the European Court of Justice as to whether the result in domestic law as to the meaning of "employment" in s. 2(4) Equal Pay Act 1970 was incompatible with Article 119 (now 141) of the EC Treaty, to paragraphs 64 to 72 and in particular 65 and 68 to 70 of the judgment of the ECJ in the Preston case and to paragraphs 32 to 35 of the decision of the House of Lords in the Preston case after the questions put to the ECJ had been answered, to support their arguments (i) that there should be a referral, and (ii) that if there was the ECJ might well adopt the Community law meaning they asserted (particularly as to the meaning of an "employment relationship"), and(b) Schmidt v Spar und Leihkasse der fruheren Amter Bordesholm, Kiel und Cronshagen (Case C-392/92) [1994] ECR I – 1311 as an example of a case where it was right for the National court to refer in circumstances when an argument that the Directive as one for partial harmonisation would not go so far as to apply to the situation in that case could be said to have force but where the ECJ applying Community law found that there was a transfer (and we were referred in particular to paragraphs 10 to 12 and 17 of the judgment in the Schmidt case).[66]As to the cases relied on by the Appellants and referred to in paragraph 65 above in our judgment:(a) the Preston case is dealing with a different situation because it is dealing with a full harmonisation measure and therefore as the question posed by the House of Lords makes clear a situation in which UK legislation could be found to be incompatible with that measure. It is therefore dealing with a very different situation and point to that which exists here as to whether terms in Articles 3 and 4 of the ARD should be given a Community law meaning, particularly when for example the Rask case makes it clear and confirms that the ARD is intended to achieve only partial harmonisation (see paragraph 27 of the judgment therein cited in paragraph 67 below),(b) also the Preston case is dealing with a procedural rule or limitation point and the statements in the judgment of the ECJ and the House of Lords in the light thereof concerning a stable employment relationship are dealing with a very different situation to that which exists under the ARD,(c) we agree with Counsel for Havering College when she submitted in respect of the Schmidt case that the issue of whether there is a transfer for the purposes of the ARD is governed by Community law which was applied in that case and that this issue is completely different to issues relating to the application of Articles 3 and 4 when there is a transfer, and(d) further we note that in paragraph 19 of the judgment in the Schmidt case the ECJ refer by reference to and with approval of the Rask case to the point that the ARD does not preclude an amendment to the employment relationship with the new employer in so far as national law allows such amendment otherwise than through a transfer of the undertaking. Further in our judgment it follows from those points that the cases referred to in paragraph 65 which were relied on by the Appellants to support their arguments do not advance those arguments or detract from (i) the strong support given by the British Fuels & Wilson case for the view that the meaning and extent of the terms "employment relationship" and "collective agreement" in Articles 3 and 4 of the ARD are governed by National law, or (ii) what we regard as the clear and compelling guidance given by the ECJ in for example the Danmols case and the Rask case for this view.[67]In addition to the British Fuels & Wilson case and the citations of authority therein Counsel for Havering College drew our attention in particular to: (a) paragraphs 26 to 28 of the judgment in the Danmols case [1985] ECR 2639 where the Court said (with our emphasis – and see the references thereto in paragraph 62 above):
"26 It is clear from those provisions that Directive No. 77/187 is intended to achieve only partial harmonisation essentially by extending the protection guarantee to workers independently by the laws of the individual Member States to cover the cases where an undertaking is transferred. Its aim is therefore to ensure, so far as possible, that the contract of employment or the employment relationship continues unchanged with the transferee so that the employees affected by the transfer of the undertaking are not placed in a less favourable position solely as a result of the transfer. It is not however intended to establish a uniform level of protection throughout the Community on the basis of common criteria. 27 It follows that Directive No. 77/187 may be relied upon only by persons who are, in one way or another, protected as employees under the law of the Member State concerned. If they are so protected, the Directive ensures that their rights arising from a contract of employment or an employment relationship are not diminished as a result of the transfer. 28 In reply to the second question it must therefore be held that the term 'employee' within the meaning of Directive No. 77/187 must be interpreted as covering any person who, in a Member State concerned, is protected as an employee under national employment law. It is for the national court to establish whether that is the case in this instance."
