MISS S E MILES v INSITU CLEANING CO LTD [2012] UKEAT 0157_12_0210

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2012] UKEAT 0157_12_0210Case No Appeal No. UKEAT/0157/12
Between
MISS S E MILESAPPELLANTINSITU CLEANING CO LTDRESPONDENT
Before
HIS HONOUR JEFFREY BURKE QCMR A HARRISMISS S M WILSON CBEDate 2 October 2012
[1]APPEARANCES For the Appellant MS RACHEL CRASNOW (of Counsel) Instructed by: Matthew Arnold & Baldwin LLP 21 Station Road Watford Hertfordshire WD17 1HT For the Respondent MS SAFIA THAROO (of Counsel) Instructed by: Rentokil Initial Facilities Services (UK) Ltd Legal Services Castlegate House Castlegate Way Dudley Worcestershire DY1 4RR SUMMARY TRANSFER OF UNDERTAKINGS – Economic technical or organisational reason The Claimant was dismissed months after a TUPE transfer but, the Employment Tribunal found, for a reason connected with the transfer. They found that there was an ETO reason entailing changes in the functions of the workforce. However, they failed to determine, although it was in issue, whether one of these changes applied to the Claimant and whether, without that change, the changes were more than minimal. Appeal allowed; remitted to same Tribunal. HIS HONOUR JEFFREY BURKE QC Introduction This is an appeal by Miss Miles, the Claimant before the Employment Tribunal, against the Judgment of the Employment Tribunal sitting at Watford, presided over by Employment Judge Pettigrew, and sent to the parties on 12 May of last year, with reasons subsequently sent to the parties on 17 June. By that Judgment the Employment Tribunal rejected the Claimant's claim that she had been unfairly dismissed by her employers, Insitu Cleaning Company Limited, the Respondent. The facts[2]The Claimant was employed from September 2006 by BCB Limited as a cleaner. She cleaned six Coral betting shops in her area and worked a seven-day week. She was paid £55 for each shop per week; so her earnings were, in gross terms, £330 per week. As long as she worked outside shop hours, it was up to her to decide when she did the work and how long she needed to complete it. She was paid by the job, not by the hour.[3]With effect from 1 October 2009, the Claimant and other cleaners were the subject of a Transfer of Undertakings (Protection of Employment) Regulations (TUPE) transfer from BCB Limited to the Respondent, who had taken over the Coral cleaning contract. We are told that there were some eight to ten cleaners who were thus transferred. In January 2010 Coral and the Respondent were in discussion to reduce the overall cleaning costs. The Respondent proposed a new working method which involved a number of changes, described as follows: first of all, cleaning would be done within shop opening hours; secondly, the cleaners would cease to hold keys of the shops and therefore to have responsibility as keyholders; thirdly, lone working would cease; fourthly, new equipment and materials would be provided; and fifthly, the cleaners' duties would include window cleaning, previously done by specialist contractors.[4]There were discussions between the Respondent and the Claimant. The Claimant, unsurprisingly, did not welcome these proposals, which meant that she would work a 30-hour week at fixed times and would receive little more than half her existing pay, and the discussions did not lead to agreement. As a result, on 15 September 2010 the Claimant was dismissed. She appealed against her dismissal, but her appeal failed. The law[5]It is necessary at this stage of the Judgment to set out the relevant statutory provisions. The TUPE Regulations 2006 provide, by paragraph 7(2), as follows:
"This paragraph applies where the sole or principal reason for the dismissal is a reason connected with the transfer that is, an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after a relevant transfer."
[6]Paragraph 7(3) reads as follows:
"Where paragraph (2) applies— (a) paragraph (1) shall not apply; (b) without prejudice to the application of section 98(4) of the 1996 Act (test of fair dismissal), the dismissal shall, for the purposes of section 98(1) and 135 of that Act (reason for dismissal), be regarded as having been for redundancy where section 98(2)(c) of that Act applies, or otherwise for a substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."
