Liddell's Coaches v Cook & Ors (Transfer of Undertakings : Service Provision Change) [2012] UKEAT 0025_12_0910

EAT
Liddell's Coaches v Cook & Ors (Transfer of Undertakings : Service Provision Change)
[2012] UKEAT 0025_12_0910 · 2012-10-09
[1]This is an appeal from the judgment of an Employment Tribunal sitting at Glasgow, (Employment Judge W Muir sitting with members), registered on 9 February 2012, finding that the Claimant Mr Cook was unfairly dismissed by Liddell’s Coaches Limited (“Liddell’s”), that his contract of employment had not been transferred to Abbey Coaches Limited (“Abbey”) by means of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) and that they had no jurisdiction to entertain Mr Gold’s complaint of unfair dismissal as he had not completed the requisite qualifying period of employment. Mr Cook was found entitled to a monetary award of £3,912.90. Mr Gold received an award in respect of notice pay.[2]The Claimants were represented before the Tribunal but chose to rely, the purposes of the appeal, on a written submission which was, essentially, to the effect that they did not demur from the approach taken by the Employment Tribunal.[3]Liddell’s were represented by Ms Barnett, HR Consultant, before the Tribunal and before us. Abbey were represented by a director, Mrs Walker, before the Tribunal and by Mr Templeton, Employment Consultant, before us. Background[4]Liddell’s’ business includes providing school transport services for local authorities. Mr Cook and Mr Gold were employed by Liddell’s as coach drivers. Mr Cook also carried out other driving jobs during the school holidays and worked in Liddell’s’ garage, where they valued his mechanical skills.[5]In August 2010, Liddell’s tendered for and were successful in being awarded five contracts to provide transport services for children who had to be decanted from Gargieston Primary School when it was discovered that that school had been built over a mineshaft. The children thus suddenly required to be ‘decanted’ to other schools in the area. Gargieston is in the local authority area of East Ayrshire Council; that council was the client in the five transport contracts. Each of the five contracts was stated to be for a period of one year.[6]Prior to the end of the 2010/2011 Gargieston decant contracts, Liddell’s tendered to provide a similar service for the following year, 2011/2012. On the findings of the Tribunal, the client’s requirement was a finite one; a new school was under construction at the old Gargieston site and was scheduled to be complete by June 2012, within the relevant project schedule. The children would, accordingly, be able to return to their old school for the start of the 2012/13 school session and there would be no further need for decant transport. In a letter dated 26 January 2012, Mr Kennedy of East Ayrshire Council wrote:
“…I would confirm that I see no reason for any further extension of the current temporary transport contract for the decant of pupils of Gargieston Primary and Nursery Class beyond June 2012.”
[7]Liddell’s were only successful in obtaining one Gargieston decant contract for the year 2011/2012. Abbey tendered for and won three of those contracts for that year. The contracts were stated to be for the period 17 July 2011 to 14 July 2012.[8]The Tribunal found in fact that: “It is unusual for contracts of one year’s duration to be awarded. Typically local authorities, at least in the Glasgow, Ayrshire and Dumfries & Galloway Regions, contract with coach operators for periods between 3 and 5 years. At the present time they have entered into 18 contracts with East Ayrshire Council of 5 years duration and 4 of one year’s duration included in which is the contract for Gargiesto n ...” [1][9]Liddell’s terminated Mr Cook’s contract of employment on or about 22 July 2012. They thought that his employment would be transferring over to Abbey but Abbey did not accept that Mr Cook had become their employee.[10]We can deal with Mr Gold’s position shortly; it was not suggested that the Tribunal were wrong to find that he did not have the requisite period of service to support a claim for unfair dismissal. Thus all that was in issue in his case was who was liable for his notice pay. The Tribunal’s Judgment[11]The Tribunal found that TUPE did not apply because the decant transport contract was in relation to a single specific event and was of short term duration. Parties were agreed that it related to a single specific event which was the rebuilding of Gargieston Primary School and the Employment Tribunal appear to have been content to proceed on the basis that that was correct; they do not explain how the construction of a building can be an “event” but nor do they question the appropriateness of parties’ agreement. They acknowledged that interpretation of the relevant provisions was not without difficulty. Under reference to a passage in the IDS Handbook on Transfer of Undertakings [2] , they observed that the government intended that any single specific event founded on would require also to be of short term duration to be of relevance. The Employment Tribunal then explain, in paragraph 5, at pages 10-11 that, in the circumstances – particularly that transport contracts were, typically, for 3/5 years rather than as short as for one year – they concluded that the contract for 2011/12 was also of short term duration. Thus, the requirements of reg 3(3)(a)(ii) of TUPE were not satisfied the effect of which was that Mr Cook’s contract of employment did not transfer to Abbey. Regarding the possibility that that sub-paragraph of TUPE did not require to be interpreted so as to require any single specific event relied on to be of short term duration, the Tribunal added: “…for the sake of completeness and in the event that the Tribunal has adopted the wrong approach, it did not regard a period of one year as being inconsistent with the notion of short term duration.” [3][12]That was in the context of the typical length of such transport contracts being 3/5 years and one year being accordingly, in their view, short term.