London Borough Of Islington v Bannon & Anor (Transfer of Undertakings : Transfer) [2012] UKEAT 0221_12_2509

EAT
London Borough Of Islington v Bannon & Anor (Transfer of Undertakings : Transfer)
[2012] UKEAT 0221_12_2509 · 2012-09-25
[1]This case is about the definition of a service provision change under TUPE 2006 . I will refer to the parties as the Claimant, Ms Bannon, and the Respondents, Community Service Volunteers (CSV) and the London Borough of Islington. Introduction[2]It is an appeal by Islington against a Judgment of Employment Judge R A Hemmings, sitting alone at a PHR, given with reserved reasons on 13 December 2011 following a two‑day hearing. The Claimant is represented by Ms Keira Gore, Islington by Ms Natasha Joffe and CSV by Mr Keith Morton QC, junior counsel having represented CSV hitherto. Background[3]The source of the litigation is a claim of unfair dismissal by the Claimant, but prior to the determination of that matter it was necessary following a case management discussion to determine the status of the Claimant in relation to the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). Four questions were directed, which the Judge answered, and, in so far as they are now relevant, the Judge came to the following conclusions (paragraph 14):
“(1) There has been a change of service provider within the meaning of [TUPE]. […] (3) The activities which ceased to be carried out by the First Respondent [CSV] on behalf on [sic] the Second Respondent [Islington] are now being carried out instead by the Second Respondent on its own behalf.”
[4]The essential issue was whether the Regulations applied to the relationship between the three parties in this litigation. Islington contended that TUPE did not apply; CSV contended it did; and Ms Bannon, who might be agnostic in this, prefers to litigate against Islington to CSV, for, if the activities in question were regulated by TUPE and there was a service provision change, she would contend that she was automatically unfairly dismissed by reason of the transfer. Arguably, she has more in her armoury against Islington. As things stand, in the light of the Judge’s decision that TUPE applied, the hearing of the Claimant’s unfair dismissal claim was set up for a hearing that has not yet taken place.[5]Following Islington’s appeal, the papers came in front of Mr Recorder Luba QC, who sent it to a full hearing, although it has to be said his approach to it as to the merits was lukewarm; what he said was he thought the Judgment was right but he could not say that the grounds of appeal had no prospects at all. He notably did not decide that it did have reasonable prospects of success. The legislation[6]The legislation relevant to these proceedings is in two parts. The first is the Children Act 1989 (CA), which provides as follows:
“Independent Visitors for children looked after by a local authority (1) A local authority looking after children must appoint an independent visitor to be the child’s visitor if— (a) the child falls within a description prescribed in regulations made by the appropriate national authority; or (b) in any other case, it appears to them that it would be in the child’s interest to do so. (2) A person appointed under this section must visit, befriend and advise the child. (3) A person appointed under this section is entitled to recover from the appointing authority any reasonable expenses incurred by that person for the purposes of that person’s function under this section.”
[7]As to TUPE, the relevant provisions are these (paras 3(1)(b)):
“[…] a service provision change, that is a situation in which— […] (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.”
[8]The conditions in sub‑paragraph (3)(a) are as follows:
“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 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 […].”
[9]An organised grouping of employees can include a single employee. The facts[10]The Claimant was employed by CSV as its project co‑ordination manager, part‑time (25 hours a week), responsible to Islington Independent Visitors’ “Allies in Islington” scheme and line‑managed by Ihona Hirving. The Tribunal summarised her job description as follows (paragraph 13):
“Her key responsibilities were to recruit, train, screen and support volunteers towards becoming Independent Visitors and then to participate in the matching of a child or young person in care to an Independent Visitor and to provide continuing support to the Independent Visitors, individually and through Support Group meetings, as well as liaising with Islington’s social care professionals.”