These paragraphs should be read with paragraph 22 thereof and the following passages from the opinion of the Advocate General (Sir Gordon Slynn) in that case where he said (with our emphasis):
"On the other hand, if an employee of one employer whose business is transferred genuinely and willingly agrees with that employer or the transferee of the business that he will not be engaged under a contract of employment, or in an employment relationship with the transferee, then he cannot, as I see it, insist as against the transferee on the performance, as from the date of the coming into effect of the agreement, by the transferee of obligations arising under the previous contract of employment or employment relationship. In the absence of genuine express agreement to the contrary, however, his rights which had already accrued qua employee against the transferor will continue to be enforceable against the transferee. Put another way, on the transfer of a business an employee of the transferor is transferred to the transferee in the same capacity, and he has all the rights under Article 3, subject to dismissal for one of the exceptions specified in Article 4. If he genuinely agrees to accept a status with the transferee which is not that of an employee he cannot rely on Article 3 as to the future. On the other hand, although the point was not argued, it seems to me that the rights accrued against the transferor are transferred to the transferee, unless these have been satisfied specifically by arrangements made under a genuine contract. It is obviously crucial for national courts to ensure that such agreement is genuine and not tainted by duress on the part of the transferor or the transferee. If as the Commission argues, case 75/63 Hoekstra v Bedrijfsvereniging 4 v Oor Detailhndel [1964] ECR 177 and case 53/81 Levin v Staatssecretaris van Justitie [1982] ECR 1035 require that 'employee' must be given a special definition in Community law, and do not depend on the relevant national law in a particular case, I would accept, on lines similar to those contended for by the Commission, that an employee is one who in return for remuneration agrees to work for another and who can as a matter of law be directed as to what he does and how he does it, whether pursuant to a contract of employment or an employment relationship …. . In my view, the question is essentially one for the national courts to decide on the facts of each case even if a Community law definition is adopted on the lines indicated. The question is thus whether the individual concerned has contractually bound himself or put himself into an employment relationship when he can be required to carry out instructions pursuant to the contract or relationship. The question in each case is whether he is subject to control by the company to an ………………………. of the relationship and, not what he could do if he took extreme measures to change the composition of the board. There is no rigid rule to 50 per cent interest or even 50 per cent voting rights disqualify him from so being. I do not consider, however, that in this Directive a special or exhaustive Community definition is to be adopted. There is no express definition of "employee" or "contract of employment" or "employment relationship" in the Directive. This Directive does not, any more than do Council Directive No. 75/129 on the approximation of the laws of Member States relating to collective redundancies (Official Journal 975, L 48/29) …set out to provide a complete harmonisation of the laws of Member States in this area. The case is to be distinguished from Levin where the word "worker" appears in Article 48 of the Treaty which the Court has held to be one of the foundations of the Community and to be directly applicable and where a uniform definition is essential. It is also to be observed that in Hoekstra at paragraph 1, the Community law definition adopted was exclusively by reference to national laws: "the concept of a 'wage earner' or assimilated worker" has thus a Community meaning, referring to all those who, as such and under whatever description, are covered by the different national systems as social security'. … In my opinion, therefore, the question as to whether a person is to be regarded as an employee for the purposes of this Directive in the present state of Community law is to be decided according to the law of the Member State governing the contract of employment or the employment relationship." and (b) paragraphs 27 to 30 to the Rask case [1992] ECR 5755: where the Court stated (with our emphasis – and see the references thereto in paragraph 62 above): "27. However, as the Court held in Case 324/86 Foreningen af Arbejdsledere i Danmark v Daddy's Dance Hall [1998] ECR 739, paragraph 16 , the Directive is intended to achieve only partial harmonisation, essentially by extending the protection guaranteed to workers independently by the laws of the individual Member States to cover the case where an undertaking is transferred. It is not intended to establish a uniform level of protection throughout the community on the basis of common criteria. Thus the Directive can be relied on only to ensure that the employee is protected in his relations with the transferee to the same extent as he was in his relations with the transferor under the legal rules of the Member State concerned 28 Consequently, insofar as national law allows the employment relationship to be altered in a manner unfavourable to employees in situations other than the transfer of an undertaking, in particular as regards to their terms and conditions of remuneration, such an alteration is not precluded merely because the undertaking has been transferred in the meantime and the agreement has therefore been made with a new employer. Since by virtue of Article 3(1) of the Directive the transferee is subrogated to the transferor's rights and obligations under the employment relationship, that relationship may be altered with regard to the transferee, to the same extent as it could have been with regard to the transferor, provided that the transfer of the undertaking itself may never constitute the reasons for that amendment (judgment in Daddy's Dance Hall , paragraph 17). 