UNITED GUARDING SERVICES LIMITED v (1) ST JAMES SECURITY GROUP LIMITED (2) MISS YOLA HERMOZA [2004] UKEAT 0770_03_1504

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2004] UKEAT 0770_03_1504Case No Appeal No. UKEAT/0770/03Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
UNITED GUARDING SERVICES LIMITEDAPPELLANT(1) ST JAMES SECURITY GROUP LIMITED (2) MISS YOLA HERMOZARESPONDENT
Before
Mr Justice Hooper Mr J R Crosby Mr P M SmithDate 15 April 2004
[1]APPEARANCES For the Appellant MR D HOBBS (Of Counsel) Instructed by: Messrs Windsor & Co Solicitors 670 High Road Tottenham London N17 OAH For the 1st Respondent For the 2nd Respondent MR I McGLASHAN Representative Peninsula Business Services Ltd Riverside New Bailey Street Manchester M3 5PB MISS L DUBINSKY Representative Free Representation Unit 4th Floor, Peer House 8-14 Verulam Street London WC1X 8LZ SUMMARY Issue was: What was the employee's place of work immediately before dismissal and from which he was excused at time of transfer by reason of illness? Application of FAIRHURST WARD ABBOTS LTD -v-BOTES BUILDING & ORS [2004] EWCA Civ 83 . Whether employee worked in the part of the undertaking transferred. THE HONOURABLE MR JUSTICE HOOPER This is an appeal brought by United Guarding Services Limited ("United") against a decision of the Employment Tribunal sitting at London South dated 12 August 2003 holding that the second Respondent, Miss Hermoza, was employed in the relevant part of the undertaking transferred to the 1 st Respondent ("St James") on 31 March 2003.[2]There is no dispute that the only issue before the Employment Tribunal was whether or not Miss Hermoza was employed by St James in that part of the St James undertaking transferred on that date to United. The relevant part of the undertaking was 50 The Broadway, Westminster. On 31 March 2003 United won the security contract in relation to those premises. We were told that the security contract for 50 The Broadway is, in accordance with normal practice, put out for tender every twelve months. Under the terms of the contract both St James and its successor United were obliged to provide 24 hour a day security at 50 The Broadway. Some seven security guards were assigned to 50 The Broadway in order to meet the contractual obligations.[3]Miss Hermoza started working for St James on about 24 January 2002. Her contract included the following term:
"Location You will normally be based at 50 The Broadway, Westminster, London SW1 however you may be required to work at different sites within reasonable travelling distance according to the needs of the business. Initially you will be working at different sites which will be confirmed by telephone. Thereafter, you will usually be based at a fixed site which will be confirmed in writing within a number of weeks"
. We were told that no such written confirmation had in fact been provided to Miss Hermoza.[4]Miss Dubinsky told us that under the terms of the contract, Miss Hermoza would only be paid if she was called to work at a particular site. Absent such a call, Miss Hermoza was not entitled to be paid. We add that clause 4 of the contract stated that Miss Hermoza would normally be guaranteed a minimum of 36 hours per week. Under clause 5 her rate of pay varied from site to site, the lowest rate payable being £5.10 per hour and the rate at 50 The Broadway being £6.55 per hour.[5]The Tribunal found that Miss Hermoza was carrying out her work up until 19 September 2002 at 50 The Broadway. During the remainder of September and until 6 October she worked increasingly fewer hours at the Broadway. Between 6 October and the end of October 2002 she worked occasional days for St James at other London sites. After October 2002 she did not work anywhere for the respondent.[6]In evidence she said that she was provided with very little work at all after that period and such work as she was offered was unsuitable for a variety of reasons. The Managing Director, Mr Williamson, of St James gave evidence that work had been offered to the applicant for the period ending Christmas 2002 and further offers of work were made at the beginning of 2003.[7]According to the Tribunal:
"In a nutshell Mr Williamson stated that there was a very substantial communication problem between [St James] and [Miss Hermoza]. I am putting the matter in a very simple shorthand language, the main reason why [Miss Hermoza] did not in fact work at other sites operated by [St James] was a communication breakdown."
