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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> RCO Support Services Ltd & Anor v. Unison & Ors [2000] EAT 38_99_2806 (28 June 2000) URL: http://www.bailii.org/uk/cases/UKEAT/2000/38_99_2806.html Cite as: [2000] EAT 38_99_2806

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APPEARANCES

 

For the Appellants: (RCO Support Services) For the Appellants: (Aintree Hospital Trust) For the Appellants: (Initial Hospital Services Ltd)	MR T LINDEN (of Counsel) Instructed By: Messrs Eversheds Solicitors Senator House 85 Queen Victoria Street London EC4V 4JL MR S GORTON (of Counsel) Instructed By: Messrs Hill Dickinson Solicitors Pearl Assurance House Derby Square Liverpool L2 9XL MS J CONNOLLY (of Counsel) Instructed By: Rentokil Ltd Legal Services Garland Road East Grinstead West Sussex RH19 2DR
For the Respondents: (Binns & Others) (Foster & Others) (UNISON) and (McKinlay)	MS H GOWER (of Counsel) Instructed By: Messrs Thompsons Solicitors Richmond House Runford Place Liverpool L3 8SW


 


MR JUSTICE LINDSAY (PRESIDENT):

1. Aintree Hospitals NHS Trust ("the Trust") ran, inter alios, two in-patient hospitals in Liverpool, one at Walton and one at Fazakerley. They are three miles apart. Both hospitals required, of course, cleaning and the provision of catering, which services came in time to be provided to each respective hospital by way of outside contractors. Over a period from 1995 changes were made by the Trust such that the rôle of Walton was reduced and that of Fazakerley increased. Walton became, ultimately, essentially a base for out-patients. In the course of the changes there were employees who had provided cleaning or catering at Walton under one contractor or under the Trust who did not get employment at Fazakerley either with the Trust or with the other contractor but who also lost their jobs with the Trust or with the contractor who had originally employed them at Walton. In April 1998 a number of those individuals lodged IT1s claiming unfair dismissal by reason of a transfer and unfair selection for redundancy.
2. The Respondents were at first the Trust and RCO Support Services Ltd ("RCO"), the contractor providing services at Fazakerley. Although we do not have a record of its formal joinder, Initial Hospital Services Ltd ("Initial"), which had had the contract for cleaning at Walton but which, in competition with RCO, failed to gain the contract for cleaning at Fazakerley (and which was already party to related proceedings brought by the Trade Union UNISON as to an alleged failure to consult) was joined as a party to the employees' unfair dismissal proceedings. It was arranged that there should be a hearing to deal with the preliminary question of whether, for the purposes of the Protection of Employment (Transfer of Undertakings) Regulations 1981, ("TUPE"), there had been a transfer of undertakings from Initial to RCO. The hearing was at Liverpool under the Chairmanship of Mr E. Lloyd-Parry and was spread over some 7 days in September 1998. The Tribunal heard written and oral evidence from 9 witnesses. Differing facts and arguments were deployed in relation to the cleaners and the caterers involved but the unanimous conclusion of the Tribunal was that for TUPE purposes there had, as to each, been a transfer of an undertaking from Initial to RCO. Both RCO and the Trust lodged Notices of Appeal, RCO as to both the caterers and the cleaners and the Trust as to the caterers.
3. As is common in cases such as this the argument has concentrated not on the provisions of our domestic TUPE Regulations which were intended to implement the Acquired Rights Directive 77/187/EEC but rather upon the authorities in relation to that Directive. Many have been cited to us but we do not need to turn to each of them. However, before we return to the facts in greater detail, we shall first need to look in particular at three of those authorities as in our view it is upon a study of those three that the result of these appeals chiefly depends.
4. In Süzen (Süzen -v- Zehnacker Gebaudereingung GmbH Krankenhausservice [1997] ICR 662 ECJ) the applicant had been employed by Zehnacker as, with others, a cleaner of a private church-run secondary school which Zehnacker had a contract with the school's proprietors to clean. On the 15th February 1994 Frau Süzen was told by Zehnacker that its contract was expected to end in June 1994 and that Zehnacker was therefore compelled, as a precautionary measure, to terminate her employment with effect from the 30th June 1994. Zehnacker said that if, after all, it was to be awarded a new cleaning contract for the school then it would offer to continue her employment. However, Zehnacker did lose the cleaning contract, which was awarded instead to another outside contractor, Lefarth. Frau Süzen sought a declaration that her dismissal had been invalid. The national court held that in order to decide that question it was necessary first to consider whether the termination of Zehnacker's contract and its award to Lefarth was to be regarded as a transfer for the purposes of the Acquired Rights Directive. The questions put to the European Court of Justice by the national court, after referring to two earlier ECJ decisions, asked firstly whether the Directive was applicable if an undertaking (there the school) terminated a contract with an outside undertaking (there Zehnacker) in order then to transfer it to another outside undertaking (there Lefarth). The second question was:-