[13]We observe, in passing, that the Tribunal did not analyse the facts to determine whether or not the other relevant provisions of TUPE were satisfied. In particular, they did not address the question of whether or not the activities carried out by Abbey for the client were fundamentally or essentially the same as those which Liddell’s had carried out for the client immediately prior to the transfer, they did not address the question of whether or not Liddell’s had organised a group of employees by reference to the client’s requirements under the five Gargieston decant transport contracts, and they did not address the question of whether or not, if there was such an organised grouping, it had had as its principal purpose the carrying out of those requirements, all of which would have arisen if they had concluded that the requirements of reg 3(3)(a)(ii) were satisfied.[14]For the reasons we explain below, we find that the Tribunal did not err in law in reaching their conclusion that reg 3(3)(a)(ii) was not satisfied but had we concluded otherwise, the Tribunal’s reasoning would have given us no assistance as to whether, on the facts, those other requirements of TUPE had been met or not. We note that the Tribunal proceeded on the basis that there was a relevant organised grouping of employees – indeed, they appear to have perhaps pressured Mrs Walker into giving up on her primary submission that it had not been shown that Liddell’s had any such grouping – but they base their approach solely on the fact that Mr Cook spent more then 20 hours per week on driving the ‘decant’ schoolchildren. That, however, is beside the point. It may show that if there was a relevant grouping of employees then Mr Cook was assigned to it (as reg 4(1) requires) but it does not of itself show that there was a relevant grouping of employees or that that group had the relevant activities as their principal purpose. The Tribunal state, in paragraph 5, that the provisions of reg 3(3)(a)(i) were satisfied but there is no sign of them having addressed these questions in the light of their findings in fact; their conclusion seems to be based simply on Mrs Walker’s concession. Had we had to consider the case on Mrs Walker’s first submission (as recorded by the Tribunal at p.8 lines 5-7), we would not have been prepared to regard it as conceded or withdrawn in these circumstances; the observation of the Tribunal on which they pressed her did not relate to the entirety of the point that she was seeking to make, namely that reg 3(3)(a)(i) as a whole had not been shown to be satisfied.[15]In the event, the Tribunal’s failure properly to address these other issues which obviously arose does not matter but it would have been better if they had set out their views and we would urge Employment Tribunals to set out their analysis and reasoning on all the relevant issues in the case, not only those on which they determine it. It also follows from these observations that we consider that Employment Tribunals require to take particular care when pressing a party’s representative to make a concession, particularly where the representative concerned is a lay person. The Appeal Motion for Fresh Evidence[16]Ms Barnett began with a motion to be allowed to submit fresh evidence. The evidence in question was a bundle of documents which contained the invitations to tender in respect of the provision of school transport services in East Ayrshire for the school year 2012/13. They had come to light in or about February 2012. They were said to show that some of the invitations were for a contract period of one year only although it was accepted that others were for longer. Ms Barnett submitted that it was relevant and that it could have influenced the Tribunal when considering whether or not the contracts under consideration were of short term duration.[17]Mr Templeton opposed the motion. It was impossible to say whether the documents would have been given any weight by the Tribunal. The motion came far too late. Tender documentation for the relevant year could have been recovered by Liddell’s prior to the hearing but that had not been done. No application had been made to the Tribunal for review of its decision in accordance with the guidance in Adegbuji v Meteor Parking Ltd UKEATPA/1570/09/LA.[18]We refused the application for fresh evidence. It came too late. It did not relate to the period under consideration by the Tribunal and Liddell’s did not appear to have made any attempt to recover and lodge documents relating to that period. Submissions for Liddell’s[19]Ms Barnett departed from her first ground of appeal. She insisted only on her second ground of appeal and part of her third ground.[20]Her second ground of appeal was that the Tribunal had reached a decision which was irrational and not a permissible option. Twelve months was not a period of short duration. This was a case of a single specific event, namely the building of the new school. That took place over a two year period and could have taken longer than that. She did, however, accept that the Tribunal had made no findings in fact about how long the construction of the school in fact took. There was, she submitted, a need to give a meaning to transfer under TUPE so as to protect employment. The Tribunal should have given consideration not only to the length of time that Abbey contracted for but also the length of time that Liddell’s had had the contract. Her submission seemed to be that the two periods should have been added together. There was a lack of authority as to what amounted to a short term duration. Twelve months did not automatically amount to a short term duration.