[11]The job specification, which has been drawn to my attention, includes the way in which the Claimant jobholder would carry out her duties, which in the specification and in the job description includes those. The job specification includes a person specification, and plainly Ms Bannon met those; she was to be employed for 21 hours a week.[12]The relationship: Islington decided to discharge its statutory duties under the CA through the medium of CSV, and to that end CSV was awarded a contract, or specification, undated but apparently for 2005/2006. There was discussion about a new specification to be awarded for 2011 and onwards, but that came to nothing, and it seems to me that the activities within the meaning of TUPE are those that are contained in the 2005/2006 specification and the job description of the Claimant. The first stage the Judge went through was to examine what were the activities conducted by CSV as at 31 March 2011. At the time the requirement of Islington was for 15 independent visitors; in the proposed but unadopted 2011 specification, the number went up to 18.[13]Ms Bannon at the time was subject to discipline. Islington’s proposal to award the contract to Action for Children foundered, because Action for Children were unwilling to take on the project with her in place in the uncertainty that prevailed. On 31 March 2011, there being no agreement to extend the relationship with CSV or for it to be rescued by Action for Children, the Claimant was dismissed by reason of redundancy. It is fair to say that CSV had in mind redundancy plans prior to the events in this case.[14]The Judge analysed what the activities were that were being conducted by CSV at the relevant time. Ms Joffe concedes that there is no error of law in the Judge’s description of those facts; they are fully described by reference to the documents that I have mentioned and the Judge’s summary. In short, the Judge invoked the description of the activities as the service provided by CSV, which is precisely the language of the 2005 service specification, and the approach was this:
“10. ... ‘1.1 An Independent Visitor is a person (usually a volunteer) independent of the local authority who befriends a young person who meets the necessary criteria. 1.2 Independent Visitors provide friendship and commitment, which can help a young person to develop self‑esteem and confidence through sharing interest and activities. They can complement the relationships and activities of Islington Social Services in promoting the young person’s. 1.3 Islington’s Independent Visitor Service is provided by CSV’s Allies Project.’ 11. Accordingly, a primary objective of the Service is to provide eligible ‘looked‑after’ youngsters (i.e. eligible youngsters in care), who do not have any close parental contact, with social access to a (rigorously screened) genuinely interested non‑family adult, with whom to enjoy leisure activities and with whom to build a trusting and pleasurable relationship, i.e. genuine unconditional friendship with a trustworthy adult, something likely to be missing from their life‑experiences of adults [sic] figures. 12. Both before and after 1 April 2011 the Allies Project was promoted on the web sites of both Islington and CSV, inviting those interested in becoming voluntary visitors to apply. At the time material to these proceedings CSV had about 15 active Visitors, consistently with Islington’s prevailing requirements.”
[15]The reference to promotion on the website relates to the way in which Islington, or CSV, would make known to people who might give their services to become independent visitors. As the Judge put it, 1 April 2011 arrived with the entirely unintended consequence for Islington that no service provision contract with an external provider was in place, and so Islington had to do something. It decided that it would provide the service under its statutory duty itself, and to this end it inherited all the material CSV had in its possession – its files about volunteers and the files about looked‑after children (LAC). The way in which that impacted was that a reduced service was offered to the people in Islington. The Judge had the advantage to hear from a visitor, Ms Rahaman, who described the situation before and after the event; she described (see paragraph 25) things going on much as they had before.[16]For five months, Islington ran the service as best it could so as to meet its statutory duty and arranged with Action for Children in September a limited service, known as a spot service. The way in which Islington dealt with this was described by

the Judge in the following terms (paragraph 27):

“Overall, the amount of time occupied by Islington on the Independent Visitor service was relatively modest and evidently less than the 25 hours per week provided for under the former CSV service‑provision contracts. Jackie Bowles was occupied for a couple of hours each month processing any expense claims received and monitoring CRB records/checks to ensure they were up to date. Since Ms Mosesh’s appointment, she and Jackie Bowles organised and chaired the Group Support meeting in September and Ms Mosesh dealt with an email and telephone enquiry from an Independent Visitor. No doubt the monthly reports from Independent Visitors were read, assessed, actioned if necessary, and filed. Between the five months April to August inclusive Islington alone were available to deal with every aspect of the Independent Visitor Service, in all respects, including any, if any, requests from looked‑after youngsters for allocation of an Independent Visitor and their matching from the available pool of Independent Visitors inherited from CSV. Otherwise the range of recruitment functions, ultimately undertaken by Action for Children from September 2011 onwards, appear to have been unresourced and neglected. The Independent Visitor service between April and September 2011 was managed overall reactively by Islington as opposed to CSV’s active management of the service.”