"Is there a legal transfer within the meaning of the Directive in the case of the operation described in question (1) even if no tangible or intangible business assets are transferred?"

The opinion of Advocate-General La Pergola, whilst recognising the merit of flexibility in the European Court of Justice's previous approach to such questions, added this plea (with his emphasis):-

"Notwithstanding that merit, however, it is still necessary, as I have cited, to identify the essential content of the transfer of an undertaking. The core requirement for applying the directive must be determined". (p. 667 g)

He considered that transfers of undertakings should be more clearly defined and distinguished from other situations which did not come within the terms of a Directive. Given that the Directive of the 14th February 1977 states that it "shall apply to any transfer of an undertaking, business, or part of an undertaking or business, to another employer as a result of a legal transfer or merger" and yet failed to define any of the terms it used and given also that the Directive had, by the time of Süzen in 1997, been the subject of very many decisions of the ECJ which had left the law in the state which the Advocate-General had described, his plea for some spelling-out of a core requirement was hardly premature.

5. The decision, though, may be said to fall short of the clarification for which the Attorney-General had prayed. As for what is an undertaking (using that word to cover a reference to an undertaking or business or to a part of either of them) the ECJ held (leaving out a further requirement not here relevant) that there had to be a "stable economic entity" and that the term "entity":-

"Thus refers to an organised grouping of persons and assets facilitating the exercise of an economic activity which pursues a specific objective". (p.670 h)

However, it was not to be thought, said the Court, merely because the service provided by the previous and subsequent holders of the contract was similar, that an economic entity had been transferred as:-

"An entity cannot be reduced to the activity entrusted to it. Its identity also emerges from other factors, such as its workforce; its management staff; the way in which its work is organised; its operating methods, or, indeed, where appropriate, the operational resources available to it". (p. 671 c-d)

6. So far as concerned the nature of an entity in a labour-intensive sector, the ECJ held that a group of workers engaged in the joint activity in such a sector on a permanent basis might constitute an economic entity and thus, said the ECJ "an entity is capable of maintaining its identity after it has been transferred where the new employer does not merely pursue the activity in question but also takes over a major part, in terms of their numbers and skills, of the employees specially assigned by his predecessor to that task".
7. It is by no means as easy to separate the passages in the judgment which deal with the question of whether there is an undertaking from the passages which deal with whether the undertaking, if any, had been transferred, but the Court held that:-

"The decisive criterion for establishing the existence of a transfer within the meaning of the Directive is whether the entity in question retains its identity, as indicated by the fact that its operation is actually continued or resumed" (p. 670 d)

and the Court then referred to the authorities for that proposition which included the Spijkers and Merckx cases to which we shall later refer. The absence of a contractual link between a transferor and transferee was not conclusive, nor need the transfer take place only in one stage. It was necessary to consider all the facts characterising the transaction in question including in particular, said the ECJ, the type of undertaking or business; whether or not its tangible assets such as buildings or movable property are transferred; the value of its tangible assets at the time of the transfer; whether or not the majority of its employees are taken over by the new employer; whether or not its customers are transferred; the degree of similarity between the activities carried on before and after the transfer, and the period, if any, for which those activities were suspended - p. 671 a-b. Such factors were to be considered as "merely single factors in the overall assessment which must be made and cannot therefore be considered in isolation" - p. 671 b.

8. It might be thought that the ECJ's response to the Advocate-General's plea for definition raised more difficulties than it answered but as for the particular answers to the specific questions raised by the national court the ECJ held:-

"The answers to the questions from the national court must therefore be that Article 1 (1) of the Directive .... is to be interpreted as meaning that the Directive does not apply to a situation in which a person who had entrusted the cleaning of his premises to a first undertaking terminates his contract with the latter and, for the performance of similar work, enters into a new contract with a second undertaking, if there is no concomitant transfer from one undertaking to the other of significant tangible assets or intangible assets or taking over by the new employer of a major part of the workforce, in terms of their numbers and skills, assigned by his predecessor to the performance of the contract". (p. 672 d-f).

