Appeal No. 14/92

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 19 November 1992
	Judgment delivered on 4 December 1992

	Before

	THE HONOURABLE MR JUSTICE TUCKER

	MR D G DAVIES

	Ms M EXLEY

DEPARTMENT OF HEALTH	APPELLANTS

(1)  MRS M BRUCE
(2)  DEPARTMENT OF SOCIAL SECURITY	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	LORD JAMES MESTON
	(of Counsel)
Department of Health
Solicitors Office
Room A106
Richmond House
79 Whitehall
London SW1A 2NS

For the 1st Respondent	In Person

For the 2nd Respondent	LORD JAMES MESTON
	(of Counsel)

	MR JUSTICE TUCKER:   This is an appeal by the Department of Health (DH) from a decision of an Industrial Tribunal held at London (South) in February and November 1991 whereby it was decided that the Respondent Mrs Margaret Bruce was unfairly dismissed by the Department of Social Security (DSS) and ordered that she be re-engaged by the Appellants.   The grounds of appeal are two-fold:

	(1)there was no jurisdiction to order the Appellants to re-engage the Respondent who was, at the time her employment terminated, an employee of the Department of Social Security, the Appellants not being the Respondent's employer nor a successor of her employer nor an associated employer within the meaning of Sections 69(4) and 153(4) of the Employment Protection (Consolidation) Act 1978.

	(2)if there was such jurisdiction, a reasonable Tribunal could not have ordered re-engagement given the history of the Respondent's employment and the considerable practical difficulties in finding her any suitable employment and the strong likelihood that any such re-employment would not be effective.

	The Respondent is now aged 54, and she lives at Blackheath.   In 1977 at the age of 39 she started employment as a clerical assistant with the Department of Health and Social Security.   Unfortunately she suffered a stroke later that year, which has left her seriously disabled.   She suffers from a left hemiplegia.   She cannot walk far or lift anything heavy.   Nevertheless she has shown a great determination to continue her employment.   For some time she was employed in the Personnel Management Division of the DHSS at Alexander Fleming House, Elephant and Castle.   In April 1988 she was transferred to other premises in Carey Street.   From the 6th June 1988 until the 27th February 1989 (a period of nearly nine months) the Respondent was off work because of back pain.   She was away for a similar reason for a further period of four months between January and May 1990.

	Meanwhile, the Government Department for whom the Respondent had been working split into two new Departments - the Department of Health and the Department of Social Security.   This change was effected by The Transfer of Functions (Health and Social Security) Order 1988.   The Order came into force on the 28th November 1988, but did not take practical effect until April the following year.

	On the 31st January 1989 a Note was circulated to all Headquarters staff headed "Restructuring of Departments of Health and Social Security".   At paragraph 4 under the heading "Relations between the two Departments", the Note said this:

"Although we are now two Departments, the Permanent Secretaries have made clear that they are committed to maintaining a close and special relationship.   There will be no "iron curtain" either now in this sorting out period or in the longer term.   There will continue to be postings in the "other" Department - temporary and permanent.   And the two personnel management divisions will be housed together at the Adelphi to ensure that the special relationship really does work in practice.   This is intended to assist career development.   And it will help the two Departments to continue to run smoothly - for example, by allowing the traditional flow of people from the Social Security Regional Organisation to Social Security and Health Headquarters jobs."

	On 28th April 1989 the Respondent received a further Note headed "Your New Employer".   This is what it said:

"This note formally advises you that consequent upon the split of the Department of Health and Social Security your employer is now

				The Department of Social Security

Your existing terms and conditions of service remain unchanged.   DHSS Staff Rules, Staff Code and other relevant documents relating to terms and conditions of service will continue to apply to both Departments until replaced by separate Departmental versions and should be read accordingly."

	Over a period of time the staff allocated to the different Departments were physically separated, and as part of these arrangements the DSS moved its employees out of Alexander Fleming House.

	The Respondent was not proving a great success at her work.   Her 1987/1988 appraisal report attracted the award of a Box 5 marking - a very low assessment of her ability and efficiency.   The Respondent was advised by one of the medical officers to the DSS to accept retirement on ill-health grounds.

	On the 26th January 1990 the Civil Service Medical Adviser, Dr Harper, certified that the Respondent was incapable, because of ill-health and after-effects of a stroke, of giving regular and efficient service, and that the incapacity was likely to be permanent.

