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United Kingdom Employment Appeal Tribunal |
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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Harrison Bowden Ltd v Bowden [1993] UKEAT 735_92_2307 (23 July 1993) URL: http://www.bailii.org/uk/cases/UKEAT/1993/735_92_2307.html Cite as: [1993] UKEAT 735_92_2307 |
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At the Tribunal
Before
THE HONOURABLE MR JUSTICE TUCKEY
MR T S BATHO
MRS E HART
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellants MR J W JENNINGS
(Personnel consultant)
Legal Personnel &
Management Services Ltd
Crown House
John Street
Shipley
W Yorkshire
BD18 3HU
For the Respondent MR S LENNARD
(Of Counsel)
Messrs Tilly Baily and Irvine
York Chambers
York Road
Hartlepool
Cleveland
MR JUSTICE TUCKEY: Following a hearing on 14 August 1992 at Newcastle upon Tyne an Industrial Tribunal concluded that the Applicant, Mr Sean Bowden, had been unfairly dismissed. The Respondents to that application Harrison Bowden Ltd appeal to this Tribunal against that conclusion. There was also an appeal by them against the subsequent award of compensation made by the Tribunal but that appeal has been withdrawn.
Before the Industrial Tribunal a preliminary issue had been formulated as follows:
"To determine the date of starting employment and the effective date of termination for the applicant and whether the applicant has been continuously employed for the necessary period of 2 years to bring a claim for unfair dismissal".
There was no dispute about the effective date of termination. It was 12 March 1991. But there was a dispute about when the Respondent had started employment. The contention on behalf of the Appellants was that it was the 11 February 1991 after they had purchased the undertaking. The rival contention was that it was in 1988 when the Respondent had started employment with the Appellants predecessors. The facts found by the Tribunal are as follows.
The Respondent was employed by a company which came to be known as NGS Bowden Ltd from June 1988. That company got into grave financial difficulties and in January 1991 Price Waterhouse were appointed joint administrative receivers under the terms of a bank debenture. The day to day running of the Company on behalf of those receivers was carried out by a Mr Peter Gibson. He placed an advertisement in the Financial Times for the sale of the business as a going concern on 29 January 1991. The Notes of Evidence before us show that on 30 January Mr Harrison (the Appellants alter ego) responded to the advertisement in the sense that he showed interest in the business. The following day, that is to say Thursday, 31 January, the Respondent and other employees of NGS Bowden Ltd (about 14 of them) were dismissed supposedly by reason of redundancy. Six other staff were kept on to help handle goods and perform essential clerical duties.
Soon after this, (the date is not entirely clear) the Respondent spoke to Mr Harrison and the Tribunal found that it was agreed that as Mr Harrison would be taking over the business at some date not too far ahead the Respondent would go into work and that he would do what he could to keep customers happy and inform them of what was going on so that when Mr Harrison got into the saddle he would be able to trade with them. That is what Mr Bowden did. It appears that he started on 4 February. He went to work as normal and after the sale of the business to Mr Harrison had been completed he was formally offered employment.
The sale of the business was completed to Mr Harrison on 8 February. It appears that on that date there was something of a hiatus because Mr Harrison had not been aware that he was taking on those employees who had not been dismissed and as a result of that the price had to be adjusted. As we have already said the Respondent was dismissed on 12 March 1991 and there was no issue before the Tribunal that that dismissal was unfair but of course the Respondent could not complain about this unless he had the two year qualifying period of employment to enable him to do so.
After setting out those facts the Tribunal proceeded to ask themselves the question "Was the applicant dismissed by the receivers' agent Mr Gibson, he being the person who had effected the Respondent's dismissal on 31 January by means of a letter, in connection with the transfer, the imminent transfer of the business NGS Bowden to Mr Harrison's company, Harrison Bowden Ltd?". They say:
"If it was a dismissal which is plainly and directly connected with the transfer, the legal significance is that the employment of the applicant continues and the supposed dismissal is a nullity. The respondents, Harrison Bowden whether they like it or not, take responsibility for Mr Bowden's contract from when he started in June 1988. If it is the situation that dismissal on 31 January really had nothing to do with the transfer then there is no responsibility passing to these respondents."
