Jinks v London Borough Of Havering (Transfer of Undertakings) [2015] UKEAT 0157_14_2302
[27]“… the new provisions appear to be straightforward; and their application to an individual case is, in my judgment, essentially one of fact. ” 21. In the instant case it might be said that the following factual questions arose. Prior to the alleged transfer, who was Regal running the car park for “on behalf of”? Who was its client or customer? Could one answer have been that it was the Council? If it could have been, should the claim be subject to investigation and determination of that point? 22. It seems to me that if A contracts with B to provide it with a service, A is obviously the customer or client. If B then sub-contracts to C to provide part of that service, plainly B is, or at very least may be, the client or customer of C. But can A also be, by virtue of the sequence of transactions, a client of C in respect of the service it provides? 23. Here the Council contracted with Saturn to provide it with the services of operating the ice rink and the car park. Saturn’s client was the Council. Saturn contracted out the management of the car park to Regal. In one sense, at very least, Regal’s client was Saturn. Could it be said that, additionally or alternatively, the Council was the real or ultimate client of Regal in respect of the car parking service? 24. I accept Mr Matovu’s submissions that in this case the Employment Judge took an impermissible short cut by treating the client of a sub-contractor as necessarily being, and only being, the contractor to which it was contractually bound to provide a service. In my judgment Regulation 3(1)(b), when read with Regulation 2(1), is not so limited. Paragraphs 9 to 12 of the Employment Judge’s Reasons plainly evidence, in my judgment, the impermissibly narrow approach that he took. The Horizon case supports the conclusion that the strict legal or contractual relationships do not necessarily answer the Regulation 3 question. 25. I must now return to the Judgment of HHJ Eady in that case. That was a case in which, like the present case, the Council was the owner of a site. It contracted with a company, Workspace, for the provision of services. Workspace sub-contracted an aspect of those services (that is to say, site security) to a company called PCS. The Council later arranged for a further and different company, Horizon, to provide security services. The Claimant in that case had been a security guard employed by PCS. In reply to his claim to the Employment Tribunal Service, both PCS and Horizon pleaded that the “client” for Regulation 3 purposes, that is to say the entity for whom the security services were provided, was Workspace. They did not suggest that the client was the Council. The Claimant himself advanced no positive case. 26. The Employment Tribunal inferred from the facts it found that the Council had been the client throughout. This Employment Appeal Tribunal allowed an appeal. In this instant appeal it was Mr Assersohn who primarily relied on Horizon . He did so for its analogous factual scenario, helpfully demonstrated by a table in his Skeleton Argument. He also relied on the outcome, the allowing by this Employment Appeal Tribunal of the appeal in that case. 27. But in my judgment Mr Matovu was correct to draw my attention to three important principles established by the Horizon case. The first principle is that the question of who is the client for Regulation 3 purposes is one of fact, not law. Secondly, the principle that there could be more than one “client” in any given case. Thirdly, the principle that the terms of Regulation 3(1)(b)(iii), read together with Regulation 2(1). Together they show that the person on whose behalf services are provided by a sub-contractor may not necessarily be the contractor from whom the sub-contract is held. 28. Those three principles or propositions, it seems to me, derive in particular from paragraphs 41 and 42 of the Judgment of Judge Eady in the Horizon case. She said this: “41. … it must be right that the assessment of who is the client in a service provision change case will generally be a matter for the Employment Tribunal as a finding of fact. Further, it may well be that there will be situations where [there] might appear to be more than one client, perhaps in an agency situation. In such cases, however, the Tribunal would need to ask (as in the Denton case) who was the real client. … 42. Asserting, as PCS has done, that there is a subcontractor relationship does not answer the question. Regulation 3(1)(b) plainly recognises subcontractor cases and the possibility of a service provision change in such circumstances is thus envisaged under (iii). That, however, is about the change in provider; it does not define the client.” 29. Although the initial decision in the Horizon case (that the Council was the client) was overturned by this Employment Appeal Tribunal, that was not because it was a conclusion reached contrary to the true construction of the Regulations. Indeed, HHJ Eady says in terms, at paragraph 45, that she had initially thought that the appeal in that case could be answered simply by upholding the decision on a finding of fact (that the client was the Council). 