[7]The Respondent claimed that the dismissal of the Claimant was for a reason connected with the TUPE transfer of the Claimant, which was an economic, technical or organisational reason, commonly described as an ETO reason, entailing changes in the Respondent's workforce, that that was a potentially fair reason for dismissal by virtue of paragraph 7(2) and 7(3) of the Regulations and that it was in the circumstances not unfair to dismiss the Claimant. The Employment Tribunal decision[8]The Employment Tribunal found, at paragraph 5, it being (whether surprisingly or not) not substantially in dispute, that the reason for dismissal was a reason connected with the TUPE transfer of the Claimant to the Respondent. That conclusion is not now challenged. The Tribunal then considered what they correctly said was the principal issue before them, namely whether the reason for dismissal connected with the transfer was what is known as an ETO reason, i.e. an economic, technical or organisational reason entailing changes in the workforce, as previously set out in paragraph 7(2) of the Regulations. They found at paragraph 5.3 that there were economic reasons, consisting of the desire to cut costs, organisational reasons, in that there were changes in working arrangements, and technical reasons, in that there were new methods, equipment and materials. They found, following the leading case of Berriman v Delabole Slate Ltd [1985] ICR 546, that for an ETO reason to entail changes in the workforce there must be changes in job functions or in numbers.[9]They then identified two changes, both of which they found at paragraph 5.7 of their Judgment entailed changes in the functions of the workforce. The first was the incorporation of window cleaning into the cleaners' duties; they described that in paragraph 5.7 as "an additional duty and one that was significantly different in character from the cleaners' other responsibilities". The second change to which they referred was the removal of keyholder responsibilities. About that they said this in paragraph 5.7:
"Although it may be in dispute as to whether a proposal was made to the Claimant not to implement this change, it is not challenged that the change was made generally in relation to the cleaning of Corals' [sic] shops."
[10]At paragraph 5.8 the Tribunal said that in those circumstances they found there was an ETO reason for the Claimant's dismissal. Neither in those paragraphs nor later in their Judgment did the Tribunal refer to the other changes in the list of changes that were discussed, which list is set out at paragraph 3.6 of the Tribunal's Judgment; why that is so is not known; but it is clear that the Tribunal found that there were two changes in which they relied in coming to their conclusion, which, as we have just said, was that there was an ETO reason for the Claimant's dismissal. They then went on at paragraphs 5.9 to 5.16 to decide that the Respondent had acted reasonably in dismissing the Claimant when she refused to accept the proposed changes; that part of their Judgment is not now challenged. Procedural background[11]The Claimant sought a review. The basis on which she put forward her application for a review is no longer relevant, because the Employment Tribunal rejected her application; and her appeal against that rejection was held by Slade J, at a hearing under rule 3(10) of the Employment Appeal Tribunal Rules on 21 March of this year, to have no reasonable prospects of success and was therefore dismissed. However, although her Notice of Appeal plainly focused attention on the review application, the learned Judge decided that it was sufficiently wide to cover an appeal against the Employment Tribunal's substantive decision that the dismissal was not unfair.[12]At the rule 3(10) hearing the Claimant, who had been unrepresented before the Tribunal, was represented under ELAAS by Ms Crasnow of counsel; and she identified and drafted two additional grounds of appeal which the Claimant was permitted to add to her Notice of Appeal and became paragraphs 8 and 9 of that notice. They involved two criticisms of the Employment Tribunal's Judgment, both of which new grounds the learned Judge regarded as reasonably arguable and permitted to go through to a full hearing. She ordered that the Employment Tribunal's Notes of Evidence relating to those grounds should be provided to this Tribunal; and we are grateful to the Employment Tribunal for honouring that instruction.[13]That full hearing has taken place before us today. Ms Crasnow, now instructed by solicitors, has again appeared for the Claimant; Ms Tharoo has appeared for the Respondent. We are grateful to both for their concise and helpful submissions. The appeal[14]In her skeleton argument Ms Crasnow sought to advance two further arguments. The first is that the Tribunal failed in relation to the keyholder change to consider whether that was a significant or substantive change or was other than a minor or minimal change, and the second was that the finding of the Tribunal that the window cleaning change was of significant effect was perverse. We allowed Ms Crasnow to amend the Notice of Appeal further to add the first of those points and hope that she has now in fact reduced that amendment to writing, (although I think I can see by her facial reaction that she has understandably omitted to do so; but she will surely catch up). We did not allow her to amend to include the new perversity argument, in each case for reasons that we gave at the time and do not need to repeat now. The keyholder issue[15]It is common ground between counsel that an ETO reason entails a change in the workforce falling within Regulation 7(2) of the Regulations if it entails a change in the overall number of the workforce, a change in the functions of the workforce, or, in either case, of a section of the workforce; see the Court of Appeal decision in Berriman , followed by the EAT in Crawford v Swinton Insurance Brokers Ltd [1990] IRLR 42. It is not necessary that the change in function or number should affect the entire workforce; it is sufficient that it should affect a section of the workforce (see Nationwide Building Society v Benn [2010] IRLR 922 ).[16]At paragraph 3.8 of the Judgment the Employment Tribunal said this:
"In her evidence, the claimant challenged the assertion that the keyholder role will be taken away. She said that there had been representations from the managers of her shops, who said that they didn't want cleaning to take place in shops [the words 'during opening hours' must have been accidentally omitted] and this resulted in a proposal from the respondents' [sic] Mr O'Wellen to the claimant that she might continue the former keyholding arrangements. The tribunal noted that this was a proposal that related to the claimant only."