They then go on to explain why it is that they approach the issues in the case in that way after having been referred to many authorities and had complicated arguments of law addressed to them by both parties who were represented at the hearing.
They say:
"The decision of Litster is the key"
and they then read from the head note in Litster v Forth Dry Dock Co Ltd [1989] ICR 341 which reads as follows:
"Where an employee has been unfairly dismissed before a transfer for a reason connected with the transfer, he is to be deemed to have been employed in the undertaking `immediately before the transfer' and the employment is statutorily continued with the transferee. Regulation 5(3) of the Transfer of Undertakings Regulations must be read as if they were inserted after the words `immediately before the transfer' the words `or would have been so employed if he had not been unfairly dismissed in the circumstances described in regulation 8(1)".
The Tribunal go on to say:
"Such a construction was necessary for the regulations effectively to fulfil the purpose for which they were made, namely giving effect to the provisions of EEC Directive 77/187."
Regulation 5(1) of the Transfer Regulations (SI 1981 No 1794) which deals with the effect of transfers on contracts of employment says:
"A relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee."
and Regulation 5(3) says:
"Any reference in paragraph (1) to a person employed in an undertaking or part of one transferred by a relevant transfer is a reference to a person so employed immediately before the transfer..."
What the House of Lords are saying in Litster is that after the words "immediately before the transfer" one has to insert the words "or would have been so employed if he had not been unfairly dismissed in the circumstances described in Regulation 8(1)".
Regulation 8(1) says:
"Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal."
So the question the Tribunal asked themselves was - Was the Respondent unfairly dismissed because of the transfer or a reason connected with it? If they answered that question `Yes' then the effect of Regulation 5(3) as interpreted by the House of Lords in Litster was that he was deemed to be employed at the time of the transfer on 8 February 1991.
There has been some debate before us as to whether that was the correct approach and, speaking for myself at one stage I had some doubt about it but it is quite clear if one reads Litster and looks at the reasoning of the Tribunal, that this was the route they followed and one which it was perfectly proper for them to follow. It was entirely in accordance with the decision of Litster which, as they say, was the key.
There was another route by which they could have reached the same conclusion based on continuity of employment, having regard to Paragraph 17(2) of Schedule 13 to the 1978 Act and the decision in Macer v Abafast Ltd [1990] ICR 234. They did not choose to do so. We therefore need say no more about this since it did not feature in the reasoning of the Tribunal and therefore it would not be right for us to follow that route at this appellate stage in the proceedings.
Nevertheless Mr Jennings who appears on behalf of the Respondents attacks the way in which they proceeded to address and answer the question as to whether there was an unfair dismissal under Regulation 8(1). The way the Tribunal went about it having posed the questions, which we have already referred to, was to say:
"We really have to ask ourselves these questions. What was in the mind of Mr Gibson, what motivated him on 31 January 1991 when he dismissed this applicant? Was he dismissing to make the company more able to be transferred and more easily and/or at a better price? Was the dismissal therefore in direct connection with the transfer of the business to a proposed or possible buyer? Was it something totally independent whereby the Receiver had come to the conclusion that he simply could not afford to have the staff and then at some later date an approach was made to buy the business but it was long after the dismissal had taken place, so the 2 were not connected, the one to the other."
Having posed those questions they concluded as follows:-
"In our unanimous judgement, we do hold that the receivers, through Mr Gibson, did dismiss the applicant and it was a dismissal in direct connection with the transfer. We have no doubt that the object of this and other dismissals on Thursday 31 January 1991 was to help, and to facilitate the transfer."
It will be self evident from the way the finding is made that this was a finding of fact. Unless therefore it can be demonstrated that the Tribunal asked themselves the wrong question, or the finding itself was perverse, the appeal will fail.
Mr Jennings submits that the approach was incorrect because he says that it is only in a case where there is a prospective transferor that article 8 has effect. Where the situation is, as here, that there are a number of possible transferees and no individual transferee has been identified or come forward, then regulation 8(1) of the 1981 Regulations has no application. He relies in support of that submission upon the definite article in regulation 8(1) that is to say to "the" transfer so, he says, there must be a transfer in existence or at least a prospective transferee and that one cannot get round that construction by reference to the following words that is to say a reason connected with "it" because "it" refers back to "the transfer" identified earlier in the regulation.