30. In truth, the decision of the Employment Tribunal in the Horizon case fell to be overturned because it had impermissibly drawn an inference from the facts it had found. In addressing her reasons for that assessment, it is illuminating that, in paragraph 46 of her Judgment, HHJ Eady treats the fact that the sub-contract of PCS was held from Workspace as but only one of several matters sustaining the conclusion that it and not the Council was the real or ultimate client on whose behalf services were provided. 31. In the light of Horizon , the reasoning of which I respectfully treat as correct, this appeal can have only one result. It must be allowed, on the basis that the Employment Judge wrongly directed himself in law. I have no doubt that, had an experienced Employment Judge such as Judge Kurrein been taken to Regulation 2(1) and its impact on Regulation 3(1)(b), he might have reached a different conclusion. Moreover, he did not have the benefit of HHJ Eady’s Judgment in Horizon , which was only handed down subsequent to his own decision. 32. For the reasons I have given, however, the approach of the Employment Judge was too narrow and was wrong. But what follows? That cannot be the end of the matter. Proceedings should not be remitted if there is no case on this point for the Council to meet. One might expect to find in a case of this nature a pleading that, despite the existence of a contract and sub-contract, the real or ultimate client of the sub-contractor was the principal in the chain of contracts. I accept Mr Assersohn’s submission that a Claimant’s case to this effect must be pleaded so that it is possible for a Respondent to understand on what basis it is said that the client of a sub-contractor is someone other than the contractor from whom the sub-contractor holds. Mr Assersohn’s submission is that in the instant case there is insufficient material in the application made to the Employment Tribunal Service for the Respondent to know what case it has to meet. In particular, it does not appear in the form ET1 at any stage that there is an express or explicit contention that Regal was providing its services on behalf of the Council as its client as opposed to on behalf of the contractor from whom it held the sub-contract. 33. I have already set out the relevant parts of the ET1. I heard crisply presented exchanges from both counsel as to the adequacy of that pleading. I am just about satisfied that paragraph 5.2 is pregnant with the contention that the true client of Regal was the Council. However, in my judgment the matter is put beyond doubt since, in the course of the hearing, I was shown the Reply to Grounds of Resistance which the Claimant put to the Employment Judge and in which, in at least three or four places, he makes clear his case that Regal had as its client the Council. In those circumstances it seems to me that there is a matter to be determined as a question of fact by the Employment Judge and I shall therefore both allow the appeal and remit the question to an Employment Tribunal. I shall hear counsel as to the nature of any further direction I need to give. Outcome 34. This appeal will be allowed on the basis that the Employment Judge misdirected himself in law on the correct approach to the TUPE Regulations . In those circumstances, Mr Matovu submits that the matter should be remitted to a different Employment Judge. He urges upon me that the effect of the order of the Employment Judge was to demolish the entire claim advanced by the Claimant and on the basis of a point not taken by the Respondent but taken by the Judge himself. Those indicia, submits Mr Matovu, suggest that the matter should go back to a different Judge. 35. I am not satisfied that the basis has been made out for excluding the Employment Judge in question, Judge Kurrein, from reconsidering this matter. It seems to me that the point has been decided exclusively on a question of law and that there have been no findings of fact, as the Employment Judge made clear in the terms of his Written Reasons. The matter proceeded before him on the case as pleaded. I do not, therefore, consider that there is any likely prejudice to either party if the matter is remitted to Judge Kurrein. However, I do not expressly remit the matter to him. It seems to me that the strike-out application should be remitted to Judge Kurrein or any other Judge of the Employment Tribunal Service as the Regional Tribunal Judge may direct. 36. I make that indication because it seems to me that the opportunity will be taken on the strike-out application to resurrect the points that the Respondent had actually wished to advance. It may be that no party takes the point as to “the client” that has been at issue in this appeal. So the strike-out application is at large, and what I remit to an Employment Judge to determine is the Preliminary Hearing of the application to strike-out on the basis that it is presently formulated, or as it is hereafter formulated by amendment of that application on the Respondent’s part. 37. So my order shall be:(1) Appeal allowed.(2) Application to strike-out remitted to any convenient Judge of the Employment Tribunal Service, which may include Judge Kurrein.