THE
HONOURABLE LADY SMITH
Introduction
1.
This appeal concerns an office in Milngavie, a boat in the South Atlantic – the “St Brandan” - its crew, and a re-tendering process in which a
Dutch company were successful but, for an interim period, chartered a different
boat from another Scottish business. That might sound like a daunting preface
to a question in an honours examination paper in International Private Law. It
is not. The circumstances arose in a claim before the Employment Tribunal by
thirteen Claimants under the “service provision change” provisions of the Transfer
of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).
2.
I will, for convenience, continue to referring to parties as Claimants
and Respondents.
3.
The Claimants are 11 members of the crew of the St Brandan
(Mr I Stirling and others) and the only two people who worked for the
company which owned it (Ms A Struthers and
Mr F P Sosin). The only Respondents with an interest in the
appeal were the companies which were First and Third Respondents before the
Employment Tribunal – (1) Argyll Coastal Services Limited and (3) Van
Winjgaarden Marine Services BV.
4.
By judgment registered on 29 October 2010, following a pre-hearing review, the Employment Tribunal sitting at Glasgow, Employment Judge
Douglas Fairley presiding, held:
“1. With effect from 19 May 2009, the employment
contracts of each of the claimants transferred to the First Respondent pursuant
to the Transfer of Undertakings (Protection of Employment)
Regulations 2006; and
2. The claims insofar as directed against the Third Respondent are
dismissed.”
Background
5.
J & A Gardner & Co Limited (“JAG”) is a Scottish maritime
company which used to own a fleet of vessels. Its office was at Milngavie. In
1982, JAG contracted with the Ministry of Defence (“MOD”), presumably by
charterparty, to provide a vessel for the delivery of cargo in and around the Falkland Islands. JAG were able to fulfil a need that MOD had for a shallow drafted small
coaster. The JAG/MOD contract continued until 2009. By 2001, the only
vessel owned by JAG was the St Brandan. It worked in the Falkland Islands, for
the MOD contract.
6.
The St Brandan required a crew of eight for its operation. They were
drawn from a pool of sixteen.
7.
Prior to 1997, the crew were employed by JAG. On 1 April 1997, new contracts of employment were put in place under which their employer was
“Guernsey Ship Management Limited” (“GSML”) of Frances House, Sir William Place, St Peter Port, Guernsey. Under a contract between JAG and GSML, the
latter had undertaken to employ the crew of the St Brandan. JAG paid GSML
a small administration fee per crew member and transferred funds to them for
the crew’s wages, each month. JAG were thus, from 1 April 1997, no longer liable to pay employer’s national insurance for the crew members and made
savings in the order of £3-4,000 per month. GSML carried out a similar
service for a number of clients. The Employment Judge referred to this
arrangement as being one which satisfied HMRC.
8.
GSML subcontracted the performance of most of their employer’s
obligations to J&A Gardner & Company (Management) Limited, a wholly
owned subsidiary of JAG. The day to day work subcontracted to JAGM was in fact
carried out by the JAG employees referred to below.
9.
JAG had, at the time to which these claims relate, only two office staff
– Ms A Struthers, managing director and Mr F Sosin,
cashier/accountant. Unlike the crew, they were, throughout, employed by JAG.
Paragraph 19 of the Tribunal’s judgment contains the findings in fact
about their work:
“19. Although the operation of the St Brandan under
the contract with the MOD was undertaken exclusively in the Falkland Islands,
JAG’s head office – from which the administration of the contract was
undertaken, and the running of the vessel co-ordinated – was located in
Milngavie, to the north west of Glasgow. By the period of time to which these
claims relate, the only office-based staff employed by JAG were a Managing
Director, Annabel Struthers, and a Cashier/Accountant, Frank Sosin.
From the office in Milngavie, Ms Struthers and Mr Sosin took all
steps that were necessary to operate the MOD contract in the South Atlantic.