[17]The Notes of Evidence show that the Claimant said in her evidence that none of the managers of her shops wanted her to clean in working hours, that the managers told their area managers, who told the Respondent, and that Nikki O'Wellen on behalf of the Respondent told the Claimant that she could in effect carry on as keyholder. This was probably new evidence when it came out, as it seems to us; it was not mentioned in the Claimant's witness statement; and the Respondent would, by the time the Claimant gave evidence, have finished their evidence. Whether what the Claimant said was put in cross-examination to the Respondent's witness we do not know; the Claimant was not represented, and the hearing was a hearing of perhaps the informal nature which Employment Tribunals were originally designed to have, with a Claimant in person and a solicitor on behalf of the Respondent. In any event, it is clear that the Claimant was claiming that that change did not, in the proposals ultimately put forward by the Respondent, affect her.[18]Ms Crasnow submits that the Tribunal failed to make a finding as to whether what the Claimant asserted was true and therefore whether, in her case, there was no change in her responsibility as a keyholder, which was to continue. It was crucial, she submits, that the Tribunal should determine whether in her case there was or was not to be such a change because, if there was not, the Respondent could not rely upon any such change as part of an ETO reason for dismissing the Claimant. Whether they could rely on it in respect of other cleaners for whom the changes did include the removal of keyholding responsibilities, if there were any, would not affect the Claimant's position.[19]Ms Crasnow further submitted by her further amendment to which we have already referred that if that change was a change which affected the Claimant, the Tribunal ought to have considered whether it was anything more than a minor change. She refers to a decision of the EAT in Gibson v Ciro Citterio Menswear PLC UKEAT/1276/97 in which the employee, in TUPE circumstances, had the keyholding responsibility taken away from her and as a result £20 a week that she was paid for that responsibility, which represented 8 per cent of her earnings, also taken away from her by the proposed changes. In this case, submitted Ms Crasnow, there was no evidence to show that any particular sum of money went with the keyholding responsibility or indeed of what the keyholding responsibility actually consisted.[20]Thus there came into play a decision of the Employment Appeal Tribunal called Green v Elan Care Ltd UKEAT/0018/01, in which the Employment Appeal Tribunal, presided over by the same Judge as is today presiding over this division of the EAT, who had no idea that nearly 13 years ago what he then said would be quoted back to him 13 years later, said this:
"Accordingly the fact that, under the proposed changes, the number of the workforce, strength or establishment was to remain the same (only because Mrs Elan took on, to a minor degree, Mrs Green's management functions), did not prevent the Tribunal from concluding that the Respondents' reason entailed changes in the workforce. While a minor change in the functions of one employee or a small number of employees in a large workforce might not be sufficient, considering the workforce as a whole, to amount to a change in the workforce, in our judgment where the steps taken by the employer involve a real change in functions in a substantial or key area of the workforce it is open to a Tribunal to find that changes in the workforce are entailed."
