MR S RITCHIE v 1. SHAWCOR INC 2. OMSCO INC [2008] UKEAT 0040_07_0603

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2008] UKEAT 0040_07_0603

Case No Appeal No. UKEAT/0040/07

Venue 52 MELVILLE STREET, EDINBURGH, EH3 7HF

Between

MR S RITCHIEAPPELLANT

1. SHAWCOR INC 2. OMSCO INCRESPONDENT

Before

Lady Smith Mr J Keenan McIpd Dr W Speirs

Date 6 March 2008

[1]APPEARANCES For the Appellant MR A COWAN (Solicitor-Advocate) Messrs Simpson & Marwick WS Solicitors Albany House 58 Albany Street EDINBURGH EH1 3QR For the Respondents MR S BRITTENDEN (of Counsel) Instructed by: Messrs Covington & Burling Solicitors, 265 Strand LONDON WC2R 1BH SUMMARY Practice and Procedure: Preliminary issues Claim for unfair dismissal and for a protective award for failure to consult re: TUPE transfer in 2005. Neither Respondent was a UK company. Respondents' case was that there was no relevant transfer under TUPE regulations. Although initially they also challenged jurisdiction under reg.19 of the ET Regulations, they conceded jurisdiction in that respect at a PHR. Question arose as to whether they had also conceded that TUPE applied. Tribunal apparently found that they had not and that even if they had done, that would not rule out the possibility of it determining that it did not if, for instance, it emerged in evidence that the transferring employer was not situated in the United Kingdom immediately before the transfer. The issue, accordingly, remained live. The Claimant appealed, arguing that the Tribunal should not have allowed a concession to be withdrawn. Appeal dismissed by the Employment Appeal Tribunal: the point taken on appeal proceeded on a misconception as to the different nature of the jurisdiction conferred on Employment Tribunals under reg. 19 and a Tribunal's jurisdiction to afford a remedy under the TUPE regulations. THE HONOURABLE LADY SMITH Introduction The Claimant seeks(a) compensation for unfair dismissal, and

(b) a protective award for failure to consult regarding what he asserts was a TUPE protected transfer that occurred in 2005, at the time of which he was dismissed. The Respondents are both non-UK companies.

[2]Regulation 19 of the Employment Tribunal (Constitution & Rules) Regulations 2004 ("the 2004 regulations") and regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE"), lie at the heart of the matter which came before us on appeal. The dismissal in this case having occurred in 2005, it is the 1981 version of the TUPE which applies.

[3]At a case management discussion on 20 April 2006, the Chairman, Ms L Doherty noted:

" 5. It was agreed at this stage that a PHR would be appropriate to determine the identity of the claimant's employer prior to when it is said by the claimant the transfer took place in terms of the TUPE regulations, in consequence of which it is alleged the claimant (sic) was he was unfairly dismissed. In fixing a PHR to consider this, the Tribunal take into account Mr Cowan's position that the claimant does not accept that he was employed by Omsco Industries Ltd. As it is the respondents' position that the claimant was employed by that company (and that his employment was never the subject of a TUPE transfer) this is an issue which will require to be determined by the Tribunal. The Tribunal will also be required to determine the issue of jurisdiction which is raised by the respondents. It is the respondents' position that the Tribunal does not have jurisdiction as the company which it said originally employed the claimant and the company to whom it is said the transfer took place are both incorporated out with the UK and have no place of business in the UK. The respondents' position is that the TUPE Regulations do not apply in these circumstances. It was the claimant's position that the Tribunal has jurisdiction by virtue of Regulation 19 of the Tribunal rules on the grounds of the place of execution of the contract of employment."

[4]Following the pre-hearing review which followed, on 18 December 2006, the Tribunal, Chairman Mr W A Muir, sitting alone, pronounced the following

[5]In his reasons, he records the following:

"1. This was a Pre- Hearing Review hearing which had been fixed to determine two preliminary issues viz. the identity of the claimant's employer as well as an issue of jurisdiction relating to whether or not the employer had a place of business in the United Kingdom. When the Tribunal convened, Mr Pilkington, appearing on behalf of the respondents, advised the Chairman that the respondents had conceded that the claimant's employment had been assigned to Omsco Inc. The jurisdiction point had been conceded too. The parties moved the Chairman to amend the designation of the first and second respondents (the transferor and transferee respectively) so that the new first respondent (the transferor) is now ShawCor Inc and the new second respondent (the transferee) is now Omsco Inc. The Chairman readily grants this motion to amend the designation of both of these respondents."