As already noted, from 2001 onwards, that was the only function of JAG, and the
principal (indeed only) purpose of Mr Sosin and Ms Struthers on a day
to day basis was the provision of the services undertaken by JAG for the MOD
using the St Brandan.”
10.
The JAG/MOD contract was due to expire in 2009 and the MOD went out to
tender. JAG were unsuccessful. MOD instead, on 30 January 2009, entered into a time charterparty with the Third Respondents for the hire of
four vessels and crew. Section 17 of the charterparty provided for
the employment of the vessels to be restricted to: “As per MOD statement of requirement
Ref. S&MO CB3193”. That statement set out requirements which included
the cargo transportation work that had formerly been carried out by the
St Brandan.
11.
As at January 2009, the Third Respondents owned only three of the
four vessels required for the purposes of the MOD contract. They,
accordingly, had, on 29 January 2009, entered into a time
charterparty with the First Respondents, to hire a vessel called “Tamar”, and
crew. That vessel would be suitable for the St Brandan work.
Section 17 of that charterparty made no reference to the MOD requirements;
it simply provided that the employment of the vessel was restricted to
“Carriage and delivery of general cargo.”
12.
The Tamar took over from the St Brandan, in the South Atlantic, on
or about 19 May 2009.
Relevant Law
TUPE 2006
13.
In so far as material, these regulations provide:
“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”.
14.
Although, before the Employment Tribunal, the Claimants had sought to
advance their case under reference to both regulation 3(1)(a) and 3(1)(b),
the first of these was not pressed and, before me, was not advanced at all.
Parties were agreed that this was a “service provision change” claim and that
the Claimants, accordingly, required to bring themselves within
regulation 3(1)(b) if they were to show that there had been a relevant
transfer. Prior to the 2006 Regulations, it had not been determined that the EC
Acquired Rights Directive applied to service provision changes. The UK
Government decided to legislate so as to expressly apply the regulations to
service provision change circumstances such as had come to be encountered when
outsourcing occurred. Authorities regarding the scope of the Acquired Rights Directive
– such as Albron Catering BV v F N V Bondgenoten Case C-242/07
[2011] IRLR 76, ECJ – are not, accordingly, in point for the purposes of
the present case.
15.
Under the regulations, the Claimants required to establish both that
there had been a relevant transfer and that that transfer had had the effect of
preventing termination of each of their individual contracts of employment. To
that end they required, first, to show that there had been a service provision
change. They relied on regulation 3(1)(b)(ii) which they could not do
unless they could show that immediately before the contract change there had
been:
·
“an organised grouping of employees situated in Britain.
·
Which had “as its principal purpose”
·
The carrying out of “the activities concerned” that is, the
activities required under the contract between the transferor and the client “on
behalf of the client”
16.
Each of those elements required to be established by the Claimants.
17.
There is no authority as to the meaning of any of the above save the
observation in Enterprise Management Services Ltd v Connect-Up Ltd
UKEAT/0462/10/CEA where HHJ Peter Clark observed, at
paragraph 8:
“The expression ‘activities’ is not defined in the regulations.
Thus the first task for the Employment Tribunal is to identify the relevant
activities carried out by the original contractor.”
18.
I would offer the further observations. It seems to me that the phrase
“organised grouping of employees” connotes a number of employees which is less
than the whole of the transferor’s entire workforce, deliberately organised for
the purpose of carrying out the activities required by the particular client
contract and who work together as a team. The reference to “situated in Great Britain” clearly requires that group to be based in Great Britain. Whilst
regulation 3(4)(c) makes it clear that, of itself, the fact that a person
or persons who are part of that organised grouping of employees work outside
the United Kingdom does not prevent the provisions of
regulation 3(3)(a)(i) being satisfied, it does not, to my mind, in any way
detract from it being a fundamental pre-requisite of a “service provision
change” transfer that there be an organised grouping of employees situated in
Great Britain.
19.
Turning to “principal purpose” there seems to be no reason why the words
should not bear their ordinary meaning. Thus, the organised grouping of
employees need not have as its sole purpose the carrying out of the relevant
client activities, that must be its principal purpose.