[21]Turning to her third ground of appeal, Ms Barnett submitted that the Tribunal’s findings at paragraph 3(f) showed that one year contracts were in fact typical; they certainly existed. Her reference was to the fact that at the time of the hearing before the Tribunal, Liddell’s had four one year contracts with East Ayrshire Council. Submissions for Abbey[22]Mr Templeton submitted that whether or not a contract was short term or long term was a matter of perspective. There had, he said, been some excitement about the decision in a case called Denton v Kirwan but he had not been able to find a report of it; it is difficult to understand why he had any difficulty in that respect since it is readily accessible on the EAT website. We refer to it in the ‘Relevant Law’ section below.[23]Mr Templeton submitted that the question of whether or not the contract was of short term or long term duration was a matter for the Tribunal as it was a question of fact. They had not fallen into error. Their decision was not an impermissible option on the wording of TUPE. Under reference to Eddie Stobart Ltd v J Moreman and others [2012] UKEAT/0223/11/1702 at paragraph 19 where Underhill J observed, at paragraph 19, that there is no rule that the provisions of TUPE require to be stretched so as to achieve transfer in as many situations as possible.[24]Regarding the interpretation of reg 3(3)(a)(ii), he submitted that it did not fall to be interpreted so as to require, for disapplication, the circumstances to be both a single specific event and a task of short term duration. Either would suffice. The Tribunal had, in any event, considered both interpretations and on either view, TUPE did not apply. They had not erred. Cross Appeal[25]We can deal with this briefly since, in the end of the day, the cross appeal was academic. Mr Templeton’s submissions were that the Tribunal had failed to consider the implications of some of the ‘organised grouping’ referred to being retained by Liddell’s, had failed to consider whether the principal purpose of that grouping was the carrying out of the relevant activities, failed to consider whether Mr Cook was assigned to that organised grouping, failed to consider what were the implications when asking, for the TUPE purposes, whether the activities said to be transferred were fundamentally the same, of Abbey having been successful in securing only three of the five contracts with Liddell’s retaining one of them, and that they had failed to explain how there was a transfer when, according to the Tribunal, the operative date for TUPE was 17 July yet Mr Cook was said to have continued in Liddell’s’ employment until 22 July. He also submitted that the Tribunal had misdirected themselves in holding that, for TUPE to be disapplied, there required to be both a single specific task and task of short term duration.[26]In response, Ms Barnett accepted that the Tribunal’s reasons were vague regarding the matter of organised grouping of employees but Mrs Walker had made the concession to which we refer above. As to principal activities, the findings showed that they were transporting the children to and from school on account of the Gargieston decant. Regarding the nature of the activities carried out by Liddell’s and Abbey, they were broadly similar. She accepted that the disparity in dates as between 17 and 22 July was not explained. She submitted that, for disapplication of TUPE by reason of reg 3(3)(a)(ii), there did need to be both a single specific event and a task of short term duration. Parties had agreed that the construction of the new school was a single specific event. Relevant Law[27]In so far as material, TUPE provides:
“2. INTERPRETATION (1) In these regulations – … references to “organised grouping of employees” shall include a single employee; … “relevant transfer” means a transfer or a service provision change to which these Regulations apply in accordance with regulation 3 and “transferor” and “transferee” shall be construed accordingly and in the case of a service provision change falling within regulation 3(1)(b), “the transferor” means the person who carried out the activities prior to the service provision change and “the transferee” means the person who carries out the activities as a result of the service provision change; … 3. A relevant transfer (1) These Regulations apply to – (a) a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity; (b) a service provision change, that is a situation in which – (i) activities cease to be carried out by a person (“a client”) on his own behalf and are carried out instead by another person on the client’s behalf (“a contractor”); (ii) activities cease to be carried out by a contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person (“a subsequent contractor”) on the client’s behalf; or (iii) activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by the client on his own behalf, and in which the conditions set out in paragraph (3) are satisfied. … (3) The conditions referred to in paragraph (1)(b) are that (a) immediately before the service provision change – (i) there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client; (ii) the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; and (b) the activities concerned do not consist wholly or mainly of the supply of goods for the client’s use. (4) Subject to paragraph (1), these Regulations apply to - … (c) a transfer of an undertaking, business or part of an undertaking or business (which may also be a service provision change) where persons employed in the undertaking, business or part transferred ordinarily work outside the United Kingdom. … 4. Effect of relevant transfer on contracts of employment (1) Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee.”