[8]The reason why she did not work at 50 The Broadway was due to a break-down in the relationship between herself and the manager of the site, a Mr Patiolla. That break-down was the subject matter of proceedings brought by Miss Hermoza on 11 November 2002 against St James. She made complaints of sex discrimination, bullying, harassment and threatening behaviour in her workplace and, in her words, "I have to beg them to correct my wages".[9]In paragraph 11 of the IT1 she wrote, amongst other things:
"I would like the tribunal to tell the company to reinstate me in my permanent site at 50 The Broadway and to compensate me for the time I am out of work because of this bully [Mr Patiolla] and unfair removal in my work place to date without work"
[10]In a subsequent typed document she complained of bullying, humiliation, harassment etc between May and October 2002 at 50 The Broadway by Mr Patiolla. In paragraph 10 she referred to the other sites to which she went for a few days in October and said that these sites were not her usual sites and were less favourable to her.[11]On 5 December 2003, St James entered a notice of appearance stating that it intended to resist the application and that the applicant had been dismissed. That was later said by St James to be an error and Mr Hobbs did not rely on it. It was contradicted by the original notice of appearance which contained eleven paragraphs and was served on or about 5 December 2003. In that notice of appearance St James accepted that they had received a complaint from Miss Hermoza against Mr Patiolla and it was contended that "following the complaint [St James] offered [Miss Hermoza] an alternative site of work to prevent her from coming into contact with the Supervisor pending an investigation into the allegations". In paragraph 3 it is stated that St James found no evidence to back up her allegations. There is some dispute as to when that investigation came to an end.[12]In paragraph 4 St James wrote:
"It is contended that [Miss Hermoza] failed to follow reasonable management instructions whereby phoning [St James] on a daily basis to be instructed of her daily shift. Furthermore, [Miss Hermoza] has failed to contact [St James] to notify them of her movements since 25 October 2002."
[13]In paragraph 5, St James wrote that:
"In response to Miss Hermoza's desire to be reinstated, St James contends that Miss Hermoza is still an employee of the company and they await her next correspondence with St James to inform them of her movements"
. In paragraph 9 it was stated that Miss Hermoza had continually failed to contact St James, as instructed, to arrange her daily shift.[14]In paragraph 11 the Tribunal wrote: ".....we accept that Mr Williamson made it quite clear that throughout the entire period from about October through until March, Mr Williamson and his managers were not prepared to allow the applicant to work at The Broadway on any shift when there was the possibility that the Applicant's working shift would overlap with that of Mr Patiolla. Furthermore we find that it is clear from Mr Williamson's evidence and some of the letters which were exchanged between the first Respondent and the Applicant, that increasingly Mr Williamson and the 1 st Respondent's management were not prepared to allow the Applicant to work at The Broadway at all, whether or not there was an overlap of shift with Mr Patiolla".[15]It is agreed that the effective date for not allowing her thereafter to work at The Broadway was 6 October 2002.[16]Paragraph 12 sets out why Mr Williamson was not prepared to and did not in fact, offer work to Miss Hermoza at that site. Paragraph 12 reads as follows: "The reasons why Mr Williamson was not prepared to and did not in fact offer work to the Applicant at that site, were firstly because of the obvious breakdown in relationship between herself and Mr Patiolla. The second reason we find was that the First Respondent had carried out what it claimed to be a full investigation of the Applicant's allegations [about which we make no finding in one direction or another] and had found them to be unsubstantiated. Thirdly, therefore it followed that they did not accept the Applicant's claims that she was 'the victim' and that it was Mr Patiolla who ought to be moved to a different site. Fourthly, Mr Williams stated that there were difficulties because the First Respondent claimed that the Applicant was causing trouble with some of the tenants/occupiers of the building. Fifthly, Mr Williamson and management were beginning to go down the disciplinary road because of the various difficulties and the Applicant and finally, sixthly, Mr Williamson was receiving advice in a general way about the fact that there were Tribunal proceedings and we find he did not take any final decision about any of the possible options open to him as the Managing Director, pending those Tribunal proceedings".[17]Although the Tribunal did not say so, it seems clear that, given that St James was not paying Miss Hermoza and had no contractual obligation to do so, there was no "hurry" to resolve the issues.[18]At a directions hearing on the 6 March 2003 shortly before (so it appears) St James were informed that they had lost the contract, the Regional Chairman asked about the possibility of Miss Hermoza's employment situation "being sorted out by agreement". Mr McGlashan, representing St James at the hearing, telephoned Mr Williamson and gave a written statement on that day which was recorded in writing: "I have spoken to the Managing Director of St James, Mr Neil Williamson. He advises that the company do not currently have any vacancies on permanent sites but will write to the Applicant as soon as any vacancies arise".[19]Following the transfer to United, St James on 29 April 2003 added two further paragraphs to the notice of appearance. Paragraph 12 stated that United had taken over the security contract and that the transfer of undertakings regulations applied. "United have maintained the continuity of employment of existing employees engaged in work at 50 The Broadway".[20]Paragraph 13 reads:
"It is contended that rule 5 of the TUPE Regulations 1981 operates so as to transfer the Applicant's contract of employment from the Respondent to United Guarding Services Limited in addition to all duties and liabilities under or in connection with such contract."