20.
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?
21.
If a claimant can show that a relevant service provision change
occurred, he then requires to satisfy the requirements of
regulation 4(1). That involves considering whether or not the claimant
was assigned to the organised grouping of resources referred to in
regulation 3(3)(a)(i). In the course of the hearing before me,
Mr Siddall sought to argue that the phrase “organised grouping of
employees” had a different meaning in regulation 4(1) from that which it
bore for the purposes of regulation 3(3)(a)(i). He referred to no
authority for that proposition and, ultimately, his submission came to be no
more than it was possible that it could have a different meaning so as to
encompass employees who were not actually part of the organised grouping
identified for regulation 3 purposes. His submission was hard to follow
and I reject it. It would be contrary to principal for a phrase used in
adjacent paragraphs in the same regulations to be given, without express
statutory direction, different meanings and there is no reason for departing
from that principle in this case.
The issues for the Employment Tribunal
22.
The issues for the pre-hearing review had been fixed at a case
management discussion on 5 May 2010 and were:
·
“identity of the employer”; and
·
“application of the TUPE Regulations.”
23.
The first of these referred to the identity of the employer(s) of the
crew member Claimants. There was no doubt that Ms Struthers and
Mr Sosin were employed by JAG. However, both parties agreed that the
second bullet point was the important issue, the First and Third Respondents
urged the Employment Judge to concentrate on the first issue and not to
determine the first issue at all and the Claimants maintained that they were entitled
to succeed if the second issue was resolved in their favour irrespective of the
outcome of the first issue. In these circumstances, the Employment Judge did
not resolve the “identity of the employer”.
Judgment of the Employment Tribunal
24.
The Employment Judge found, as noted above, not only that TUPE applied
but that the Claimants’ contracts had transferred and had transferred to the First
Respondent. I say more below regarding him having done so, in circumstances
where the TUPE issue for the PHR had been limited, at the case management
discussion, to “application of the TUPE Regulations”.
25.
As for the way in which the Employment Judge reached his conclusion, his
reasoning appears to be as follows: this was a “service provision change” case,
under regulation 3(1)(a) of TUPE. He agreed with Mr Napier, who also
appeared for the Respondents before him, that the Third Respondents did not,
when JAG lost the contract, carry out the relevant service for the MOD. It was
carried out by the First Respondents. He considered that the First Respondent
did so “on behalf of” the MOD; it did not matter if they did not know of the First
Respondent’s identity at the time they contracted with the Third Respondent.
He then found that the sole purpose of the activities carried out in Milngavie
was to support the “operational end of JAG’s activities (by which I mean the
day to day activities of the St Brandan in the South Atlantic)”
(paragraph 68), that the activities in Milngavie had no “stand alone”
purpose and that the administration of the operation of the St Brandan in
the Falkland Islands “was carried out from JAG’s office in Milngavie by an
organised grouping of employees consisting, immediately prior to
19 May 2009, of Mr Sosin and Miss Struthers.”
26.
The Employment Judge considered that it would “make no sense”
(paragraph 69) at least from 2001, to regard the office based functions in
Milngavie as being divorced from the delivery of the activities being carried
out by the St Brandan.
27.
The Employment Judge made no findings as to whether or not the crew were
“an organised grouping of employees”.
28.
He then considered whether, assuming that the crew were employed by
GSML, not JAG, it mattered, for TUPE purposes, that there would be two
transferor employers and concluded that it did not; neither party took issue
with this proposition at the appeal hearing.
29.
Then, the Employment Judge observed that it did not matter whether the
crew were employed by GSML or JAG and said, at paragraph 78:
“What matters is that the provisions of Regulation 3(1)(b)
were engaged, and the Tribunal has jurisdiction to entertain all of the claims
by virtue of Regulations 3(3)(a)(i) and 3(4)(c). In my opinion,
Regulation 3(1)(b) applied her to all of the Claimants and the Tribunal
has jurisdiction to hear their claims on their merits.”