[28]The Tribunal interpreted reg 3(3)(a)(ii) as meaning that if reliance was placed on the “single specific event” part of the provisions, the event in question required to be of short term duration before TUPE was disapplied. Other than the IDS Handbook and a reference to what was understood to be the government’s intention, the Tribunal found no helpful guidance. So far as we are aware, the interpretation issue has not been authoritatively determined but it was discussed by the President of this Tribunal, Langstaff J, in the case of SNR Denton UK LLP v Kirwan and another UKEAT/0158/12/ZT where, at paragraph 41, he said:
“41. I turn to the third argument, which is a further and separate ground for allowing this appeal. It is that the Tribunal was in error in its approach to determining whether Regulation 3(3)(a) was satisfied. It is not necessary for me in approaching this to determine the interesting but somewhat theological question of whether the draughtsman of the statute intended the words “a single specific event” to be qualified by “of short‑term duration” as well as the word “task”; that is a perfectly permissible way of reading the sub‑paragraph, but so too is it on the face of it a permissible reading to read “a single specific event” as standing on its own and the words “of short‑term duration” to be linked to the word “task” alone. If it were relevant to express a preference, mine would be for that advanced by Mr Harris, which is that the “short‑term duration” covers both events, and I would do so because it seemed to me that the point here is essentially one of time and permanence. The context is employment; an impermanent employment which is anticipated is unlikely to have the consequence of the transfer Regulations being applied, but a single specific event might be of very considerable duration. It is possible to think of several such examples.”
[29]It is, of course, with hesitation that we would seek to disagree with the President, but it respectfully seems to us that the term “single specific event” stands alone. An ‘event’ is a single happening or occurrence; in philosophical terms, it is an occurrence involving a qualitative or quantitative change or complex of changes located in a restricted portion of time. Further, “event”, of itself, connotes short duration; to refer to a single specific event of short term duration is, we consider, tautologous. There was no need for the draughtsman to apply the phrase “of short term duration” to “single specific event”.[30]Whilst we can think of “activities” related to “single specific events” which may not be of short term duration – such as the provision of security advice during the planning stages prior to a major event as referred to in the DTI Guide - that, with respect, is a separate matter. The Olympics example cited in the DTI Guide does not, we consider, demonstrate that TUPE would not be disapplied in the first contract to which they refer [4] . The Olympic Games were plainly a single specific event; they opened on a specific planned date (27 July 2012) and closed on a specific planned date (12 August 2012) seventeen days later. They were of short term duration. The example given does not, we consider, show that a single specific event could be long term, however lengthy or extended the period over which security advice referred to was provided. There, the client intention is still shown to be that the security advice activities were to be carried out in connection with a single specific event which was of short term duration and TUPE is, accordingly, disapplied. That is not surprising since, as we say, we cannot envisage anything that can properly be characterised as being an event being other than of short term duration. The fact that activities carried out in connection with an event are to be long term does not make the event itself long term. The flaw in the DTI thinking appears to us to be conflate “activities” and “event”. They seem to think that TUPE will not be disapplied if the activities in question can be shown to be long term but, whatever problems there may be with the wording of reg 3(3)(a)(ii), on no view can it be read so as to qualify the word “activities” with the phrase “of short term duration”. The grammar used does not permit that interpretation.[31]Regarding the matter of ‘short term duration’. In Denton , Langstaff J continued:
“42. The reason why it is unnecessary to determine that in this case is that both, as it seems to me, look to something that is of limited duration. If it were necessary, and I do not think in this case it is, to determine the scope of “short‑term duration”, i.e. to ask what length of time is involved, then I have on the one hand the submission made by Mr Reade that because by statute administration must be completed within a year with an exceptional six‑month addition to follow, such that that is inevitably short‑term, and that of Mr Harris, which is that one should have regard to the context of employment law and employment relationships as a whole within which to make the assessment. 43. In case this particular point goes further, given the outstanding appeals, I am told, in respect of both Hunter and De’Antiquis , and, for that matter, the very recent currency of Edenwest , I should perhaps say something of my conclusions. They are these, but tentatively advanced for the reasons I have given. First, what is short‑term or long‑term is inevitably a matter of perspective. Perspective depends entirely upon the viewer. The view to be taken here in what is an avowedly employment context is, it seems to me, that of the employee and not that of the historian for whom short‑term duration may be a very much longer period. It cannot be so short‑term as to suggest that it is of no great relevance to consider whether there should be a transfer under TUPE or not; that suggests that a length of time of more than a few weeks will undoubtedly still be capable of falling within “short‑term duration”
