Appeal No. EAT/0210/03/ZT

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 29 July 2003

Before
HIS HONOUR JUDGE D M LEVY QC
MR T HAYWOOD
MR P M SMITH

MR W B COOK	APPELLANT

EMCOR FACILITIES SERVICES LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR MOHINDERPAL SETHI
(of Counsel)
Messrs Hawkins Russell Jones Solicitors
7-8 Portmill Lane
Hitchin
Herts
SG1 1AS	
For the Respondent	MR GEORGE FOXWELL
(of Counsel)
Instructed By:
Messrs Berrymans Lace Mawer Solicitors
Carlton House
Carlton Place
Southampton
Hants
SO15 2DZ	

JUDGE D M LEVY QC:

1	This is an Appeal from a Decision of an Employment Tribunal sitting in Bedford on 29 August 2002, 31 August 2002 and 1 November 2002.  The issue for the Tribunal to decide was whether Mr W B Cooke (“the Appellant”) was constructively dismissed by the Respondent (a) under TUPE Regulation 5(5) which would make it an unfair dismissal and/or (b) under Section 95(1) of the Employment Rights Act 1996 and, if so, whether this amounts to an unfair dismissal under Section 98(4) of the Employment Rights Act 1996.

2	The issues were resolved in favour of the Respondent and hence, when the decision was promulgated on 18 December 2002, a Notice of Appeal was lodged on 29 January 2003.  The matter came before Judge Ansell on the sift system and he sent it for a Full Hearing, albeit that he said in paragraph 2 of his order that it should be by a Judge sitting alone;  happily that has not happened and the Appeal has been heard by a full Tribunal.

3	The Originating Application settled by Counsel who appears for the Appellant today, sets out the matters of which the Appellant complained.  We will refer to some paragraphs of that application.  Paragraphs 1 and 2 reads as follows:-

“1	The [Appellant] commenced employment with Glaxo Group Research Limited on 17th January 1994 as a Senior Technician in its Engineering Department based at Stevenage, Hertfordshire.  Glaxo Group Research Limited became part of Glaxo Wellcome plc which subsequently became Glaxo Smithkline (GSK).
2	By letter dated 9th July 2001, the HR Business Partner of GSK (Jane Oldershaw) wrote to the [Appellant] to inform him of, amongst other things, the following matters:
2.1	‘... a proposal to outsource the business of delivery of engineering services to Drake and Skull Technical Services (DSTS) in September 2001.  We believe that this will be a transfer to which the statutory provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) will apply’.
2.2	‘... that under the TUPE Regulations, DSTS has an obligation, upon our request, to let us know of any measures they envisage taking in connection with employees who transfer to them and a written request has been sent and the response has been received that no measures are envisaged.  The purpose of this letter is to confirm the summary of the main terms and conditions which would transfer, but, given the period before the proposed transfer date your employer may make changes to some conditions eg – shiftworking, to accommodate the current needs of the business’.
2.3	‘For rights under the Share Scheme, you will have the same rights on transfer as GW employees have in a redundancy situation.  Guidelines are given in a document issued by the Share Schemes Department explaining the options (enclosed)’.
2.4	‘DSTS will be arranging to meet with you on an individual basis after 17th July 2001 to discuss the details of the proposed transfer further and will be outlining the opportunities with regard to pension and private healthcare provision’.”

4	Paragraph 11 of the Originating Application set out details of the Appellant’s employment before the transfer and concludes at 11.1.5:

“The [Appellant] enjoyed a benefits package which included, amongst other things, Sharesave and Share Option schemes and bonuses and a non contributory pension scheme.”

We are not concerned with the pension scheme in this appeal but the other benefits of the package enjoyed by the Appellant are at issue in this appeal.

5	The last two paragraphs of the Application summarise the claims which the Tribunal considered with the result we have noted.

6	The Hearing of this Appeal has gone into a second day because we have been taken through a number of cases at some length; we do not complain of this.  Both Counsel appeared below and have helped us considerably going through the maze which we have followed in the authorities cited to us.

7	The form of the Extended Reasons which are found at page 1 of our bundle are familiar, though it is right to say that Extended Reasons extend to only 8 pages.  Mr Sethi has submitted with some justification that when so much detail was before the Tribunal the findings of fact are less full than might have been expected.  Paragraph 2 sets out in some detail the grounds and findings on which the Appellant relied under the Employment Rights Act.  Paragraph 6 (c) ends

“The Respondent did not act to the [Appellant’s] detriment in breach of an implied term of trust and confidence, thus entitling the [Appellant] to resign”.

8	So far as the findings of fact which led to that conclusion is concerned, we see no reason to quarrel with the facts as found.  However, on the other matter, we are far from satisfied that the Employment Tribunal has dealt sufficiently with the Applicant’s case which we have summarised above, particularly under the TUPE Regulations which are not set out in the Extended Reasons.  We are not satisfied that the submissions made for the Appellant have been sufficiently fairly and fully considered.  Our bundle for the Hearing includes the three schemes under which the Appellant benefited whilst employed by GSK.  The Share Savings Scheme is set out between pages 101 and 111, the Share Option Scheme between pages 151 and 165 and the Bonus Scheme between pages 168 to 178.  Paragraph 3 of the Tribunal’s Extended Reason has as a heading “Findings of Fact in relation to GSK’s Share Save and Share Option Schemes” It is notable that the Bonus Scheme is not referred to at all in that paragraph.