One only needs to apply that decision to the facts of the case at hand, says Mr Linden for RCO, and the answer to the appeal, he says, is clear; it must be allowed.

9. But can we still safely rely upon Süzen? There are two cases in the Court of Appeal we need to look at.
10. The first in time of the two Court of Appeal cases requiring our particular study is Betts and Anor -v- Brintel Helicopters Ltd and Anor [1997] ICR 792. Shell (UK) Limited required helicopter services for moving men and goods to and from rigs in the North Sea. Brintel had three helicopter bases, at Aberdeen, Sumburgh and Beccles. It agreed three contracts with Shell for the provision of helicopter services, one for each of those three bases. At Beccles, in Norfolk, Brintel employed 66 people, including all seven of the individual plaintiffs. Brintel's contracts with Shell (UK) were due to expire on the 30^th June 1993. Brintel tendered for but lost the Beccles contract, which was won by KLMERA (Helicopters) UK Ltd ("KLM"). KLM took over no staff or equipment from Brintel at Beccles and moved the base of operations to Norwich. Brintel found jobs for some of the 66 at Beccles but 38, including all seven plaintiffs, were "surplus to requirements". But for the threat of proceedings KLM might have taken on some of the Brintel staff but with proceedings hanging over it considered it to be imprudent to do so. The plaintiffs argued there had been a TUPE transfer such as entitled them to declarations that they were employees of KLM. The judge, Scott Baker J, granted such declarations. KLM appealed to the Court of Appeal.
11. In the Court of Appeal the only reasoned judgment was that of Kennedy LJ, with whom Auld LJ and Sir Roger Parker concurred. Kennedy LJ examined a series of ECJ and other decisions beginning with Spijkers -v- Gebroeders Benedik Abattoir CV [1986] ECR 119 ECJ. That early case had held that the decisive criterion for establishing whether there was a transfer for the purposes of the Directive was whether the business in question had retained its identity. There a purchaser had taken over the premises and most of the staff of the former business which, on insolvency, had been sold. It was necessary to consider in such a case, held the ECJ:-

"Whether the business [was] disposed of as a going concern as would be indicated, inter alia, by the fact that its operation was actually continued or resumed by the new employer, with the same or similar activities".

- see Betts at p. 799 b-c.

12. That view of the law led to a particular focus on activity and in turn to a decision which might otherwise have been regarded as extreme, namely Schmidt -v- Spar-und-Leihkasse [1995] ICR 237. Frau Schmidt was the only cleaner at a bank's branch. The bank decided to contract-out that cleaning. The ECJ in Schmidt repeated the reference to continuity and the resumption of activities which we have cited from Spijkers supra and held that Directive:-

"Is to be interpreted as covering a situation .... in which an undertaking entrusts by contract to another undertaking the responsibility for carrying out cleaning operations which it previously performed itself, even though, prior to the transfer, such work was carried out by a single employee".

- see Betts at p. 800 d.

No assets were said to have been transferred in the Schmidt case and, in effect, the organisation of the cleaning operations which Frau Schmidt had carried out on her own were held to have amounted to something capable of being an undertaking which had been transferred.

13. The Court of Appeal in Betts next looked at Dines -v- Initial Healthcare Services Ltd [1995] ICR 11 where the Court of Appeal, reversing the Employment Appeal Tribunal, had held that there had been a relevant transfer; although no plant or material had changed hands the incoming cleaning contractor had used nearly all the staff which the former contractor had employed at the hospital site in question.
14. Another ECJ case, Merckx -v- Ford Motor Co. (Belgium) SA [1997] ICR 352 was cited to the Court of Appeal in Betts as a case in which there had been no transfer of tangible assets but where a Ford-owned motor dealership in Brussels was transferred by Ford to an independent company. Again there was, it seems, a focus on operations or activity by reference to the dictum we have cited from Spijkers supra although, perhaps foreseeing difficulties, the ECJ left out the concluding words "with the same or similar activities" and disguised the citation by referring not to its having come from Spijkers, its origin, but from "inter alia" another case, Dr Sophie Redmond Stichting -v- Bartol [1992] ECR I - 3189, 320, para 23 (where, again, although the passage is cited as derived from Spijkers, those last words were omitted).
15. Against this background Kennedy LJ then turned to Süzen. Kennedy LJ accepted:-

"That the decision in Süzen .... does represent a shift of emphasis, or at least a clarification of the law, and that some of the reasoning of the earlier decisions, if not the decisions themselves, may have to be reconsidered".