[21]In its Notice of Appearance as a Second Respondent, United alleged a failure on two occasions to get a reply to requests to St James to give details of employees based at the site. There was a dispute of fact which the Tribunal did not resolve as to whether or not a reply had been sent.[22]On 14 March United had left job application forms at 50 The Broadway and Miss Hermoza did not apply for a position. According to the Notice of Appearance, on 1 April 2003 United employed five of the persons at 50 The Broadway including Mr Patiolla. There is reference to three other workers including a Mr "Laurance" who had worked at the premises before the date of the transfer and who, according to Miss Hermoza, had taken her place. He had accepted an offer to continue working for St James. In paragraph 15 United contended that Miss Hermoza was not "assigned or allocated" to the undertaking immediately before the transfer.[23]Subsequently, Miss Hermoza issued further proceedings alleging unfair dismissal against both United and St James.[24]There is no dispute that the Tribunal had to ask itself the question set out in United's Notice of Appeal, namely whether the Applicant was "assigned" or "allocated" to 50 The Broadway immediately before the transfer. It is agreed that there is no difference in the meaning of the word "assigned" and the meaning of the word "allocated".[25]We turn then to the way in which the Tribunal approached that question and the answer which it gave.[26]The Tribunal said, and there was no dispute about this, that the Applicant was certainly "assigned" to 50 The Broadway up until, at the least, September 2002 "when the problems of alleged harassment and in due course sex discrimination proceedings claim arose".[27]In paragraph 19, the Tribunal asked hypothetically "what we would have decided if there had been no transfer question, but the Applicant had come to us, say, arguing a case for constructive dismissal in March". The Tribunal said that they would have investigated the case and reached a conclusion about whether Miss Hermoza's allegations were justified or whether St James' rejection of her allegations was justified. The Tribunal continued: "Had we been persuaded that the Applicant's allegations were justified, we believe that we would have concluded that the First Respondent had wrongly removed her, the victim of discrimination of her Manager and we would have either recommended or indeed considered recommending orders whereby the Applicant would be 'reinstated' to her post at The Broadway. Alternatively we might have decided that the Respondents were justified in rejecting her allegation and were justified in excluding her from The Broadway site pending the Tribunal proceedings or a final election by one side or the other".[28]It is Mr Hobbs' submission that this was not the correct approach. He made the same criticism of the finding in paragraph 20: "We find that so far as the contract of employment is concerned, there was blatantly no mutual agreement that the Applicant's normal location of work had been agreed to be changed. The Applicant could in no sense be said to have agreed not to return to The Broadway and to become an unallocated floating security guard. Indeed, there was letter after letter, quite apart from the contents of the Tribunal proceedings, in which the Applicant asserted that she wished to be "reinstated" to her position at The Broadway. Throughout the entire history, we find, the Applicant's case was that she was a Broadway employee and was entitled to remain a Broadway employee".[29]In paragraph 21 the Tribunal found that as a matter of law St James was not entitled to change the position unilaterally. Mr Hobbs submits that this must be wrong given the terms of the mobility clause and we are inclined to think that he is right as a matter of contract law.[30]The Tribunal went on to say that St James had not reached the position of either sacking Miss Hermoza or disciplining her for refusing to work elsewhere, even though they were clearly thinking about such a course and had started down that road. The Tribunal found that the approach that it had adopted towards Miss Hermoza was "analogous to 'suspension' or something of that kind" and that Miss Hermoza's "precise contract of employment status remained in the air pending the outcome of the Tribunal proceedings".[31]The Tribunal concluded that Miss Hermoza was assigned to The Broadway undertaking immediately prior to the transfer and her contract of employment was thus transferred. It had reached this conclusion "on a cold balancing act of the factors in each direction".[32]Mr Hobbs submits that the Tribunal, by concentrating on a lack of agreement by Miss Hermoza to any change of the site of her work, on the fact that she had not agreed to becoming an unallocated guard and on what Miss Hermoza wanted to occur, applied the wrong test. He also submitted that the Tribunal erred in basing its conclusions upon what might have happened had she been successful in her discrimination claim and upon what the tribunal (wrongly he submits) understood to be the position under the contract.[33]Both Mr McGlashan and Miss Dubinsky submitted that the Tribunal has adopted the proper approach. Miss Dubinsky submitted that the Appellant's attack on the findings is no more than an attack on findings of fact dressed up as a matter of law. She reminded us that this Tribunal is reluctant to interfere with findings of fact.[34]Apart from the issue of law in the first part of paragraph 21, Mr Hobbs did not dissent from the various findings of fact in the paragraphs which we have summarised.[35]Mr Hobbs submits that the proper test is to be found in a decision of the EAT in Fairhurst Ward Abbotts Ltd v Botes Building & ors EAT/1007/00/DA, 27 March 2003 (unreported). One of the employees, Mr Salih, had been absent from work because of illness from 4 January 1999 and had not returned to work in April at the time of the transfer. The tribunal said that the essential question was "what was his contractual place of work immediately before the transfer from attendance at which he was excused by reason of his illness?" HH

Judge Burke QC said, giving the judgment of the Tribunal (paragraph 78):

"The appropriate test, in our judgment, was whether he had been employed to work [in the part transferred] immediately before the transfer i.e whether [the part transferred] was his contractual place of work and that was where [ the employer] would have required him to work immediately before the transfer had he not been excused from attendance. The same test would apply to the employee on holiday, on study leave or on maternity leave."