The Appeal
Submissions for the Respondents
30.
Mr Napier stressed that the Respondents’ approach was that the
plain and ordinary meaning of TUPE applied. There would only have been a
relevant transfer if the Claimants were part of an organised grouping of
employees situated in Great Britain before the transfer employed by the
transferor and, pre-transfer, employed for the purpose of carrying out
“activities” within the regulations. Under reference to Metropolitan
Resources v Church Dulwich [2009] IRLR 700 he emphasised the
importance of adopting a straightforward and common sense application of the
relevant statutory words to the individual’s circumstances before them (per HHJ
Burke QC at paragraph 28). Authorities on the Acquired Rights
Directive were of no assistance. It was also important to follow a structured
approach asking what were the relevant activities? Whether those activities
had transferred over? Whether the conditions in regulation 3(3) had been
satisfied?
31.
There was no issue between parties as to whether there was a difference
between the pre and post transfer activities. The Respondents accepted that
any test of similarity was met.
32.
Mr Napier’s first and principal submission (which was, ultimately, acceded
to by Mr Siddall) was that the Employment Judge had fallen into error in
that he had wholly overlooked the requirement to consider regulation 4.
The PHR was held to decide whether or not there was a “relevant transfer”. It
was not held to establish whether, if there was such a transfer, that transfer
was effective to transfer the contracts of the individual employees. The
latter question was separate from the question of whether or not TUPE applied.
Nowhere in the Employment Tribunal’s decision was there reference to
regulation 4. Nowhere did the Employment Judge make any finding in fact
regarding the issue of whether or not the individual employees were assigned
for regulation 4(1) purposes. That was particularly significant on the
present facts because it was far from clear to which (if any) “organised
grouping of employees” the crew Claimants were signed. Indeed, the Tribunal
had made no findings regarding “organised grouping of employees” beyond their
finding that the two officer workers in Milngavie were such a group. However,
there was not even a finding that Ms Struthers and Mr Sosin were
“assigned” to that grouping. Employment Tribunals require to deal only with
the issues live before them (Taskmaster Resources Ltd v Kanyimo and
Another [2007] UKEAT 0441-06/2002 para 14).
33.
Mr Napier indicated that the First and Third Respondents had not
addressed the issue of individual assignations or transfers because they had
taken the view that it was not within the scope of the hearing, which was restricted
to the issue of whether or not there had been a relevant transfer.
34.
In deciding as he did, the Employment Judge had overlooked the
significance of regulation 4 thus missing a crucial step in the legal
analysis and, moreover, had gone beyond the terms set for the PHR without
giving any indication that he had planned to do so. He had failed to show the
minimum requirements in relation to his reasoning process as required by
rule 30(6) of the Employment Tribunal Rules (English v Royal Mail
Group Ltd UKEAT/0027/08; Greenwood v NWF Retail [2001]
896 EAT paragraph 63). In these circumstances, the judgment was
fundamentally flawed and the entire case required to be remitted to a freshly
constituted Tribunal, Employment Judge Fairley no longer being available.
35.
Mr Napier also dealt with the remainder of his grounds of appeal
but not so as to detract from his principal submission being that for the above
reasons there required to be a remit. First, he submitted that if (which was
not conceded) the crew members, Ms Struthers and Mr Sosin all
comprised a single “organised grouping of employees”, there was no basis for
applying the regulations to them because the majority of the group ordinarily
worked outside the United Kingdom. They could not satisfy the requirement that
the organised grouping be “situated in Great Britain”. He referred to the case
of Holis Metal Industries Ltd v J M B and another
[2008] IRLR 187 where, at paragraph 42, HHJ Ansell observed that, so
far as international matters were concerned:
“…the only limitation is that there should have been an
organised group of employees situated in Great Britain immediately before the
service provision change…”
36.