- p. 807 f-g. Those "earlier decisions" must have included Spijkers and Schmidt. He held that there was an undertaking or economic entity consisting of the helicopters and infra-structure, the landing strips, premises and buildings at Beccles and the staff, the maintenance and support staff at Aberdeen, the contract between Shell and Brintel and the rights thereunder to land helicopters on the oil rigs and to use their facilities - see p. 805 a-b; 807 g. But, as to whether that undertaking retained its identity in the hands of KLM, his answer was that clearly that was not the case - p. 807 h. Counsel had failed to distinguish Süzen - p. 806 h - and, although Kennedy LJ does not in terms say that he proposed to apply Süzen, the headnote is correct in saying that that was done and it is inherent in the passage last cited that the Court of Appeal in Betts had real doubts as to how far the reasoning in the earlier decisions such Spijkers and Schmidt could be relied upon post-Süzen.

16. The last case which we need to study in any corresponding detail is ECM (Vehicle Delivery Service) Ltd -v- Cox and Others [1999] IRLR 1162 CA. Axial had had a contract with VAG Limited under which Axial delivered Audi and VW cars from Grimsby Docks to dealers up and down the United Kingdom. The drivers employed by Axial delivered other makes of cars for about half their time. Axial had a fleet of vehicles transporters dedicated to the VAG contract. Axial lost the VAG contract to ECM, who elected not to employ any ex-Axial workers. No assets or staff had been transferred to ECM - see p. 1163 and see also p. 1166 d-e and p. 1167 a-c. On a direct application of a simple understanding of the decision in Süzen it is difficult to see how the answer could have been that there had been a transfer of any undertaking. However, both the Employment Tribunal and the Employment Appeal Tribunal had so held and the Court of Appeal upheld the Employment Appeal Tribunal. Mummery LJ, with whom Henry and Laws LJJ, agreed held:-

"The Employment Tribunal applied the correct test, as laid down by the Court of Justice in Spijkers and followed in other cases, such as Schmidt [1995] ICR 237, Although the Süzen decision [1997] ICR 662 has been described as involving a shift of emphasis or a clarification of the law, nothing was said in Süzen which cast doubt on the correctness of the interpretation of the Acquired Rights Directive (Council Directive (77/187/EEC) (OJ 1977, L.61, page 26)) in the earlier decision cited to and applied by the Employment Tribunal in the Extended Reasons".

- see p. 1168 b-c.

A little later Mummery LJ continued:-

"ECM's case has to be that Süzen makes all the difference. It does not in this case. The importance of Süzen , has, I think, been overstated. The ruling in Süzen should be seen in its proper context.

(1) The Court of Justice has not overruled its previous interpretative rulings in cases such as Spijkers and Schmidt. This is clear not only from the citation of those cases in the judgment in Süzen, but also from their continued prominence in the reasoning of the Court of Justice in its post- Süzen decision in Sanchez Hidalgo -v- Asociacion de Servicios Aser (Case C-173/96) [1999] 136.

(2) It is still the case that it is for the national court to make the "necessary factual appraisal" in order to decide whether there is a transfer in the light of the criteria laid down by the Court of Justice.

(3) It is still the case that those criteria involve consideration of "all the facts characterising the transaction in question", as identified in Spijkers, at para 13 of the judgment of the Court of Justice, in order to determine whether the undertaking has continued and retained its identity in different hands. The Employment Tribunal carried out a full factual appraisal, applied the correct criteria and concluded that, despite changes in the organisation of the operation for the delivery of cars under the VAG contract, there was a continuation in the hands of ECM of the existence of the discrete economic entity previously carried on by Axial".

- see p. 1168 d-g.

Later still Mummery LJ continued at p. 1169 e:-

"The transfer was established by the Employment Tribunal looking at all the relevant facts and concluding that this undertaking was based on the VAG contract and that it continued in different hands, even though no employees of Axial were appointed by ECM".