[6]The hearing of the Claimant's claim began on 14 May 2007 before an Employment Tribunal sitting at Glasgow, Chairman Mr R A MacKenzie. At the start of the hearing, the Claimant's agent stated that the Respondents had conceded jurisdiction not just for the purposes of the unfair dismissal claim but also in respect of the TUPE claim. That was disputed on behalf of the Respondents. Their position was that the concession had only extended to regulation 19 jurisdiction, not to TUPE jurisdiction. The Tribunal determined that the issue of whether or not TUPE applied was a matter for them to determine. Evidence began to be led but after a break, the Claimant's agent indicated that he wished to appeal against that decision. The Tribunal accordingly issued a judgment which was registered on 20 June 2007 and which was in the following terms:

"The judgment of the Tribunal is that the issue of whether the claimant's employment transferred to the second respondents shall be determined after the hearing of evidence."

The Appeal

[7]The notice of appeal advanced, essentially, two arguments, both predicated on the assertion that the Respondents had conceded "TUPE jurisdiction" at the pre – hearing review and that that concession had been allowed to be withdrawn at the hearing chaired by Mr MacKenzie. The first argument was that whilst it was recognised that the decision whether or not to allow a concession to be withdrawn was a matter for the Tribunal's discretion, there was a rule of law that that discretion was only to be exercised in "exceptional circumstances" and the Tribunal had failed to apply that rule: if they had done so, they had reached a perverse decision. The second was that if the decision of the Tribunal did not involve allowing a concession to be withdrawn, it was a decision as to whether or not the TUPE regulations applied and that was one which ought to have been taken at a pre- hearing review: in allowing the matter to be raised at the stage it was, the Tribunal applied the wrong test, which failing, reached a perverse decision.

[8]In oral submission before us, Mr Cowan sought to introduce new arguments that were not foreshadowed in his notice of appeal but ultimately accepted that it was not open to him to do so. In support of the first ground, he submitted that the Respondents had, at the pre-hearing review, conceded that the Claimant's employer had a place of business in the United Kingdom which went not only to the jurisdiction requirements of regulation 19 of the 2004 regulations but to what he referred to as the territorial jurisdiction requirements of regulation 3 of TUPE. He submitted that the authorities made it clear that there required to be exceptional circumstances before a concession could be withdrawn. He referred in support of that submission to: Glennie v Independent Magazines (UK) Ltd

[1999] IRLR 719

and Secretary of State for Health and another v Rance and Others

[2007] IRLR 665

. He went through the Tribunal's reasoning and submitted that there was no suggestion of an exceptional circumstances test having been applied. He also submitted that the matters relied on by the Tribunal at their paragraphs (b), (c), (f) and (g) were irrelevant and that they had failed to have regard to the fact that the Respondents could have raised the issue of TUPE jurisdiction at the case management discussion with a view to it being determined at a pre- hearing review, that at the point the concessions were made, the Respondents were represented by experienced counsel, that given the concessions, the Tribunal did not require to hear evidence on jurisdiction, and that the point that the Respondents sought to take was not pled in their ET3s.

[9]Mr Cowan accepted that the authorities he referred to concerned the withdrawal of concessions at appeal stage and that it might be easier to withdraw a concession at first instance stage. He also accepted that it was not submitted to the Tribunal that there would be any prejudice to the Respondents if the concession that he referred to were to be withdrawn.

[10]For the Respondents, in a clear and cogent submission, Mr Brittenden stated that it was the Respondents' firm position that no concession had been made to the effect that regulation 3 of TUPE applied. The Claimant had conflated regulation 19 of the 2004 regulations with regulation 3 of TUPE and in so doing ignored the fact that, for there to be a relevant transfer for the application of the latter it was necessary to ask, firstly, what was transferred and then secondly, was whatever it was that was transferred situated in the UK immediately before the transfer? At the pre- hearing review, the identity of the employer had been confirmed. That having been done, it was also recognised that the regulation 19 requirements were satisfied. Whilst the Respondents had previously relied on regulation 19(2)(a), it was noticed that the Claimant could, even if it did not apply, show that his case fell within the provisions of 19(2)(b). That was why regulation 19 "jurisdiction" was conceded. The upshot was that it was accepted that the Tribunal could entertain the claim. That did not, however, mean that the Tribunal had jurisdiction for the purposes of applying TUPE.