	On the 5th February 1990 the Respondent was given notice of compulsory retirement on the grounds of ill-health to take effect on 11th May.   The Respondent appealed this Notice.

	On 27th April 1990 a Medical Appeal Board reported as follows:

"Mrs Bruce is very disabled by her residual left hemiparesis, recurrent low back pain and liability of her legs to swell.

She is probably capable of doing a desk job, provided that she only has to get up and walk short distances, does not have to lift or carry anything heavy and does not have to negotiate swing doors.   She needs door to door transport, and a journey of no more than 30-45 minutes each way is probably as much as she could be expected to manage on a regular basis.

If a suitable job with these constraints can be found for her, it would be justifiable to give her a further trial to see whether she is capable of working with reasonable efficiency, as she maintains that she is keen to continue in employment.

If no suitable post is available for her, then we consider that her retirement on medical grounds would be appropriate and fully justified."

	The result of all this was that when the Respondent returned to work on the 9th May 1990 she was faced with compulsory retirement in two days time, and her employment was accordingly terminated.   She thereupon applied to the Industrial Tribunal alleging that she had been unfairly dismissed.   She named the DSS as her employer.   The relief she sought was reinstatement and compensation.   The DSS served a Notice of Appearance and stated that they had acted reasonably in its conduct towards the Respondent.   They continued to try and find a suitable placement for her either in their own Department or in other Departments, but these proved impossible in view of the criteria imposed by the Medical Appeal Board, and also because of the Respondent's low Box marking.

	In these circumstances it is perhaps surprising to find that despite the contents of their Notice of Appearance the DSS admitted liability in this case.   They did not contest the allegation of unfair dismissal.   By their letter dated 11th January 1991 they said that they were not able to reinstate or re-engage the Respondent because of a lack of suitable accommodation, and they made a very handsome offer of compensation.   The Respondent was unwilling to accept this offer.   She wished to pursue her application before the Industrial Tribunal and did so.   She appeared in person before the Tribunal as she did before us.   We enquired whether she was aware of the services offered by the Free Representation Unit, and it was clear not only that she was but that she had in fact consulted them.

	So the Industrial Tribunal was not troubled with the issue of whether the dismissal was unfair - they only had to consider the question of remedy.

	Lord Meston represented the DSS at the hearing before the Tribunal.   The present Appellants were not at that stage parties to the proceedings.   They were joined as Respondents at the instigation of the Tribunal despite opposition from Lord Meston.   The Tribunal gave reasons for their Order to take this course, the most material of which are those set out in paragraphs 4, 5 and 6 as follows:

"4.	The present Respondents' case is that if the Applicant is to be reinstated or re-engaged, she can only be deployed at Alexander Fleming House if she is transferred to the Department of Health, and that she cannot be so transferred because of the internal Civil Service-wide rule that no such transfer can take place if the employee has a marking in her annual appraisal of less than a certain grade.   Mrs Bruce had a lower marking on more than one occasion, although the precise circumstances in which that happened, and the reason for it, appear to be in dispute.

5.	Despite the very able arguments of Lord Meston for the Respondents it appears to us that the Civil Service is one inalienable whole, and not a series of separate legal entities.   The various great departments of state are, in truth, in the same legal position as the branches or divisions of some companies or other legal organisation.

6.	In reaching this conclusion we derived considerable assistance from the case of Town Investments Ltd and Others  v  Department of the Environment (1978 AC 359 HL - to which Lord Meston, in discharge of his responsibility to cite any case law revealed by his researches which was favourable to the unassisted Applicant, kindly drew our attention.   Lord Diplock there said in terms (at page 383A)  "The relationship of master and servant does not exist between a minister in charge of a Government Department and any other government servant employed in that department in whatever grade of the Civil Service he may be.   They are both fellow servants of the Crown".   Section 138 of the Employment Protection (Consolidation) Act 1978 extends the provisions of the Act to "Crown employment", while sub-section (2) of that Section defines Crown employment as "employment under or for the purposes of any government department", thereby making the very point made by Lord Diplock, namely that there was one government notwithstanding that it had, and its functions were carried out by, a number of departments and ministers.   Viewed in this light, the Transfer of Functions Act 1988, relied upon by Lord Meston, reinforces rather than controverts our view, since it is simply giving effect to the transfer of functions by the Crown, or Government, from one servant to another."