17. It is arguable that a decisive factor in ECM and one which allowed the Court of Appeal to depart, as it might seem, from Süzen and Betts -v- Brintel, was that in ECM the incoming contractor, ECM, had deliberately chosen not to employ former Axial staff in order to avoid the application of the TUPE Regulations - see p. 1167 e. The Court of Appeal held in ECM, almost at the foot of its decision, that the Tribunal had been entitled to have regard to that motive as a relevant circumstance - p. 1169 e-f. However, the Court of Appeal do not say that the point was so significant that in itself it justified a departure from the inflexible simplicity of a summary version of the decision in Süzen (a version, as it seems, adopted in Betts -v-Brintel) that if there was neither a movement over of a majority of the workforce nor of any significant assets then there could be no transfer, which simple and inflexible summary view the Court of Appeal in ECM in any event denied existed. It may be that later decisions will seize upon this motive factor as a distinguishing feature of ECM which permitted the Court of Appeal to take the view it took of Süzen. However, we do not feel able to so hold, given the broader reasoning in ECM that Spijkers and Schmidt still held up and that the importance of Süzen could too easily be overstated. Indeed, had Mummery LJ seen this motive factor as of real importance it would have been likely that he would have expressly referred back to the discussions as to KLM's reasons for not employing former Brintel staff in Betts supra at [1997]ICR 794 f-g, 797 g, 805 d and 806 a. It is, in our view, only the Court of Appeal itself that will be able to attach to the motive factor the decisive importance we have described.
18. At our level, the two Court of Appeal cases we have looked at pull, as it seems to us, in different directions, with Betts -v- Brintel underlining the Süzen decision that without assets or a majority of the workforce moving over there can have been no transfer but with ECM underlining the continuing relevance of Spijkers and Schmidt as cases insisting that the matter is still one of fact to be approached in the round by the Tribunal as the national fact finding court. It is not for us to pick and choose between them; given that ECM was heard and decided after Betts -v- Brintel and given that it expressly considers Betts -v- Brintel, then if there is, as we have thought there to be, tension between the two, we must follow the latter of the two. With that opening explanation of the law we now return in more detail to the facts.
19. It is necessary to look separately at the cleaners and the caterers.
20. As for the cleaners, most at Walton were held to have been "dedicated to work in particular wards or theatres, each in her own station for four years or more, one for twenty years ... All were permanently dedicated members of the in-patients' cleaning team. They needed a certain measure of training and they operated established systems with the medical staff". From October 1995 they were employees of Initial. Prior to Initial winning the cleaning contract, another contractor, Taylorplan had provided the cleaners from 1972, before which the Trust had not used outside cleaners but had arranged the cleaning itself. The closure of the Walton in-patient services began even before Initial won the contract, namely on 29^th March 1994 when the Accident and Emergency Department at Walton closed and its work was given to Fazakerley. Other wards followed later the same year as part of Phase I of a process of moving out of Walton and into Fazakerley. As further wards closed in 1996 the 6 domestics (not including any of the applicants) who had cleaned those particular wards moved to the new wards at Fazakerley, where RCO was already the cleaning contractor. A difference arose between UNISON, the Union of those 6, and RCO as to whether their employment was protected; it was eventually accepted that the 6 should enjoy continuity of employment. Further movements from Walton to Fazakerley awaited completion of buildings at Fazakerley. On the 19th November 1997 there was a meeting between RCO and UNISON at which RCO indicated that it would take on domestics employed by Initial at Walton if they first resigned from Initial. But those concerned, some 25 domestics and 3 supervisors, did not wish to compromise their rights or their employment with Initial in that way. RCO and Initial had both tendered for the continuing cleaning contract at Fazakerley but RCO had won it. None of the Walton cleaners applied for jobs with RCO and none was taken on. By or on the 31st March 1998 employment of domestics at Walton had ended. Doctors and nurses, with their medical equipment and beds and furniture moved from Walton to equivalent wards at Fazakerley, together with the patients. Operating theatres at Walton closed and then the new wards and new theatres at Fazakerley started work, "or rather" as the Tribunal put it, "continued the work done hitherto at Walton by the domestics (and other employees) there". The Tribunal held that upon the opening on the 1st April 1998 at Fazakerley there was a "ward-for-ward, theatre-for-theatre equivalence in the arrangement at the two hospitals", although, because the area at Fazakerley was smaller, fewer hours needed to be devoted to its cleaning.
21. Then, in a long paragraph summarising its view of the facts, the Tribunal held as follows:-