29 It should also be borne in mind that, by virtue of Article 3(2) of the Directive, the transferee is bound to continue to observe the terms and conditions of the employment agreed in any collective agreement on the same terms applicable to the transferor under that agreement, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement. The Member State may limit the period for observing such terms and conditions, subject to the proviso that it must not be less than one year. 30 Within the framework of those rules, it is for the national court to assess the extent, under national law, of the transferor's obligations, whether they arise under a contract of employment, an employment relationship or a collective agreement."
[68]We agree that those citations from the Rask case provide clear and compelling authority that the Appellants' arguments are wrong and that the meaning and extent of the terms "employment relationship" and "collective agreement" in Articles 3 and 4 of the ARD, and thus the rights and obligations arising thereunder, are to be assessed and determined by National law. We would go further and say that the Rask case provides the short answer to the Appellants' arguments that these terms should have a Community law meaning and demonstrates that those arguments are wrong and that the ECJ has already determined that their meaning and effect, and thus the rights and obligations they create, are to be determined by National law.[69]We also note that paragraph 31 of the judgment in the Rask case is cited by Lord Slynn in the British Fuels & Wilson case (see page 1158 G/H). This paragraph in the judgment in the Rask case answers the question posed in that case and therefore reflects paragraph 30 of the judgment therein which says that whether the transferor's obligations (and thus the employee's rights and the transferee's obligations) arise under a contract of employment, an employment relationship or a collective agreement it is for the National court to assess their extent under National law. In our judgment this citation by Lord Slynn provides strong support for the view that the fact that he was not dealing with rights under an employment relationship or a collective agreement does not have any significance (and thus for the view we expressed in paragraph 61 above). Further support for this view is found in the decision of the Court of Appeal in Clifton Middle School v Askew [2000] ICR 286 in particular at 297 C/G and 309A to 310C.[70]We also agree with a submission made on behalf of Havering College that the fact that the ECJ in the Danmols case made it clear that the term "employee" within the ARD must be interpreted by reference to National law provides (alone and together with British Fuels & Wilson case and the Clifton Middle School case) strong support for the view that the terms "contract of employment", "employment relationship" and "collective agreement" and the rights and obligations created thereby should also be assessed and governed by National law. Linguistically(i) in Article 3(3) "employee" and the "employees' rights" are linked to all three terms, and(ii) in Article 4(2) "employee" and his working conditions are linked to the terms "contract of employment" and "employment relationship". On a linguistic approach it would therefore be very odd if National law did not apply to all three terms. The same point can be made if the issue is approached purposively because the terms relate to the relationship between, and the respective rights and obligations of, an employee and his employer. Conclusion on the Article 3 argument[71]For the reasons we have given we reject this argument. The Article 4(2) argument[72]In our judgment on a proper analysis this argument is one that a variation from Silver Book terms cannot be imposed on the Appellants and is based on public policy and the proposition flowing therefrom that the Appellants cannot waive mandatory rights conferred on them by the ARD (see for example the Daddy's Dance Hall case, and the British Fuels & Wilson case at 1160 F and 1166F). In our judgment this argument is not properly based on Article 4(2) in isolation.[73]Like the Employment Tribunal (see paragraph 27(xii) of the Extended Reasons) we agree with the submission of Counsel for Havering College that Article 4(2) is a separate Article dealing with what in England would be described as a constructive dismissal and thus with responsibility for an ending of the contract of employment and with it the employment relationship at the election of the employee (see the opinion of Advocate General Slynn in the Danmols case at page 2641 and Merckx and Neuhuys v Ford Motors [1996] ECR at paragraphs 36 to 39). There was no such termination in this case by the employees.