On the facts, it could not be shown that looking at the crew, Struthers
and Sosin together, they were situated in Great Britain.
37.
Mr Napier next submitted that, approaching matters on the basis that the
Tribunal had namely that JAG employed Ms Struthers and Mr Sosin, the
requirements of regulation 3 could not be satisfied in respect of the two
office workers. That was because the activities which comprise the service
provision change were the tasks carried out before the change, by the
St Brandan, in the Falkland Islands. The crew were not situated in Great Britain. Even if one took account of the situation of their employer, that did not
assist since GSML was based in Guernsey.
38.
Further, the Tribunal had erred in finding that there was an “organised
grouping of employees” comprising only Ms Struthers and Mr Sosin.
Those two employees could not, by themselves, form an organised grouping of
employees whose principal purpose was to carry out “the activities concerned”
because those activities were intended by the client, the MOD, to be carried
out principally in the South Atlantic around the Falkland Islands. Whatever
administrative activities were carried out in the Milngavie office, they did
not amount to a set of activities capable of being separated from the
activities in the South Atlantic or of supporting a relevant organised grouping
of employees. As HHJ Clark had observed in the Enterprise
Management Services Ltd case, whether “activities” could be split into
parts was an “interesting question” and “would require further fact finding”.
That was with a view not to having different facts substituted for those found
by the Tribunal but dealing with an error by the Tribunal which amounted to an
error of law, this issue being a mixed question of fact and law.
39.
Whilst, as above noted, Mr Napier did not take issue with the
possibility of there being a relevant transfer that involved two transferors,
in this case, what emerged was that on the crew side there might be an
organised grouping of employees but they were employed by GSML carrying out the
operational aspects of the MOD contract on the St Brandan in the Falkland
Islands and TUPE did not apply. Regulation 3(4)(c) did not help. The
Employment Judge had, in effect, allowed the crew to “piggyback” on the
organised grouping of employees in Great Britain that he identified (Struthers
and Sosin). That was not an approach that was open to him however; the crew
had a separate employer. They could not be lumped together with Struthers and
Sosin. His application of regulation 3(4)(c) was erroneous. It would be
extraordinary if it was easier to satisfy the requirements of
regulation 3(1)(b) where some of the potential transferring employees
worked abroad, as opposed to working in Great Britain. That cannot have been
what the regulations intended. He was not suggesting that there could not be a
relevant transfer of employees who in fact worked outside Great Britain pre-transfer, but any such employee would, none the less, have had to have been
assigned to “an organised grouping of employees that existed and was based in Great Britain”.
Submissions for the crew member Claimants
40.
Mr Siddall began by referring to the definition of employee in
regulation 2 pointing to the definition being wider than that in
section 230 of the Employment Rights Act 1996; the purpose of
his doing so was not entirely clear. Although he then, initially, sought to
resist Mr Napier’s submission that the Employment Judge had erred by
failing to consider regulation 4(1) and determine whether or not its
requirements were satisfied, he ultimately conceded that that was a problem and
recognised that that issue required to be remitted to a fresh Employment
Tribunal for deliberation and decision.
41.
Mr Siddall, none the less, sought to, as he put it, have the
judgment “upheld” on three points. First that there had been a relevant transfer
namely a service provision change falling within regulation 3(1)(b).
Secondly, that, immediately prior to the transfer there was an “organised
grouping of employees” whose principal activity was the performance of work for
the client, situated in Great Britain. Thirdly, that regulation 3(4)(c)
did serve to allow the crew member Claimants to be assigned to an organised
grouping of employees in Great Britain.
42.
I have already referred to an argument advanced by Mr Siddall to
the effect that “organised grouping of employees” has a different meaning in
regulation 3 from regulation 4, and my rejection of it.
43.