. But it seems to me that the broader context is that of employment relationships as a whole, in which such guidelines, as they are, are that at the time that the Regulations were made it would take a year for an employee to obtain employment rights other than those in respect of automatic dismissals, but similarly an employee might expect to receive at the most 12 weeks’ notice from his employer and could in some circumstances give as little as 1 week to him. He would have three months within which to appeal a finding of unfair dismissal. 44. All these are capable of creating a context within which “short term” may be judged, but it seems to me that there is more than just the general employment context; there is necessarily the context of the particular employment and the particular relationships. That must vary, inevitably, from case to case. It will be, inevitably, therefore to some extent a matter of fact and degree, and, providing the Tribunal has regard to the words of the paragraph and the general context within which to place the particular facts of the case, a finding of fact and degree is unlikely ever to be wrong.”[32]On this matter, we are glad to be able to agree with Langstaff J. Whether or not a client intends that certain activities will be carried out in connection with a task of short term duration must be a matter of fact and degree and very much for assessment by the tribunal of first instance in the context of their findings in fact about the whole circumstances of the change of service provision. Discussion and Decision[33]We are satisfied that this appeal is not well founded.[34]Having heard the evidence, the Tribunal found that it was unusual for a contract between local authorities and coach operators for the transport of schoolchildren to be for as short a period as one year. That was not typical. Further, they found that in this case, there was a particular short term purpose for the Gargieston decant contracts. East Ayrshire Council had first required the Gargieston decant service when an urgent short term need arose in August 2010, for the school year 2010/11. The three contracts awarded to Abbey were only going to be for one year because by June 2012, there was an assurance that the new school would be ready and the children would return to Gargieston for the 2012/13 school session.[35]In the context of those surrounding circumstances, it is not at all surprising that the Tribunal concluded that the Abbey contracts were short term in nature. Although they do not spell it out, applying the language of the regulation, that means that they concluded that what the client (East Ayrshire Council) intended under those contracts was that Abbey carry out their contractual activities in connection with a task of short term duration namely transporting the ‘decanted’ children during the 2011/12 school session.[36]We would add that we are not persuaded that the finding that Liddell’s had four one year contracts at the time of the hearing showed that the Tribunal required to conclude that they were typical. To the contrary, Liddell’s’ overall position – which was that the vast majority of their contracts were for significantly longer than that – supports the view that a one year contract was atypical.[37]The Tribunal also, of course, found that the activities were in connection with a single specific event of short term duration. For our part, we have difficulty in categorising the construction of a building as an ‘event’ although it is plainly a task. That does not, however, matter since the Tribunal went on and concluded that the event in question was of short term duration and, again, that was the only conclusion which, sensibly, they could have reached in the circumstances. Regarding Ms Barnett’s submissions based on the construction for the school being two years and there being a possibility of it taking longer, it falls to be rejected as the Tribunal made no such findings of fact.[38]The cross appeal then becomes academic. We have, however, already observed that a number of the questions raised by Mr Templeton were not addressed by the Tribunal and would have required to be answered if TUPE had not been disapplied by reg 3(3)(a)(ii). We cannot express a view as to what would have been the outcome as there are insufficient findings in fact to enable us to do so. Disposal[39]We will, in these circumstances, pronounce orders dismissing the appeal, dismissing the cross appeal and upholding the judgment of the Employment Tribunal. [1] Reasons, at paragraph 3(f). [2] The passage is at paragraph 1.106 and is as follows: “The Reg 3(3)(a)(ii) wording is not without its difficulties. One possible interpretation is that the provision excludes from TUPE activities(i) all single specific events, and(ii) all tasks of short- term duration. This would suggest, for example, that the award of a contract relating to a single specific event would be excluded, no matter how long that event is intended to take. An alternative reading is that an event or task must be both ‘single specific’ and ‘of short term duration’ if the Reg 3(3)(a)(ii) exclusion is to apply. It is the latter meaning that the Government intended. The DTI Guide gives an example involving the two different contracts for the provision of security to the Olympic Games. The first contract, providing security advice to the event organisers over a period of years up to 2012, would relate to a single specific event, but its longevity would mean that it would not be excluded by Reg 3(3)(a)(ii). The second contract, to protect the athletes’ security during the Games itself, would be a single specific event that was of a sufficiently short duration to come within the exclusion and thus fall outside the new SPC Rules.” [3] Reasons, page 11 lines 12 – 15. [4] Namely the example of the provision of security advice to the event organisers over a period of years prior to the Olympic Games taking place in 2012.