[74]In our judgment the responsibility referred to in, and imposed by, Article 4(2) is not addressing the issue that arises when in English terms a contract of employment is varied and an employment relationship continues on different terms. In English law questions can arise in those circumstances as to whether there has been a termination (or rescission) or a variation only (see for example Morris v Baron [1918] AC 1 and British and Benningtons Limited v NW Cachar Tea Company [1923] AC 48). It seems to us that in a case where an employee accepts a change that is imposed in circumstances that amount to an impermissible waiver so that Daddy's Dance Hall applies an argument that the "imposed variation" itself amounts to either:(a) an effective termination which precludes arguments that rights and obligations that existed prior to, and on, the transfer continue as between the employee and the transferee as was the case in the British Fuels & Wilson case, and further or alternatively(b) a termination within Article 4(2) and that therefore the employee is precluded from seeking to enforce, or require compliance with, rights and obligations that were transferred by virtue of the ARD (and/or TUPE) would not succeed. No such argument was advanced in this case on behalf of Havering College.[75]Further it seems to us that if after (and on the basis of) an "imposed variation" of rights and obligations to which Daddy's Dance Hall applies (and which is thus not one based on a genuinely voluntary agreement of the type envisaged by the Advocate General – Sir Gordon Slynn, in his opinion in the Danmols case at pages 2641/2) an employee decides(i) to sue in, and obtains, damages or compensation for breach of contract and/or unfair dismissal, and(ii) to continue to work under the new terms and conditions, the issue arises whether by that choice or election and result (which could have been made if the transferor had imposed the same changes) the employee has waived rights conferred on him by the ARD. This issue: (a) was not argued before us although the Employment Tribunal refer to (but do not decide or base their decision on) the issue of affirmation in paragraph 27(xv) of the Extended Reasons, and (b) raises points that are similar to and to an extent overlap with those relating to which Lord Slynn concluded in the obiter part of his speech in British Fuels & Wilson case relating to what he calls the second issue (see pages 1164/6) would have to be referred to the ECJ. If this issue had been part of the argument and reasoning founding the decision in favour of Havering College, which it was not, it seems to us that having regard to that view of Lord Slynn there would have been considerable force in the point that this issue (and thus the issue of affirmation considered by the Employment Tribunal) should have been referred to the ECJ.[76]Additionally, and in any event, in our judgment:(a) if the argument on "impermissible variation" is based on Article 4(2) alone, or in part, this does not give it an additional or free standing force,(b) the Appellants' argument based on Article 4(2) cannot succeed unless their Article 3 argument succeeds because it is only then that the Appellants can point to a right that has been removed. Therefore our rejection of the Article 3 argument is fatal to the Article 4(2) argument, and(c) on the facts as found by the Employment Tribunal there was no termination within Article 4(2) (i.e. one because the transfer involved a substantial change in working conditions) and we have rejected the Appellants' argument referred to in paragraph 40 (b) that the findings of the Employment Tribunal on causation are perverse or not properly explained. Conclusion on the Article 4(2) argument[77]For the reasons we have given we reject this argument. The argument by reference to paragraph 27 (xiv) of the Extended Reasons[78]As mentioned in paragraph 39 above in this paragraph the Employment Tribunal consider the position on the hypothetical basis that their earlier conclusions were wrong and decide that the Applicants' case would fail because (by reference to the central question they pose) the variations (if that is what they were) were not "because of the transfer". The argument being considered is therefore the Appellants' argument that as the Employment Tribunal put it there was a variation that fell foul of the principles enunciated by the ECJ in Daddy's Dance Hall and thus their argument that there were imposed and impermissible variations.[79]In argument before us Counsel for Havering College made the point (and the first argument she advanced was) that unless the Appellants succeeded on this limb of their appeal which relates to causation that was a sufficient ground to dismiss the appeal because the other contentions advanced by the Appellants depend on them showing that the reason for the changes was sufficiently connected to the transfer. We agree and as appears from paragraph 31 above this was accepted by Counsel for the Appellants.[80]However like the Employment Tribunal we have dealt with the Article 3 arguments first because as appears in paragraph 33 above they are a necessary basis for the Appellants' case that Havering College was not "at liberty" to offer them contracts that did not include Silver Book terms and there were imposed and impermissible variations.