Mr Siddall turned to the question of multiple transferors. There
could be more than one transferor. He referred to Albron Catering
at paragraph 20 and 24 and submitted that the approach of the European
Court of Justice could be applied to regulation 3(1)(b). It showed that
it was perfectly acceptable for the organised grouping of employees referred to
in regulation 3 to have a multiplicity of employers. That being so, all
of Mr Napier’s criticisms fell away. There was no difficulty in
interpreting the facts as showing that there was a relevant transfer. He also
submitted that Mr Napier was attempting to argue questions of fact which it
had already been determined by the Employment Tribunal. That was not open to
him. Having identified the activities as they did, the Tribunal reached the
conclusion that was correct and not open to criticism. Mr Siddall
referred to a cross-appeal lodged on behalf of the crew member Claimants to the
effect that the Employment Tribunal had erred in failing to find that the
transferee employer was the Third Respondent. He made no submissions in
support of it on the basis that if he succeeded in his arguments regarding
regulation 3, as above, he would ask that the issue of the identity of the
transferee employer be remitted as well as the regulation 4 issue.
Submissions for Ms Struthers
44.
Mr McGuire submitted that the Tribunal had not erred in law. The
Employment Judge had correctly identified that Ms Struthers was employed
by JAG and was part of an organised grouping of employees, consisting of
herself and Mr Sosin. The activities in question were those carried out
by JAG in the performance of its contract with MOD. The sole purpose of
Ms Struthers’ activities was, “along with Mr Sosin” to support the
operational end of the activities performed by the St Brandan in the South Atlantic. The Tribunal’s reasoning was not open to criticism. They did not suffer
from the same problem as the crew in that they were based in Great Britain. Regarding the regulation 4 problem, Mr McGuire submitted that it was not a
material error. Based on the findings made by the Tribunal, it was self
evident and without doubt that Ms Struthers contract of employment was assigned
to the organised grouping of employees identified by the Tribunal because she
was part of it. There could be no doubt that her contract of employment would
have transferred to the First Respondent. He asked that her case be treated
separately and not be remitted notwithstanding the regulation 4 issue.
45.
Mr Sosin was present in person. He confirmed that he had nothing
to add to the submissions that already had been made.
Discussion and Decision
46.
I have no difficulty in acceding to Mr Napier’s submission that the
Tribunal erred in determining that the Claimants’ contracts of employment had
transferred without considering whether or not the requirements of
regulation 4(1) were satisfied. The issue of whether or not a particular
employee was assigned to the “organised grouping of employees” affected by the
transfer and thus entitled to the protection of TUPE is not a mere formality.
It can only be resolved after a proper examination of the whole facts and
circumstances. Being involved in the carrying out of the relevant activities
immediately prior to the transfer will not necessarily mean that that employee
was assigned to the organised group. It is not difficult to think of
circumstances where it will not be possible to conclude that an employee was
assigned to the organised grouping such as where he was only working on that
matter on a temporary basis – to provide cover for a member of the group who is
on leave, for instance. An employment tribunal has to take care to be
satisfied that the particular claimant was in fact assigned to the relevant
organised grouping prior to the transfer before it can reach what is a highly
significant conclusion for both claimant and putative transferee, that the
contract of employment transferred across when the client changed their service
provider. It is self evident that to consider the issue raised by regulation
4, consideration of the whole facts and circumstances in which the Claimants
worked will be required and I am satisfied that that needs to be carried out
afresh, particularly since the remit will be a new tribunal.
47.
The Tribunal’s error is such that its judgment falls in its entirety and
the case will, accordingly, require to be remitted for a rehearing.
48.
In these circumstances, anything that I have already said or have to say
regarding the regulation 3 issues that arise are obiter and it is
only by way of hoping to assist in focussing the issues that I make the
following observations.
49.
The questions that the Tribunal will require to address include the
following.
·
What, if any, organised groupings of employees existed?
·
Was there an office based organised grouping? If so, there would
seem to be no doubt that it was situated in Great Britain. That, however, would
not be sufficient. The Tribunal would then have to ask whether they had as
their principal purpose the carrying out of the relevant activities?
·
If there was an office based organised grouping, what activities
did they carry out?