[17]Employment Judge Hemmings in accordance with the law – no objection is taken to that account – and to the authorities, to which I will turn in due course - noted thereafter that its current intention was to join forces with others to provide the service. His conclusions are set out succinctly in two‑and‑a‑half pages indicating that there was an organised grouping of employees and noting that the focus was on whether the service was, after cessation by CSV, carried out instead by Islington on its own behalf. The Judge concluded as follows:
“31.6 But that is not what happened. Islington did not suspend the service. Unwelcome and unplanned though the situation was, the facts clearly establish that Islington attempted to cure their problem of having no contractor under contract by initiatives to secure Action for Children belatedly signing up to the service‑provision contract and in default initiatives with CSV to restore the past relationship and continue as the provider. 31.7 When it became apparent that these initiatives had failed, as it quickly did. Islington put in place its own arrangements for the provision of the service. It took possession of all of CSV’s files relating to the service. It appointed Jackie Bowles to undertake the routine administration of expenses. It corresponded with the Independent Visitors to inform them of what they were doing. The Independent Visitors submitted their monthly reports of their meetings with the youngsters assigned to them as necessary, and filed them; expense claims were processed and CSV’s financial systems were acquired and integrated within Islington’s Finance Department for that purpose; Independent Visitors were advised to contact Ida Cohen as their point of contact if they needed to discuss their work with the matched‑child in any way, including provision of urgent support if required; and as early as 21 April 2011 the Independent Visitors were effectively requested and expressly encouraged to carry on as normal, supporting the children from Islington with whom they were matched. Masani Mosesh, an Independent Reviewing officer and qualified Social Worker was appointed to provide support to the group of independent volunteers, she and Jackie Bowles arranged a support meeting for 22 September 2011; Ms Mosesh became the point of contact for support and was used from within the team of Independent Volunteers; and further support group meetings were planned. 31.8 The level of active engagement in providing the service in the first three weeks of April 2011 was minimal and the subsequent provision grew incrementally. No third party was involved in providing any part of the service before September and during September Action for Children came under contract for the recruitment and matching process in respect of future volunteer applicants to enter the Independent Visitor service, but with no involvement with the existing team of ex‑CSV independent volunteers. 31.9 The scope and resources of the service provided for 4‑5 months by Islington may have been unsatisfactory, unsurprisingly as the 25‑hour per week resource represented by the Claimant was unavailable to Islington, and their method of resourcing the service may have been different to CSV, but the Tribunal is satisfied that Islington carried on and carried out the Independent Volunteer service i.e. the Activity previously carried on by CSV and its contractor, on its own behalf except for recruiting any new independent volunteers.”
[18]So, the Judge’s overall conclusion was that this was “in‑housing”, and he answered the questions posed for him at the CMD in advance of his own PHR by para 31.9 above. Islington’s case[19]It is contended on behalf of Islington that the Judgment is perverse. The succinct argument that Ms Joffe addresses is that the Tribunal operated on a generic rather than a detail‑specific approach to the activities and fell into error by looking more widely than is required by the law. She contends by reference to the authorities that Tribunals should not take a broad‑brush approach to these matters. Her principal ground is that the Tribunal failed adequately to identify the activities carried out by CSV. It is to be noted that this is a qualified criticism and not one of the Judge failing to analyse the activities at all.[20]Her principal argument is that there are differences between what CSV was doing and what Islington did or could do immediately post‑1 April 2011. She singles out the training of new volunteers (the independent visitors), the matching of volunteers to LAC, publicity and promotion of the service, and monitoring of the way in which the independent visitors carried out their work. She contends that the Tribunal has made insufficient findings on the activities done by Islington and that there is no essential similarity between the pre and post‑service change position.[21]Secondly, she contends that the Tribunal failed to consider whether the activities were fundamentally or essentially the same as that carried on by CSV, as to which she relies on the language used in Metropolitan Resources v Churchill Dulwich [2009] IRLR 700 . In as much as it might be inferred that the Judge decided that the activities of CSV and Islington were fundamentally or essentially the same, the Judgment is perverse. This meets the standard for an overwhelming case that he misconstrued the evidence.