[81]In our judgment (as with the Article 4 argument which as we have said is on a proper analysis one that there were impermissible variations) our rejection of the Appellants' Article 3 argument is fatal to their argument that there were imposed and impermissible variations.[82]Further in our judgment our rejection of the Article 3 arguments means that the decision of the House of Lords in the British Fuels & Wilson case is determinative of and fatal to the Appellants' arguments that there were imposed and impermissible variations because in this case (as in that one) the termination of the contracts of employment and the rights and obligations thereunder (and under, or by reference to the employment relationship and the collective agreement) that were transferred were not attributable to, or occasioned by, the alleged variations but:(i) in the cases of Ms Humphrey and Ms Allen were attributable to, or occasioned by, the expiry of their fixed term contracts (which incorporated Silver Book terms and were entered into after the transfer), and(ii) in the case of Ms George was attributable to, or occasioned by, the expiry of her fixed term contract (which also incorporated Silver Book terms and was entered into after the transfer) and her decision to accept a promotion rather than to revert to her contract for an indefinite term as a lecturer. In those circumstances in our judgment the decision of the House of Lords in the British Fuels & Wilson case (see in particular 1164 D/F which makes it clear that the first issue in that case relating to the validity and effectiveness of the dismissals was determinative and there was no need to consider the second issue based on the argument that the dismissals were nullities and there had been variations) has the result that in this case those terminations of the rights and obligations of the Appellants that transferred were effective and that is determinative of this case. We will however consider the two arguments advanced on behalf of the Appellants referred to in paragraph 40 above.[83]The first argument is that the Employment Tribunal erred in law in particular by considering whether the variations (if that is what they were) were solely by reason of the transfer because they submitted by reference to Litster v Forth Dry Dock Co Ltd [1990] 1 AC 546 (and in particular at 554F (Lord Keith), 558H (Lord Templeman) but see also 577 G/H (Lord Oliver), and Warner v Adnet [1998] ICR 1056 in particular at 1064C (Mummery LJ) that the correct question is whether the variation is for a reason "connected with" the transfer. In our judgment this argument is plainly wrong for the following reasons:(a) in those cases the judges are summarising, or referring to, Regulation 8 of TUPE rather than the ARD (which the Appellants relied on) and in any event it is wrong to extract and use such shorthand and substitute it for the words in the relevant statutory or equivalent material when those words and their effect are directly in issue (see for example In re Sevenoaks Stationers Ltd [1991] Ch 164 at 176F ),(b) the ECJ in Daddy's Dance Hall (see paragraphs 14 to 17 of the judgment) make it clear that (i) their reasoning is based on the point that dismissal by reason of the transfer must be considered as mandatory and part of the protection based on public policy that leads to the conclusion that rights conferred by the ARD cannot be waived, or restricted, even with the consent of the employees, and (ii) the rights and obligations of the employment relationship may be altered with regard to the transferee to the same extent as it could have been with regard to the transferor, provided that the transfer of the undertaking itself may never constitute the reason for that amendment and this is confirmed by the ECJ in the Rask case (see paragraph 28 and also paragraph 31 of the judgment),(c) there are at least six other cases in which the ECJ has held that the ARD is intended to protect employees from changes motivated "solely" by the fact of the transfer (namely Wendelboe [1985] ECR 462 at paragraph 15 ("motivated solely by the fact of the transfer"), Danmols [1985] ECR 2639 at paragraph 26 ("solely as a result of the transfer"), Ny Molle Kro [1987] ECR 462 at paragraph 29 ("solely as a result of the transfer"), Commission v Belgium [1998] ECR 127 at paragraph 13 ("solely because of the transfer"), Bork [1998] ECR 3057 at paragraph 18 ("solely as a result of the transfer") and Jules Dethier [1998] ICR at paragraphs 34 and 36 ("sole justification is the transfer" and "solely by reason of the transfer").(d) the passages referred to in (c) accord with the approach and rationale in paragraphs 14 and 15 of the judgment of the ECJ in Daddy's Dance Hall which show that the inability to waive rights conferred by the ARD is based on the public policy, and thus the purposes, that underlie the ARD and this in turn supports the view that the trigger to the application of the principle and thus the inability to waive described in Daddy's Dance Hall (i) should only be activated to further that public policy and those underlying purposes, and (ii) should mirror the reference to the "transfer itself" and "because the transfer involves a substantial change --- " in respectively Articles 4(1) and 4(2), and(e) the approach taken by the Employment Tribunal is consistent with (and the Appellants argument that all that is required is a connection with the transfer is inconsistent with) the speech of Lord Slynn in the British Fuels & Wilson case at 1166 D/F and the view of the Court of Appeal in Whitehouse v Charles A Blatchford & Sons Limited [2000] ICR 542 that there is no infringement of an employee's rights under the ARD or TUPE if the transfer is simply "the occasion" for changes (see in particular pages 542F, 550G and 555C/D).