	Thus it is that the Department of Health are the Appellants before us, though Lord Meston made it plain that he also represented the DSS.   He submitted that there are two issues for us to determine.

	(1)Can the Industrial Tribunal require a Government Department to re-engage an Applicant who was never employed by that Department?

	(2)Whether, even if there was power to order re-engagement, were the Tribunal right to order it?

	Unfortunately we are divided in our decision on both issues.   The majority (the lay members) take the view that the Industrial Tribunal were empowered, in the particular circumstances of this case, to make the order against the Department of Health.   The minority (the Chairman) takes the opposite view.

	In the opinion of the Chairman, the effect of the Transfer of Functions Order was quite plain.   It was to create two new and separate Departments of State, each carrying out its own functions, and each employing its own staff.   Each new Department was to be headed by a Secretary of State, and he and his successors were to be a corporation sole.   It is equally plain to the Chairman that at the date of the termination of the Respondent's employment, she was (as she herself believed to be the case) employed by the DSS, and that she had been so employed since at least the 28th April 1989.   The DSS was her employing Department.   Although there was a continuing informal connection between the two new Departments there was no automatic right of transfer between them or to any other Department.

	The fact that in the early stages of the split there was this informal connection between the two new departments does not in the Chairman's view give rise to a continuing or permanent right of transfer, certainly not after 28th April 1989, and not therefore at the date of the Respondent's dismissal nor at the time of the Tribunal's decision.

	The Appeal Tribunal are unanimous in their view that the Industrial Tribunal were wrong in law to hold that the Civil Service is one inalienable whole.   The dictum of Lord Diplock in Town Investments Ltd  v  Department of the Environment was not followed in Linden  v DHSS (1986) 1 WLR 164.   The Respondent did not make any claim against the Civil Service or the Crown.   Section 138(2) of the 1978 Act provides that "Crown Employment" means employment under or for the purposes of a government department (see also Section 138(7)(f)).   It is clear to all members of the Appeal Tribunal that the 1978 Act defines the Government Department, rather than the Crown at large, or the Civil Service, as the unit by which a person is employed.

	Accordingly, the Chairman approaches the question of who was the Respondent's employer by asking by whom she was employed at the time of her dismissal?   (See Section 153(1) of the 1978 Act).   The answer to this in his view is clearly the DSS.   The DH was not then "the employer", nor was it a "successor of the employer".   It may have been a successor of the old employer (DHSS) but not of the new employer.   And the DH was not an "associated employer" as defined in Section 153(4) which is concerned with holding and subsidiary companies.

	Moreover, it seems to the Chairman that there would be difficulties about enforcing the Tribunal's Order if the terms were not fully complied with.   How could the Tribunal make an award of compensation against the DS ("the employer") under the provisions of Section 71?

	The Chairman further takes the view that even if there had been power to order re-engagement the Tribunal was wrong to order it.   There was unchallenged evidence before the Tribunal about the considerable practical difficulties of finding a job for the Respondent, and admirable though her resolve was to find work, it was not a realistic prospect for her.   The Tribunal ought to have taken a common-sense view.   The Respondent had already been given one fresh start but it had come to naught.

	The lay members disagree with the Chairman on both points.   Largely basing themselves on the notices "to all HQ staff" dated 29th July 1988 and 31st January 1989, which refer to "common citizenship" and "no iron curtain either now or in the long term", they feel that there was a special relationship between the two new Departments.   They are of the opinion that from a practical point of view the staff were being treated as if the two Departments, though having been divided, were operating closely with one another in relation to the employment of staff, and that they should be considered as one Department for that purpose.   The January 1989 Notice stated that "every effort will be made to fit in with preference (as to Department) in the next three years or so", and lay members think that this shows that at least until, January 1991 the division between the two Departments as employers remained fluid.

	The lay members take the view that the Tribunal was justified in ordering re-engagement, and can see no grounds for not so ordering.   They feel that the extremely close and unusual link which existed between the DSS and DH at the time of the unfair dismissal warrant an order for re-engagement by the DH.

	Accordingly, by a majority, the Chairman dissenting, this appeal is dismissed.   Leave to appeal.