·
Were the crew part of any office based grouping? How could that
be, if they had a different employer? – the application of section of 394(c)
cannot, in my view, be relied on so as to allow them to “piggy back” onto any
grouping of Struthers and Sosin that is found to have existed.
·
Were the crew of themselves an organised grouping of employees?
If so, were they situated in Great Britain? Only if both those questions are
answered in the affirmative need there be any further consideration of the
activities that they were carrying out. If they are not both answered in the
affirmative then that would demonstrate that TUPE did not apply.
50.
Regarding the issue of what were the “activities” carried out for the
MOD by JAG, the starting point would seem to be to ask what was the service
that the client contracted for? The answer may be no more than that the MOD
contracted for the hire of a vessel and crew to carry cargo around the Falkland
Islands with the Master of the vessel receiving day to day instructions from
the MOD regarding what was required in that regard. Whilst ancillary matters
arise, such as the employers’ duties in relation to the crew, the need to
arrange insurance for the vessel and to arrange for repair of the vessel if
required, and the paperwork involved in, for instance, invoicing the MOD, these
being matters which – whilst they might be seen as facilitating the activity in
which the claimant is interested – are not the activity itself , as the
Employment Judge, in referring to operational end of the contract being the
“activities” in the South Atlantic, appeared to accept.
51.
I am mindful of the Employment Judge having found that the ‘office
based’ activities were not divorced from the work of the St Brandan but
there are, as I see it, two problems in his approach. The first is that the
only detailed findings he makes about Ms Struthers and Mr Sosin’s
work is where, at paragraph 21, he finds that they in fact carried out the
various employer’s duties that had been subcontracted by GSML to JAGM. At
best, that demonstrates that they carried out work for GSML – in circumstances
where he did not find that the GSML arrangement was a sham and did not find
that JAG employed the crew. It is not clear whether or not he was including
their de facto work in relation to the crew in finding that their work
was not divorced from the operation of the St Brandan. If he was, I find
it difficult to accept that it was open to him to do so when JAG were not found
to be the employers of the crew. The second is that the other findings he
makes about their work are vague and amount to no more than that their office
work was administrative with regard to the running of the St Brandan. The
provisions of regulation 3 would, however, appear to require an
examination of what exactly were the activities that were carried out rather
than just a determination of their characterisation. Quite apart from anything
else, some of their work must have related to the need to protect and preserve
what appears to have been the company’s principal asset - the St Brandan –
to consider and plan for the future of that asset, to, if their premises were
leased, attend to their tenant’s responsibilities and, if they owned the
premises, manage, protect and preserve that asset also.
52.
Regarding the expression “an organised grouping of employees”, I would
refer to my comments in the “Relevant Law” section above. I would reject
Mr Siddall’s contention that a single organised grouping of employees
could be made up of employees who have different employers. Such an
interpretation flies in the face of commonsense, in my view. It would not be
one which gives the words their ordinary, straightforward, meaning. It seems
plain to me that Parliament envisaged a situation where a group of an
employers’ employees is put together by that employer to carry out some
particular work that a contract with a particular client requires and does so.
The group will be subject to the same employer control and direction, to the
same client confidentiality requirements (if applicable) and the same duties of
care all stemming from that single contractual relationship. They can properly
be regarded as bound together in a single joint enterprise to fulfil their
employer’s contractual duties to the client. Employees of another employer
would be outsiders; they could not be regarded as part of the same grouping or
bound to the same contractual duties. Whilst I agree that there would seem to
be no objection in principle to the idea that where a client moves his business
from two service providers to a single service provider, TUPE may apply to two
separate groupings of employees, that is a quite different matter.
Disposal
53.
In these circumstances, I will pronounce an order upholding the appeal,
setting aside the judgment of the Employment Tribunal and remitting the cases
to a freshly constituted Employment Tribunal for a rehearing.
54.
The remit requires to be to a fresh Tribunal as Mr Fairley has
returned to full-time practice at the Scottish Bar.