This construction of the regulation, he argues, was not followed by the Tribunal because they merely asked themselves whether the dismissal was connected with the transfer to a "proposed or possible" buyer and not, as they should have asked themselves, whether it was connected with the transfer to Mr Harrison. They could not have answered that question in favour of the Respondent because at the time he was dismissed Mr Harrison had done no more than say to Mr Gibson that he wanted to know more about the sale of the prospective business.
We have considered those submissions carefully. We are bound to say that if the construction contended for by Mr Jennings is correct it would open a loophole in this legislation which presumes continuity of employment and attempts to ensure the protection of workers when undertakings are transferred. There is also a conceptual difficulty in distinguishing between a prospective transferee and the actual transferee. Why should it make any difference if there is one front runner at the point of dismissal who is then perhaps (as the example was put to us) gazumped by another one but in the meantime the employees have been dismissed? If their dismissal was connected with the transfer one would expect this legislation to protect them.
We do not therefore accept the construction contended for by Mr Jennings. We think that the reference to "the transfer" is a reference to a transfer which actually takes place which these regulations contemplate by the definition of `the relevant transfer.' Regulation 8(1) is directed to the situation both before and after such a transfer. We cannot see that it is of importance that the transferee has been identified at or before the moment of dismissal. P Bork International A/S v Foreninger of Arbejdsleddene i Danmark [1989] IRLR 41 which is the decision of the European Court of Justice which prompted and informed the decision of the House of Lords in Litster suggests that the approach in considering cases such as these is to look back in time to see what actually happened. In that case there was no question of the transferee being identified at the moment of dismissal and yet it was a case in which the workers concerned were protected by the directive.
The other related point made by Mr Jennings is that the decision in Litster only applies to a case where there is collusion between the transferor and transferee. Obviously you cannot have collusion if the transferee is not identified. We have looked carefully at the decision of Litster. There is nothing in that decision to support the proposition that it applies only to a case of collusion although Litster itself was such a case. In the course of his Judgment at page 379(B) Lord Oliver referred to the position where there was collusion "or otherwise". That, it seems to us makes it clear that he was not confining the decision to cases of collusion nor could he have been since the House was principally concerned with the way in which the regulation was to be construed.
That disposes of the first of the Respondents' grounds of appeal. The second and third grounds can be considered together since on analysis they come to an attack upon the finding of fact of the Tribunal.
Mr Jennings points to the passage to which we have referred where the Tribunal contrast the position of a dismissal connected with the transfer to one where a receiver has come to a conclusion that he could not afford to have the staff and then at some date "long after" the dismissal has taken place someone comes along to buy the business. That, submits Mr Jennings, is an incorrect approach: it suggeststhat they decided that the dismissal was connected with the transfer simply because it took place shortly after the dismissal.
We do not accept this submission. The Tribunal properly directed themselves on the question of time. They quoted part of the Judgment in Bork which says:
"In order to determine whether the only reason for dismissal was the transfer itself account must be taken of the objective circumstances in which the dismissal occurred and in particular, in a case like the present one, the fact that it took place on a date close to that of the transfer and that the workers concerned were re-engaged by the transferee."
Having reminded themselves of that it was a question for them as to the importance which they attached to the proximity of the date upon which the dismissal occurred, the time when the transfer began to take shape and the time when it was finally implemented. This was entirely within the fact finding province of the industrial jury.
A number of further points were made by Mr Jennings. He submits that this was obviously a dismissal for economic reasons because most of the employees who were dismissed were not re-engaged after the transfer. He submits that there was no basis for their finding that Mr Gibson's evidence could not be accepted. He referred to the Respondent's complaint to the Industrial Tribunal where he states that when he first joined in 1988 he was a lighting manager and director and when he was taken back on again he was a salesman. Those were all points of detail, arguments of fact which we do not think carry the Appellants' case forward. The only question is - Was this a permissible finding for this Tribunal to make in the circumstances which they set out in their Reasons? We have no doubt that it was. There is no basis therefore for arguing that the decision was perverse.
It must follow that this appeal is dismissed.