9	Within paragraph 3, there are four sub paragraphs relating to these two schemes considered which end with this paragraph:

“(e)	It is clear from the documentation governing these schemes that they were entirely discretionary and did not form part of any contractual entitlement, i.e. there was no requirement on the employee to enter the scheme, and it operated entirely at the discretion of GSK.”

The fact that an employee was not required to enter the scheme is less material than the fact that it operated entirely at the discretion of GSK.  How that discretion was exercised in the context of what happened over the years needs to be set out.

10	There were these findings on the two schemes which were mentioned in paragraph 7 of the Extended Reasons:

“We have considered the judgment in Mitie Managed Services Ltd v French [2002] IRLR 512 and come to the following conclusions:-
(a)	The share option and share save schemes were not part of the contract between the [Appellant] and GSK and therefore did not pass on transfer.  Regulation 5(2) of the Transfer of Undertakings (Protection of Employment) Regulations 1981 make it clear that rights, powers, duties and liabilities under or in connection with any such contract shall be transferred.

No consideration whatsoever is given to what is meant by ‘in connection with’ in that context but the wording goes on:

“This was not a contractual entitlement and we do not consider that an aid to interpretation is required from the Council Directive 2001.  Article 3 (1) refers to ‘rights and obligations from a contract of employment’ and in the interpretation section at Regulation 2, ‘contract of employment’ means any agreement between an employee and his employer determining the terms and conditions of his employment.
(b)	Further, the nature of the scheme [we do not know if this is both schemes which are mentioned in sub paragraph 1 or only one of them, though we suspect it is the Share Option scheme] operated by GSK and was essentially speculative, depending on the value of shares in the marketplace at any given time.  As such, it is impossible to determine any definable value at any particular time.  We note the observations in the Mitie Managed Services case in which transferred employees are entitled to participate in ‘a scheme of substantial equivalence and one which is free from unjust, absurd or impossible features’.  Given the circumstances of this scheme, we take the view that these are ‘impossible features’ for the Respondent to replicate on any equivalent basis.”

11	After taking us through a number of authorities on the first day of the Hearing, Mr Sethi, submitted that the Tribunal erred in paragraph 7 (a) in that it misdirected itself in Law or misapplied the Law in that it either ignored or failed to correctly understand the scope of Regulation 5 (2) of TUPE and article 3.1 of the directive and he laid emphasis on the words in the directive “arising from a contract of employment or from an employment relationship”.  He submitted that the Tribunal failed to consider the fact that the rights and obligations can arise in connection with the contract of employment and from an employment relationship and do not necessarily have to arise under the contract of employment itself.  He submitted that it was only by virtue of being an employee employed under a contract of employment with GSK that the entitlement to join the Share Save and Share Options agreement schemes was triggered.  He submitted that at the very least the Share Save and Share Option schemes arose in connection with the contract of employment and from the employment relationship, even if the Tribunal was correct in its view that they did not arise under the contract of employment.  He submitted that it would defeat the purpose of the regulations and directive if employers entered into separate contracts dealing with valuable remuneration in the knowledge that the remuneration terms would not transfer.  Secondly, he submitted that the Tribunal failed to consider the fact the provision of the Share Save and Share Option schemes amounted to something “done ... by ... the transferor in respect of … a person employed in that undertaking”.

12	He also submitted that in purporting to apply Mitie Managed Services Ltd v French [2002] IRLR 512 EAT, the Tribunal was wrong to conclude here that the essentially speculative nature of the shares in GSK made it impossible for the Respondent to provide schemes of substantial equivalence.  A scheme, he submitted, was not speculative in that it depends on the value of shares in the market place at any given time but does not make itself impossible to replicate.  He submitted it was possible to identify the value of shares by reference to, for instance, the FTSE 100 Index.  The Tribunal in fact, he further submitted, failed to make any findings of fact or give reasons as to what scheme of substantial equivalence would entail.  He asked rhetorically, does it relate to the operation of the scheme or of the financial value of the benefit?  

13	Mr Sethi submitted, the basis of the remission by the EAT in Mitie, for further findings to be made was a course which we should follow here.  He pointed out that the Tribunal failed to make findings of fact and explain its reasoning, in particular, as to the circumstances and what were the impossible features in addition to the speculative nature which could not be replicated.  Further, he submitted that the Tribunal failed to consider whether transferred employees were entitled to be compensated by the transferee Respondent for loss of such benefit, in the event that they were indeed impossible to replicate.  In that regard he referred to the decision in Unicorn Consultancy Services reported in 2000 IRLR 80 which was cited in Mitie.  

14	We have not ignored the helpful submissions of Mr Foxwell in submitting that enough was said and done for us to be satisfied that there had been a full and proper Hearing and a full Decision, but we do accept Mr Sethi’s submission that fuller reasons have to be given before, on certain points, a decision can stand.  In Tran v Greenwich Vietnam Community [2002] IRLR, the Court of Appeal suggests that where insufficient reasons are given, an appeal must be allowed, but a complete re-hearing by a fresh Tribunal may not be necessary.  We do not think it is necessary for this matter to be remitted to a freshly constituted Tribunal.  We think that this Tribunal, who spent three days hearing the evidence and considering the Appellant’s position, should set out findings of fact on which its conclusions as to the Appellant’s entitlements can be made.  Whether such conclusions lead to the same or another result from that reached in the previous hearings is for the Tribunal to consider.

15	To that extent, we allow this Appeal.