[22]Finally, Ms Joffe contends that the Tribunal Judge failed to consider her argument that there was fragmentation of CSV’s activities after 1 April 2011, and she is at least, on behalf of her client, owed a finding by the Judge on that. The Claimant’s case and CSV’s case[23]Ms Gore and Mr Morton QC go figuratively hand in hand, Mr Morton QC engagingly adopting all her submissions, she having by agreement addressed me first. Ms Gore contends that the standard of perversity is not met in this case. The Judge made adequate findings as to the conduct of such activities as Islington took back to itself both in his description of the facts and in the astringent conclusions he reached at paragraph 31 and following. The Judge carried out the necessary comparative exercise, and the criticism of perversity cannot weigh, since the Judge expressly recognised that there was some non‑performance by Islington of the activities conducted by CSV; the Judge had those in mind and could not be said to have made perverse conclusions. The principal argument of Ms Joffe, as to perversity, which is based upon the passage I have cited from paragraph 27 above, can be resolved in this way: the Judge was not deciding that there were requests from LAC during the period April to September; this is not a finding. It is qualified by the words “if any requests”. The absence of recruitment is explicable on the basis that there was none going on at the time. It followed therefore that there was no training.[24]Ms Gore points to the finding in paragraph 12 that both before and after 1 April 2011, CSV had about 15 active visitors, consistent with Islington’s prevailing requirements. So, although the specification called for 18 in its later version, 15 was the extant version, and that was what was prevailing at the time. The fragmentation argument was met by Ms Gore by saying that the finding by the Judge, that Islington took over everything, is a complete answer. This was not a situation where, to take the example in debate, two canteens are being run by a single contractor and then they are split into two and handed over to two successors; there was only Islington, as the Judge expressly found.[25]Mr Morton QC, adopting Ms Gore’s argument, contends that the activity is the provision of the independent visitor service, and, reassuringly, he relies upon my Judgment in Ward Hadaway Solicitors v Love and Ors [2010] UKEAT/0471/09, contending these matters such as the findings about what the activities are is one that is fact‑sensitive. He also relied upon the use of the word “intention” in TUPE paragraph 3(1)(b)(ii) (see above) which is an intention as to the way in which the client anticipates that the work will be done. Although this is primarily, as the Judge found, to deal with short‑term projects such as is illustrated by the Judgment in Rygaard v Skro Molle Akustik A/S [1996] IRLR 51, the intention of Islington was to carry on provision of the service to discharge its statutory duty, and this is relevant to the description of the activities post‑1 April 2011.[26]Ms Joffe did not dissent from Mr Morton’s invocation of the correctness of my Judgment in Ward Hadaway . The legal principles[27]I set out the legal principles in Ward Hadaway by reference to the principal authorities and given the endorsement of the Bar in front of me I will save everybody’s time and simply incorporate what I there said: “ The legal principles applicable in this case arise from a number of the authorities which have been put before us. We are most grateful to HHJ Burke QC for his analysis of the service provision changes in new TUPE 2006 set out in his judgment in Metropolitan Resources Ltd v Churchill Dulwich Ltd [2009] ICR 1380 , heard before but reported after the judgment in the present case. The facts of that case are in one sense similar to ours in that they are to do with the loss of a contract for the provision to the Home Office of accommodation for asylum seekers and its inheritance by another provider. In that case a judgment by the employment tribunal that there was a relevant service provision change was upheld on appeal. On his way to making that conclusion, Judge Burke set out the three categories of service provision change and distinguished those from the economic entity: ‘27 “Service provision change” is a wholly new statutory concept. It is not defined in terms of economic entity or of other concepts which have developed under the 1981 Regulations or by Community decisions on the Acquired Rights Directive prior to April 2006 when the new Regulations took effect. The circumstances in which service provision change is established are, in my judgment, comprehensively and clearly set out in regulation 3(1)(b) itself and regulation 3(3); if there was, immediately before the change relied upon, an organised grouping of employees which had as its principal purpose the carrying out of the activities in question, the client intends that those activities will be carried out by the alleged transferee, other than in connection with a single specific event or a task of short term duration, and the activities do not consist totally or mainly of the supply of goods for the client's use, and if those activities cease to be carried out by the alleged transferor and are carried out instead by the alleged transferee, a relevant transfer exists. In contrast to the words used to define transfer in the 1981 Regulations the new provisions appear to be straightforward; and their application to an individual case is, in my judgment, essentially one of fact.’ He regarded the new three-part definition of service provision change as straightforward. It was introduced in order to alleviate the difficulties of old TUPE.[24]Judge Burke then went on to consider, taking, a straightforward and commonsense application, what a Tribunal should do, and he said this:
‘30. The statutory words require the employment tribunal to concentrate upon the relevant activities; and tribunals will inevitably be faced, as in this case, with arguments that the activities carried on by the alleged transferee are not identical to the activities carried on by the alleged transferor because there are detailed differences between what the former does and what the latter did or in the manner in which the former performs and the latter performed the relevant tasks. However, it cannot, in my judgment, have been the intention of the introduction of the new concept of service provision change that that concept should not apply because of some minor difference or differences between the nature of the tasks carried on after what is said to have been a service provision change as compared with before it or in the way in which they are performed as compared with the nature or mode of performance of those tasks in the hands of the alleged transferor. A common sense and pragmatic approach is required to enable a case in which problems of this nature arise to be appropriately decided, as was adopted by the tribunal in the present case. The tribunal needs to ask itself whether the activities carried on by the alleged transferee are fundamentally or essentially the same as those carried out by the alleged transferor. The answer to that question will be one of fact and degree, to be assessed by the tribunal on the evidence in the individual case before it.’
He also invoked an earlier judgment on new TUPE 2006 provided by Langstaff J and members in Kimberley Group Housing Ltd v Hambley & Ors [2008] ICR 1030 . That was substantially followed by HHJ Ansell in OCS Group UK Ltd v Jones [2009] UKEAT/0038/09.[25]The only difference appears in a judgment which I gave in Compass Group UK & Ireland T/A Scholarest v Burke & Ors UKEAT/0623/06. In certain circumstances the analysis of what is fact and what is law suggested by Lord Hoffmann in Lawson v Serco Ltd [2006] ICR 250 gives rise to a question of law. So, a decision as to what are activities under TUPE 2006 is one for the Employment Tribunal alone. The findings of fact deserve sanctity. But the determination of an essential question of law once findings of fact are made is a question of law. Mr Sweeney relies upon that.”[28]As we pointed out in paragraph 27 of that Judgment, this is a question of fact. The application of the facts is a question of law. The references to Metropolitan Resources are contained in that Judgment. Since then there has been a number of other authorities, but in my judgment the situation is clearly set out by HHJ Burke QC. What he went on to say in Metropolitan Resources was this:
“36. At paragraph 24 of their judgment the Tribunal applied the correct test when it looked for the essential service or activity provided by MRL; and in finding that it was the same as that provided by CB the Tribunal reached a factual finding which was open to them. The Tribunal was alive to all of the differences on which Mr Bourne relies. The difference in location was expressly considered at paragraphs 25 and 27; the extra services provided by MRL were expressly referred to in paragraph 24; the fact that MRL's operation began and continued without any of CD's employees, management or otherwise, was fully appreciated by the Tribunal which found that the CD employees did not go to Coombe Farm until 2 April and that MRL took on their own employees when they entered into their contract with MH; the Tribunal also expressly referred to the difference between Coombe Farm and Barry House in terms of security. Despite those differences, to which it cannot be said, reading the judgment as a whole, that the Tribunal failed to pay regard, the Tribunal found that the activities carried on by MRL amounted essentially to the provision of good quality accommodation to asylum seekers together with associated services and that they were the same as those provided by CD. ”
[29]There was debate before me about whether what might be described is a generic approach is correct, or a more detailed approach. Lady Smith faced this problem in Argyll Coastal Services Ltd v Stirling and Ors UKEATS/0012/11 when she said this:
“Regarding ‘activities’ it seems plain from the terms of both regulation 3(1)(b) and 3(3)(a)(i) that Parliament, by using the word ‘activities’ had in mind considering what it was that the client required of the transferor or employer. What exactly was the service that was contracted for?”