[21]It is not suggested that any subsequent authority has altered what appears from those words, namely that there is an obligation on a Tribunal to consider whether a change in the functions of employees is a minor or minimal change or is a significant or substantive change; and Ms Crasnow submits that the Tribunal did not embark on deciding that question in this case.[22]Ms Tharoo, with admirable professional candour, agreed that the Tribunal did not determine the issue as to whether the keyholder change was or was not to apply to the Claimant. The fact that the Claimant raised it in the course of her evidence after the Respondent had given its evidence of course did not mean that the Respondent accepted it, and the Tribunal did not suggest that they did. The Tribunal simply did not determine the issue. It may be that they did not need to because they regarded the window cleaning changes of sufficient significance of itself; but they did not say that; they based their Judgment, as it seems to us, on two changes and not on one. If the keyholder change had, or may have had, any weight in their conclusion that there was a change in the functions of the relevant section of the workforce, then they were, in our judgment, obliged to resolve that issue and there was an error of law on their part in failing to do so.[23]Ms Tharoo tentatively – we think it is fair to describe it in this way – put forward an argument that, if the change applied to the remainder of the workforce or relevant section of the workforce, it did not matter that it did not apply to the Claimant. Neither counsel was able to find, 30 years almost since the TUPE Regulations first came into existence, any authority which supported – or, for that matter, demolished – that proposition. If it were a tenable proposition, one might expect that it would have made an appearance slightly earlier than now, but, leaving that on one side, in our judgment it is in reality not a tenable proposition. The issue for the Tribunal was whether there was a reason falling within Regulation 7(2) of the 2006 Regulations for the dismissal of the Claimant. If the change relied upon by the employer as amounting to an ETO reason had not been sought to be applied to the Claimant, then, in our judgment, it could not be put forward as amounting to or as an aspect of changes that together amount to an ETO reason for dismissing her. If that were not so, an employer could make changes for the rest of the workforce, make no changes at all in the case of an individual Claimant or group of Claimants, and then, if fairness of dismissal of that employee or those employees arose, argue that there was an ETO reason for dismissing them. That argument, in our judgment, is one that would be bound to fail.[24]Accordingly, for those reasons, ground 8 in the Notice of Appeal and what we will call for the moment ground 8A of the Notice of Appeal, which I see Ms Crasnow has now, while we have been giving judgment, drafted, succeed; and the errors of law alleged in both those grounds are made out. Window cleaning[25]At paragraph 5.7 of their Judgment the Tribunal concluded, as we have already set out, that the incorporation of window cleaning into the cleaners' duties was "an additional duty and one which was significantly different in character from the cleaners' other responsibilities". Ms Crasnow submits that the Tribunal erred in failing to consider and to decide whether the addition of that duty was more than a minor or minimal change, for if it was not more than minor or minimal, then – it is not in dispute as to the subject to the recondite point to which we have just referred – it would be insufficient for the ETO reason's defence (see, again, Green ). She submits that the Tribunal did not consider how frequently the window cleaning would have to be done, how long it would take and matters of that kind. She points to the fact that the cleaners would have within a betting shop to clean television screens, mirrors, desks and other surfaces generally and that adding cleaning of the windows could well not be treated as anything other than minimal, and the Tribunal were not entitled to rely on the evidence of the Claimant herself, who said that the window cleaning would take four to five hours per week both in her ET1 and in her evidence, for she had never done it.[26]We cannot accept those submissions. The Tribunal recorded the Claimant's evidence and plainly took it into account; there was no other evidence. The Tribunal were entitled, in our judgment, to rely on what the Claimant said, which was, as it happens, although she surely did not know it, against her own interests. Adding four to five hours, or even somewhat less, per week to anyone's job is always likely to be regarded as significant or substantial. It might be said that adding the job of cleaning the windows of a betting shop, which, it is agreed, we can take judicial notice of as being large and taking up all or most of the frontage of any betting shop, is a significant or substantial change; but it is not necessary for us to rely on judicial knowledge or judicial notice; in our judgment, it was plainly open to the Tribunal on the basis of the evidence given by the Claimant herself, to regard this as a significant change – in other words, one that was more than minor – as they did. Thus this part of the appeal fails. Disposal[27]We now have to consider what should be done in the light of the allowing of the appeal on the first two grounds. It is not in dispute, firstly, that there must be a remission, and secondly that that remission must be to the same Tribunal. We would propose that the remission should be to the same Tribunal to determine: (1) whether the change in relation to keyholders' responsibilities was to be applied to the Claimant; (2), if so, was it a significant change or a minor or minimal change; and (3) if the keyholders' change did not apply to the Claimant, or, if it did but it was not in itself a significant change, were the changes overall, taken as a whole, a sufficient change to amount to an ETO reason? On that basis, the appeal is allowed.