[84]The second argument is that the conclusion reached by the Employment Tribunal on the facts in paragraph 27(xiv) of the Extended Reasons (and in earlier paragraphs thereof) that(i) the transfer was not the sole or main reason for the introduction of the change from Silver Book terms, and(ii) the sole or main purpose of the incorporation of the new Colleges by the Further and Higher Education Act 1992 was not the breaking of the Silver Book terms, were perverse or not properly explained. Again in our judgment these arguments are plainly wrong.[85]The test for perversity is a high one (see for example Piggott Bros v Jackson [1992] ICR 85). In respect of this argument both sides provided us with a list of aspects of the evidence before the Employment Tribunal which they invited us to consider. We shall not repeat those lists. In our judgment they clearly establish that the Employment Tribunal had evidence before them upon which they could base their conclusions on these points and that those conclusions were well within the range of permissible options. Indeed we would go further and record that in our judgment their conclusions on them are correct. In our judgment in advancing this argument, and thus the argument recorded in paragraph 13 of the Extended Reasons, that the sole or main purpose of the incorporation of the new colleges was the breaking of the Silver Book terms(i) the Appellants took a blinkered, partisan or subjective approach and one which placed far too much weight on the pragmatic points we have referred to in paragraph 53 above, and(ii) it seems to us from what we have read that the last two sentences of paragraph 13 of the Extended Reasons are correct.[86]In advancing the second limb of this argument Counsel for the Appellants referred us to Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 in respect of the duty to give reasons, which does not deal with the duty of an Employment Tribunal in this respect, rather than to the well known authorities relating to the approach this Tribunal should take to arguments as to the adequacy and content of Extended Reasons and the duty of the Employment Tribunal to give reasons (of which Meek v City of Birmingham District Council [1987] IRLR 250 is perhaps most regularly cited – see also the cases referred to in paragraphs 29 to 44 of Linsdsay v Alliance & Leicester Plc (EAT/1317/98)). Unsurprisingly there is some overlap between the cases relating to the duty of Employment Tribunals to give reasons and the Flannery case but in our judgment we are bound by the cases relating to Employment Tribunals which have regard to the functions of an Employment Tribunal, this Tribunal and the higher courts on appeals from decisions of Employment Tribunals. In our judgment applying the approach in those cases (and indeed the approach set out in the Flannery case) the Employment Tribunal have properly explained their reasons for reaching the conclusion contained in paragraph 27(xiv) which should not be read in isolation. It should be read with paragraphs dealing with the facts and in particular paragraphs 8 to 24 of the Extended Reasons. Conclusion on the argument by reference to paragraph 27 (xiv) of the Extended Reasons[87]For the reasons we have given we reject these arguments. The argument on paragraph 27(viii) of the Extended Reasons[88]The Appellants argued by reference to the sentence: "We conclude that it is clear that employees of the Respondents at the time of the transfer had to be employed on Silver Book terms" that this paragraph was internally inconsistent and that the conclusions or assertions in the next sentences were wrong. We do not agree. In our judgment on a proper and thus a generous reading of this paragraph of the Extended Reasons it is not internally inconsistent and none of it is wrong.[89]In our judgment in the context of the paragraph the highlighted sentence is making the point that by virtue of the ARD (and TUPE) on transfer the existing employees of the transferor (the local authority) became employees of the Respondent (Havering College) on their existing terms including those in the collective agreement (i.e. the Silver Book). This is what happened. The other sentences are applying (and expanding on) the earlier acceptance in the sub-paragraph by the Employment Tribunal of the argument of Counsel (Ms Tether) for the Respondent that there was no contractual obligation to renew on Silver Book terms. As appears above we agree with this point (see paragraph 46 above).[90]In any event on the approach to be taken to Extended Reasons (see paragraph 86 above) in our judgment any lack of clarity in this sub-paragraph does not found an appeal. Overall Conclusion[91]For the reasons we have given we refuse to remit any question to the ECJ and we dismiss this appeal. We make no order as to costs.