"(d) The core business of the domestics moved to Fazakerley, ward for ward, theatre for theatre. The ancillary demand, the cleaning of corridors, remained, though the corridors changed; likewise the cleaning of offices. It was no more than a change of location for the same business carried on by a different firm. Here was a labour intensive business: the transfer of tangible assets was of little significance, for there was not much that might be transferred. On a strict definition, the nature of the business meant that there were no significant intangible assets, such as goodwill or unpaid fees; the Trust provide a free public service, without rival, to the greater part of the community. The need for the cleaners' labours were substantially maintained. To the extent that these cleaners were trained to do a special kind of cleaning, the need for their particular skill travelled from Walton to Fazakerley. The areas they cleaned serviced those people who had previously gone to Walton for their medical needs: the customers remained the same, whether in the technical sense in which the Trust was the customer or the looser sense in which the community's sick and pregnant were. Wards and theatres that corresponded with those in Walton needed to be cleaned, with the corridors providing access to them: the same categories of ailment and need were provided for after the change, just as they had been before it. A patient coming to Fazakerley after the change, having earlier been treated at Walton, would have been admitted to the ward for the same speciality, perhaps lain in the same bed, cared for by the same nurses, treated by the same doctors, operated on in a similarly dedicated theatre, as at Walton. There was the same need for cleaning, some of it rather specialised, as before".

The Tribunal considered whether the fact that the area to be cleaned differed upon the move from Walton to Fazakerley and that the area to cleaned at Fazakerley was smaller than had been the case at Walton affected the question of whether there was an activity that retained its identity after a transfer. The Tribunal's answer was:-

"The business was not to clean a certain square footage in a certain time but to clean the areas designated by the Trust for the treatment of certain patients and their approaches, whatever the size of the areas and however long it took to clean them. We daresay, too, that the different shift-patterns were influenced by different needs after the change. A business might always change its location or the size of its site or its arrangement of shifts without necessarily losing its identity".

22. The Tribunal asked whether there was an economic entity recognisable in relation to the cleaning services for in-patients. In a passage which dealt with both caterers and cleaners, the Tribunal, as to the cleaners held:-

"Particular people did particular jobs in particular places for particular people: all the work .... was homogeneous, belonging in the same category; ...... [The cleaners represented] a group with its own identity ..... staffed by people dedicated to particular tasks. The fact that the handful were pool workers or that people might be expected to show flexibility did not alter the character of [the] service being done by a team: a pool to cover absence was necessary; flexibility is a wide-spread requirement throughout industry".

23. It held that there was an economic entity recognisable here as to the cleaners and the Tribunal then considered next whether there was a change of ownership or merely a closure of Walton and a dissipation of the work elsewhere. Was there, it asked, a transfer of the economic entity represented by the cleaning services for in-patients at Walton? The Tribunal held that there was such a transfer.
24. As for the caterers, they consisted of 6 chefs and a larger number of support staff, supervisors, cashiers, assistants and porters. Before the move to Fazakerley they were employed by the Trust itself and provided a complete catering service for staff and patients. Individual members performed designated rôles in the catering operation but they were required to be flexible and to cover for each other during absences. It was, held the Tribunal, "flexibility within a team". On the movement of Fazakerley some catering equipment - a slicing machine and service trolleys, went from Walton to Fazakerley.
25. The 6 chefs moved to Fazakerley to work in the new facility which was opened there. They remained Trust employees. Of the catering support staff at Walton, 6 were deployed elsewhere within the trust but 3 were dismissed by reason of redundancy. RCO, by then the holder of the catering contract at Fazakerley, invited applications from those 3. They applied but, of them, the applicant Mrs Binns was not offered a job and the applicant Mrs McKinlay declined the job offered to her. The Tribunal held:-

"There was here some transfer of assets, though it was not extensive. Catering support again is a labour intensive business. The heavy plant in the kitchen was owned by the Trust. The ultimate consumers of the service are the hospital staff and patients. The staff formerly employed at Walton would use a new restaurant, for it was nearer the wards where they worked at Fazakerley. Patients who were, or would before the move have been treated at Walton, were , after the move, served from the new kitchen. The same need by the same people was met in the same way; the service at Walton did not change its identity. The variation in the hours worked does not effect what has happened; there was a transfer within the meaning of the regulations.".

