RAFFAELE SCARANO v RADMORE TRADING LTD [2002] UKEAT 0175_01_0403

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2002] UKEAT 0175_01_0403Case No Appeal No. EAT/0175/01Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
RAFFAELE SCARANOAPPELLANTRADMORE TRADING LTDRESPONDENT
Before
His Honour Judge Peter Clark Miss C Holroyd Mr B GibbsDate 4 March 2002
[1]APPEARANCES For the Appellant NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE APPELLANT For the Respondent NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE RESPONDENT JUDGE PETER CLARK: This is an appeal by Mr Scarano, the Applicant before the Birmingham Employment Tribunal, against that Tribunal's decision promulgated with extended reasons on 14 December 2000, dismissing his complaint of unfair dismissal brought against the Respondent Radmore Trading Ltd, on the grounds that he had not completed one year's continuous employment with the Respondent.[2]The facts, as found by the Tribunal, were these. In December 1997 the Appellant commenced employment at a restaurant in Wolverhampton called Sofias. That business was then owned by a company, Sofia's (Wolverhampton) Ltd. The effective owner of that company was a Mr Siadatan. That gentleman also owned a restaurant, also called Sofias, in Walsall, through the medium of a company, Sofia's (Walsall) Ltd. Occasionally, the Appellant helped out in the Walsall restaurant. He was the assistant manager at the Wolverhampton restaurant. Mr Siadatan entered into a franchise agreement, which crystallised on 16 October 1999, whereby the Respondent company, Radmore, effectively owned by Mr Silk, would take over the running of the Wolverhampton restaurant and in return pay Mr Siadatan's company a proportion of the restaurant's profits and a monthly consultancy fee.[3]It was common ground, first that the transaction constituted a relevant transfer between the two companies for the purposes of Regulation 5 of the TUPE Regulations 1981 and secondly that the Appellant was employed in the transferor's business immediately before the transfer on 16 October 1999.[4]Most of the restaurant staff transferred to the new company, however, the Tribunal found that under an arrangement between Messrs Siadatan and Silk, initially the Appellant and a chef, Mr Sergio Dario, both of whom might be described as key workers, were retained in the transferor's employment and loaned to the Respondent, the latter being invoiced for their wages. Thus the Appellant in practice continued working at the Wolverhampton restaurant without interruption after 16 October.[5]The so-called loan arrangement did not last long. In the early part of the second week of the new franchise agreement Ms Claire Smith, Mr Siadatan's book-keeper, arrived at the restaurant with numerous P45's for all the former staff including the Appellant and Mr Dario. She told Mr Silk that there had been a change of plan; Mr Sidatan's company was no longer to employ those two gentlemen. It was up to him whether he wished to employ them. Mr Silk could not afford to lose them; so he took them into the employment of Radmore, employment which continued in the case of the Appellant until his summary dismissal on 15 June 2000 for alleged gross misconduct.[6]At a preliminary hearing held in this appeal before a division presided over by Mr Recorder Burke QC, at which the case was permitted to proceed to this full hearing, the EAT directed that the chairman of the Employment Tribunal, Mr Rostant, be asked to provide his notes of evidence. Unfortunately the file and the case has been lost by the Employment Tribunal. In these circumstances the learner Recorder directed that the parties prepare a note of the evidence for submission to the chairman and lay members of the Employment Tribunal for their comments. The Appellant's solicitor did so, however by this stage Radmore had ceased trading and looked likely to go into and has subsequently gone into liquidation. The Respondent's solicitors were no longer instructed. Nevertheless, that note was sent to the Chairman and members, who did not dispute the accuracy of its contents.[7]It is clear from the note that the solicitor then appearing for the Appellant below, took two points on continuity, it being said that the Appellant could not claim continuity of employment with Mr Siadatan's company, that is before October 1999. First he relied on the provisions of TUPE, but secondly he relied on section 218(2) of The Employment Rights Act 1996 and referred the Tribunal to the EAT decision in Macer v. Aberfast [1990] ICR 234. Section 218(2) provides; so far as is material:
"If a trade or business, or an undertaking…is transferred from one person to another – (a) the period of employment of an employee in the trade or business or undertaking at the time of the transfer counts as a period of employment with the transferee (b) the transfer does not break the continuity of the period of employment."
[8]It was argued that the arrangement between Messrs Siadatan and Silk concerning the initial loan of the Appellant by the former to the latter (through their respective companies) was part of the machinery transfer. The Tribunal rejected that submission. Were they correct in law to do so? We have not had the benefit of argument from either party in this appeal, the Appellant is unwell and unable to attend and the Respondent company, as we have indicated, is now in liquidation and the liquidator has indicated that no representation will be forthcoming in this appeal for economic reasons. However, in our judgment they were not. It appears from the note of proceedings prepared by the Appellant's solicitors that the Tribunal initially indicated that they would reserve their decision in order to research the point, but then gave an ex tempore judgment through the chairman instead. A more considered response may have led them to the case of A & G Tuck Ltd v. Bartlett [1994] IRLR 162 , a decision of the EAT cited at the preliminary hearing by counsel then appearing for the Appellant, and the later Court of Appeal authority of Clark.and Tokley Ltd v. Oakes [1998] IRLR 557.[9]In Bartlett the Applicant was employed as production manager by the transferor company at their Slough premises. That business was transferred to a new company. He was directed to assist the new owners by his employer. He did so for two weeks, whereafter he was taken into the employment of the transferee. Subsequently he was dismissed by the transferee. An Employment Tribunal found that his employment with the two companies was continuous, applying the predecessor provision to section 218(2) ERA. The Employment Appeal Tribunal upheld that decision.[10]Bartlett , together with Macer v. Aberfast was referred to without disapproval by Lord Justice Mummery, giving the leading judgment in Oakes . That case is authority for the proposition that the words "at the time of transfer" in what is now section 218(2) ERA, do not focus on the precise moment of transfer, here 16 October 1999, but include a process extending over a period of time.[11]In the present case it is absolutely clear to us that the transfer from Mr Sadiatan's company to the Respondent included the short-term loan of key employees, the Appellant and Mr Dario. Applying the broad interpretation in section 218(2) approved by the Court of Appeal in Oakes , we have concluded that no Tribunal properly directing itself could come to a finding other than that section 218(2) applied and preserved this Appellant's continuity of employment, going back to the inception of his employment at Sofia's (Wolverhampton) in December 1997. In these circumstances we shall allow this appeal and substitute a declaration that the Appellant has sufficient continuous employment to bring his complaint of unfair dismissal against the Respondent company in liquidation. The case will be remitted to the Employment Tribunal for hearing on the substantive merits of the claim before a freshly constituted Tribunal. For that purpose it will be necessary to notify, not only the liquidator of the Respondent company but also the Secretary of State, who may have a liability out of the fund in the event that the complaint succeeds, particularly in relation to a claim for wrongful dismissal based on summary termination of the employment.