[30]As to the degree of scrutiny, a similar view was taken by Langstaff J and members in Kimberley (see above), where they said this: “ 28. As to whether there was here a service provision change the Tribunal identified the activities as we have described and no one challenges that description. It seems to us that care may need to be taken by a Tribunal in deciding what it is that constitutes the relevant activities. If, for instance, here the relevant activities had been described as ‘maintenance operations’ then it is possible that there might have been a different conclusion, but we cannot consider that further. The Tribunal found that the activities of providing suitable accommodation and related supported services to asylum seekers in the town concerned had been carried out by a contractor on a client's behalf. That is all that 3(1)(b)(ii) looks at: to see that those activities have ceased. […][35]We conclude that the Tribunal here was entitled to come to the view that there was a service provision change. It may be that there are some circumstances in which a service which is being provided by one contractor to a client is in the event so fragmented that nothing which one can properly determine as being a service provision change has taken place. This Tribunal considered whether that was the case here and concluded it was not. We think that since there are two overlapping contracts now providing for activities which were previously provided by one provider that the Tribunal was entitled to come to that view. Having come to that view the question then turns to what the consequence is. We observe that when a Tribunal is examining the question whether there is a service provision change or not it is of course entitled to, and must, look at all the facts and their implications in the round, and it may be that a Tribunal wishes to take into account as indicating that there is no service provision change any difficulties in determining who should take responsibility for an employee's contract after any given date. But as a matter of clarity and logical progression having taken that into account in determining whether there is a service provision change, as this Tribunal here in our view was entitled to do, we turn now to what the consequence is and how Regulation 4 operates. ” Discussion and conclusions[31]Applying those authorities to the present circumstances, it has been very helpful for me to accept Ms Joffe’s approach as to the position when CSV held the contract. There is a description of the activities in the service specification and in the job description; the activities are correctly described, as she accepts, by the Judge, and so there is no criticism of his analysis as a matter of fact of what the activities were to which TUPE is said to apply.[32]Turning, then, to the position after that, it plainly was the intention of Islington to discharge its functions under the statute itself; nobody else was there. Does its imperfect performance of that duty mean there was no service provision change? As the Judge recorded, Islington’s performance was unsatisfactory; it has acknowledged that. It also acknowledged that the performance of the duties was unresourced.[33]In my judgment, that does not change the essential examination of what occurred on the change. The activities included those done by CSV. Not all of them were carried out, because of the lack of resources, or because this situation landed on Islington’s doorstep at short notice; it did the best it could. It could not be as ambitious and expansive as CSV was. Nevertheless, it had the work in progress, as I will call it, of the existing relationships between the independent visitors organised by CSV and its LAC. There is no finding that any individual actually came forward and sought an independent visitor at that stage. I accept Ms Gore’s analysis of the way in which the Employment Judge expressed himself in paragraph 27 of the reasons.[34]The Judge did not have to decide specifically on fragmentation. I agree with Ms Joffe that she may feel short‑changed that the Judge did not specifically dilate upon her estimable argument, but the finding is plain: nobody other than Islington was doing any of these activities. Islington may not have been doing all of them, but that, in my experience in dealing with these TUPE cases, is not uncommon. When a canteen changes hands, the work may decline because people may not want to go to the new provider; it does not change the character of the service being provided or of the activities being provided just because on accepting the change not all of the activities can be carried out.[35]The Judge was the sole finder of facts in this case. It was his job to match up the pre and post‑service change activities, and, as I pointed out in Ward Hadaway , it is not the job of the EAT to second‑guess this. The assessment is a question of law, but the findings as to what was going on after 1 April 2011 is for the Judge as a matter of fact. The five points argued by Ms Joffe as being activities that were not carried on are either expressly mentioned by the Judge or are insignificant enough to not call into question his finding that there was a service provision change. The Judge made a careful assessment of the law having made the relevant findings. He did give sufficiently detailed attention to the activities as he found them to be, and there is no way in which Ms Joffe can successfully argue that his Judgment was one that no reasonable Judge could come to or was based upon no evidence.[36]So, for all those reasons, I would very much like to thank all three counsel and their teams; this appeal is dismissed.