[11]Mr Brittenden went through paragraph 5 of the note following the case management discussion and said that it was plain that it had three parts to it. Only two of them went forward to a pre-hearing review, namely identity of the employer and the question of regulation 19 jurisdiction, as indicated by paragraph 6 of the note. The application of TUPE was not to be determined at the pre-hearing review.

[12]Separately, Mr Brittenden drew attention to the fact that at the end of the pre-hearing review there were still two Respondents to the claim, the transferor company and the transferee company. That of itself showed that the issue of the applicability of TUPE remained live. Had it been conceded, there would have been no need to retain the transferor company as a Respondent, given the terms of regulation 5. Rather the position was, plainly, that the Claimant was saying he had an "ordinary" unfair dismissal claim against the transferor company which he would only run if it was not established that there was a relevant transfer. However, if it was established that there was such a transfer then he would direct his claim against the second Respondent.

[13]Mr Brittenden submitted that the case of Rance could be distinguished, as could Glennie . The guidance list in Rance was not exhaustive and no consideration had, for instance, been given to what would be the position if there had been a genuine misunderstanding. He added that it would not, in his submission, be just to hold a party to a concession that was not intended and was not made in clear and unambiguous terms.

[14]Finally, returning to the fundamental nature of any question of jurisdiction, Mr Brittenden referred to Secretary of State for Employment v Globe Elastic Thread Co Ltd

[1979] IRLR 327

and Ahsan v Watt

[2008] IRLR 243

for a submission that parties cannot by conduct or agreement confer on a court or tribunal a jurisdiction that it does not otherwise have. Relevant Law: the Regulations and their effect:

[15]Regulation 3 of TUPE provides:

"3(1) Subject to the provisions of these Regulations, these Regulations apply to a transfer from one person to another of an undertaking situated immediately before the transfer in the United Kingdom or a part of one which is so situated."

[16]Regulation 19 of the 2004 regulations provides:

"… (2) An employment tribunal in Scotland shall only have jurisdiction to deal with proceedings (referred to as "

Scottish proceedings") where- (a) the respondent or one of the respondents resides or carries on business in Scotland; (b) the proceedings relate to a contract of employment the place of execution or performance of which is in Scotland; …"

[17]A number of statutory rights are subject to limitations which involve geographical restriction. The rights conferred by TUPE fall into that category. However, as the terms of regulation 3 show, it is not possible to decide the geographical issue until there has first been a determination of what undertaking, if any, was transferred and whether or not the claimant was employed by the transferor immediately before the transfer. It is trite that employer and undertaking are not necessarily one and the same thing. Accordingly, a determination that an employer resides in or has a place of business in Scotland will not, of itself, determine whether he transferred an undertaking for which the employee worked that was situated in the UK immediately before the transfer. To put it another way, the undertaking transferred by a Scottish company could be an undertaking that was situated outside the UK immediately before the transfer and TUPE would not then apply. Thus, if a respondent were to concede that he carried on business in Scotland, that would not amount to concession that TUPE applied or that full enquiry into the issues that are raised by regulation 3 did not require to be made.

[18]In addition to the requirements of the particular statute on which the claim is based, in this case TUPE, an employment tribunal only has jurisdiction to deal with proceedings if regulation 19 is satisfied. Discussion and Decision

[19]We are readily satisfied that the Claimant's appeal is misconceived. Firstly, we do not read the note following the case management discussion or the reasons attached to the judgment following the pre-hearing review as indicating that the Respondents had made any concession which assisted the Claimant in his case under TUPE.

[20]We agree with Mr Brittenden that paragraph 5 of the note following the case management discussion shows that three matters were indicated as being at issue between the parties namely(i) the identity of the Claimant's employer;

(ii) whether or not there was a relevant transfer for TUPE purposes, and

(iii) whether or not regulation 19 jurisdiction could be established since the Respondents asserted that they were not UK companies and did not carry on business in the UK (regulation 19(2)(a) matters). We also agree that it is evident that the TUPE issue was not one of the two matters that went forward to be determined at the pre-hearing review.