26. The Tribunal had earlier concluded that there was an economic entity present, namely the catering support for Walton in-patients. As had been the case in relation to the cleaners, the Tribunal held (in a citation from which we have already made extracts) that:-

"Particular people did particular jobs in particular places for particular people: all the work .... was homogeneous, belonging in the same category; .... they did the jobs ancillary to serving the food prepared by chefs; each was a group with its own identity; each was staffed by people dedicated to particular tasks".

The passage we have earlier cited as to flexibility referred as much to caterers as it had done to the cleaners.

27. Thus it was that the Tribunal, which did not have the benefit of the decision of the Court of Appeal in ECM, came to its unanimous conclusion.
28. If we are right in our view that we are unable to distinguish ECM in the Court of Appeal because of the motive feature present there (but not in terms found present here) and if we are right to follow the latter of the two cases in the Court of Appeal, Betts and ECM, between which tensions, if not conflicts, exist, then we cannot take the simple view, encouraged by Mr Linden and by Mr Gorton for the Trust, that, following Süzen, the absence of both movement of significant assets and of a major part of the workforce must necessarily deny the existence of a relevant transfer. Mr Connolly for Initial, whilst arguing against this next argument, rightly characterises the Appellants' best argument as being that here there was a labour intensive business - "a people business" - and that, if, in a "people business", no people are transferred then there can be no transfer and that it is therefore not necessary to quibble as to whether there was a stable economic entity or undertaking as, even if there was, on that argument there could have been no transfer of it. However, on our view of ECM that argument, forceful as it is, does not suffice. Rather, as ECM encourages, we must:-

(i) recognise that, as was the case in ECM, there can both be an undertaking and a transfer of it notwithstanding that neither significant assets nor a majority of the workforce moves over;

(ii) that "all the facts characterising the transaction in question", must as Spijkers requires, be taken into account;

(iii) that the "necessary factual appraisal" is for the Employment Tribunal to carry out as the national court entrusted with the task;

(iv) that whilst it is wrong to look merely to see if a given activity continues in order to find whether there is either an undertaking or its transfer, both Spijkers (paras 11 and 12) and Schmidt (para 17) still stand for the propositions that the decisive criterion as to transfer is whether the business in question retains its identity and as to the importance in relation to that of whether its operation was continued by the new employer with the same or similar activities;

(v) Schmidt still stands (para 16) as a powerful reminder, when no assets are transferred, that the safeguarding of employees' rights, the very subject-matter of the Directive, cannot depend exclusively on such a factor, a factor which the European Court of Justice had in Spijkers held not to be decisive on its own;

(vi) Schmidt still stands as a reminder of to how very little is required to amount to something capable of being an undertaking - one cleaning lady and her organisation - once due regard is paid to the safeguarding of employees' rights, the subject-matter of the Directive;

(vii) Not only is it not necessarily decisive that no majority of the workforce is transferred (because in ECM itself no employee was transferred yet there was held to be a relevant transfer), that is only one of the number of factors that need to be considered, none alone being decisive but all being required to be taken into account by the fact-finding body in its composition of an overall view of whether or not there has been a relevant transfer of an undertaking.

29. Turning from that view of ECM to the case at hand, the Tribunal below did not look only to activity but also to the training, system, or organisation that lay behind the activity. Its factual appraisal included both that there were, as to cleaners and caterers, economic entities and that they were transferred. In the light of ECM in the Court of Appeal we cannot say with any confidence that the Tribunal thereby erred in law. We are not sorry so to conclude. There is a real danger, were Süzen to be given the unqualified force that has been argued for it, that in labour-intensive areas of employment such as cleaning and catering where contracting-out is now common and where significant assets are often either unnecessary or unlikely to be moved, an incoming contractor would be able to avoid the Directive by the simple expedient, often easy of achievement, of ensuring that he took on none of the previous contractor's workforce. The protection of employees' acquired rights, a basic objective of the Directive, would not only be jeopardised but, as Miss Gower, for the former employees, asserts, would be jeopardised in relation to perhaps the most vulnerable of all classes of workers, those with only relatively simple and commonly-available skills which, on that account, the incoming contractor could readily choose to supply by way of others in the labour market. There are, of course, economic arguments that incoming contractors should be free to bid for their contracts as competitively as they may dare and should thus be entirely free to avoid all obligations to entrenched employees. However, such economic arguments are not for us and, had they been intended to hold sway, the Acquired Rights Directive would surely never have been called into existence. We dismiss the appeals.