[36]The test adopted by HH Judge Burke was unanimously approved by the Court of Appeal [2004] EWCA Civ 83 . Mummery LJ said that the Employment Tribunal had not asked or answered the factual question, namely where Mr Salih would have been required by his employer to work, had he been fit to do so (paragraph 41). May LJ did not disagree that this was the appropriate test but merely disagreed as to whether or not the matter should have been remitted to the Tribunal.[37]Unfortunately the judgment of HH Judge Burke was not provided to the Employment Tribunal.[38]We take the view that the proper test is that set out by HH Judge Burke now approved by the Court of Appeal. Mr Hobbs submits that, applying the two-stage test, although The Broadway may have been Miss Hermoza's contractual place of work (given the absence of any direction under clause 4), St James would certainly not have required her to work there immediately before the transfer had she worked. To support that submission he relies, in particular, upon the findings of fact in paragraph 11 of the extended reasons which we have already set out earlier in this judgment. If the Employment Tribunal had applied the correct test (about which it unfortunately had not been told) there would, in our view, have only been one possible conclusion on these factual findings, namely that Miss Hermoza would not have been required to work at The Broadway.[39]It was submitted by Mr McGlashan and Miss Dubinsky that a finding that Miss Hermoza was not assigned to The Broadway necessarily involves the conclusion that she must either have been assigned somewhere else (which she had not been) or that she was a floating guard. They point to paragraph 20 of the decision which state that Miss Hermoza had not agreed to become an unallocated floating guard. Mr Hobbs submits that it is not necessary to decide her status. We agree. The only question which the Tribunal had to ask themselves was whether or not she was assigned to 50 The Broadway. It is our unanimous view that, as she was not allowed to work "at all" at 50 The Broadway under the St James contract at the relevant time, Miss Hermoza was not assigned to 50 The Broadway. In these circumstances it was open to the Employment Tribunal to conclude that Miss Hermoza was not so assigned without a finding as to where she was assigned.[40]For all these reasons we allow the appeal. We remit back to another Tribunal the resolution as against St James only of the two outstanding applications brought by Miss Hermoza.[41]Before leaving this case we would wish to express our concerns about TUPE. We stress that our comments involve no criticism of the appellant or of the 1 st respondent.[42]This is another case in which an employee has not had her claim resolved before an employment tribunal because there is an issue as to who is her employer following a transfer. We asked Mr Hobbs whether it was possible for the transferee to shift responsibility for any alleged wrongdoings of the transferor via some sort of third party proceedings. He prepared a note concluding that it was not possible, a note with which both Miss Dubinsky and Mr McGlashan agreed. We attach that note as Annex A to this judgment.[43]In contracting-out situations such as this one, there is no legal obligation upon the transferor to inform a potential transferee of the existence of a substantial claim. There being no contractual relationship between the transferor and the transferee, no indemnity can be sought and no request for information need be answered. Furthermore the transferor is in a far better position than the transferee to defend any claim which arose whilst the employee was employed by the transferor. There is a risk that a transferor faced with a substantial claim by an employee in a part of its undertaking will deliberately not seek the renewal of the contract relating to that part and hope to place on a transferee any responsibility for that claim. There is also an incentive to delay the processing of claims in the expectation that a contract to provide, say security services, could be lost to another company.[44]We note that under the Council Directive of 12 March 2001 on the approximation of the laws of the Member States relating to the safe-guarding employee's rights in the event of transfers of undertakings etc, member states may make provision for the transferor and the transferee to be jointly liable. This has not been implemented in this country.[45]We are particularly concerned that employees are not having their disputes resolved quickly. In this case Miss Hermoza instigated the proceedings in November 2002 and yet fifteen months later she has not had the benefit of her hearing. We wonder whether it is possible in cases like this to resolve the employee's claims before resolving the issue of who is the employer. Whilst accepting that that may appear strange, it would achieve the important objective of resolving as quickly as possible the employee's complaints against the employer. We make it clear that what we are saying is no more than an invitation to employment tribunals to see whether there is a better way of dealing with this kind of case than that employed here.[46]We would, in conclusion, like to thank Mr Hobbs, Mr McGlashan and Miss Dubinsky for their help. In particular we thank Miss Dubinsky who has conducted Miss Hermoza's case without fee.