[21]The Respondents' concession that was referred to in the pre-hearing review reasons clearly related to regulation 19 jurisdiction. It can be seen to have followed from the Claimant's response to the Respondents' case that because they were not UK companies and did not carry on business in Scotland, there was no such jurisdiction. That response is recorded at the end of paragraph 5 of the case management note and was that his contract of employment had been executed in Scotland. That was sufficient for regulation 19 purposes. It is not surprising, in that event, that the regulation 19 point was conceded. That that was all that was being referred to as being conceded is further supported by the fact that, in paragraph 1 of the pre-hearing review reasons, it is recorded that the hearing had been fixed to determine:

"the identity of the employer as well as an issue of jurisdiction relating to whether or not the employer had a place of business in the United Kingdom."

[22]That is regulation 19 language. It is not indicative of the issue of whether or not regulation 3 of TUPE was satisfied being under consideration at that point at all.

[23]In the event, the identity of the Claimant's employers pre transfer had, by the start of the hearing, been agreed and, as Mr Brittenden quite properly indicated, it was realised by then that whatever the position was regarding regulation 19(2)(a), the Claimant was able to bring his case under reference to regulation 19(2)(b).

[24]Further, we agree that the Claimant's argument is undermined by the fact that following the pre-hearing review and at the time of the hearing before the Tribunal chaired by Mr MacKenzie, his case was directed not just against the transferee Respondent but against both transferor and transferee. Had the application of TUPE been conceded, the case against the first Respondent would have fallen away. The fact that the Claimant has continued to direct his case against both is itself indicative of his position being that the application of TUPE is yet to be determined.

[25]Mr Cowan appeared ultimately to accept that the application of TUPE had yet to be determined in this case but he seemed to submit that what he referred to as the geographical aspect of TUPE had been conceded and was foreclosed by the acceptance of regulation 19 jurisdiction. That is not, however, a tenable approach. It involved looking at the issues that arise under regulation 3 of TUPE in the wrong order. As we have already noted, the first question for regulation 3 is: what undertaking was transferred? Only when that question has been answered can the question of whether or not it was one which was situated in the UK before the transfer be addressed.

[26]Finally, even if we had reached the conclusion that the Respondents had made some concession under reference to TUPE, that could not have had the effect of conferring power on the Tribunal to afford TUPE rights to the Claimant. Contrary to what was submitted by Mr Cowan, there is no rule that a concession on jurisdiction is binding absent exceptional circumstances so as to bar a court or Tribunal from considering the issue. The Tribunal would still have had to be satisfied that TUPE did in fact apply. As was said in the Ahsan case, at paragraph 30:

"…parties cannot by agreement or conduct confer upon a tribunal a jurisdiction which it does not otherwise have … It is easy to see why parties should not be able to agree to confer upon a tribunal a jurisdiction which Parliament has not given it."

[27]Thus, as the Chairman Mr Mackenzie commented at paragraph (l):

"In the event of evidence being led which was to the effect that there had been not transfer in terms of Regulation 3 of the TUPE then the claim would be refused as we would have no jurisdiction to consider the claim notwithstanding any concession made by the respondents."

[28]We fully agree with those comments and are satisfied that the judgment issued by that Tribunal was correct and certainly not the result of any error of law. Disposal

[29]In these circumstances, we will refuse the appeal and remit to a freshly constituted Employment Tribunal to proceed with the hearing that was due to have taken place before the Tribunal chaired by Mr MacKenzie. We are providing for a freshly constituted Tribunal on the basis that the MacKenzie tribunal heard very little evidence, that the hearing will, inevitably, have to start again given the lapse of time and in the hope that it will be quicker and easier to constitute a fresh tribunal rather than reconstitute that one.

[30]We should also record that Mr Brittenden expressly reserved the Respondents' position as regards expenses. In the event of success they would, he advised, be making an application for expenses on the ground that the appeal was misconceived. The issue of any whether or not to make any such award is, accordingly, reserved meantime.

order

"The Order of the Tribunal is to amend the designation of the first respondents from Omsco Inc to ShawCor Inc. 6300 Navigation, Houston, Texas and to amend the designation of the second respondent from Vallourec & Mannesman to Omsco Inc, 6300 Navigation, Houston, Texas."