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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> BKE-A Division of John Mowlam And Company Plc v. McLoughlin [2003] UKEAT 894_01_1402 (14 February 2003) URL: http://www.bailii.org/uk/cases/UKEAT/2003/894_01_1402.html Cite as: [2003] UKEAT 894_1_1402, [2003] UKEAT 894_01_1402

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APPEARANCES

 

For the Appellant	MR B NAPIER (of Counsel) Instructed by: John Mowlem & Co PLC Legal Services Dept White Lion Court Swan Street Isleworth Middx TW7 6RN
For the Respondent	No appearance or representation by or on behalf of the Respondent


 


THE HONOURABLE MR JUSTICE NELSON

1. This is an appeal against the decision of the Employment Tribunal sitting at Newcastle upon Tyne of 28 June 2001 in which they determined that Mr McLoughlin's employment amounted to an undertaking which had been transferred to BKE, the Appellant, under the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE).

The Facts.

2. Mr McLoughlin, the Respondent, was engaged as a rigger in 1995 by Redpath Engineering, and continued in that employment until 1996 when Kvaerner took over Redpaths. He worked throughout at the Dupont Nylon site. Mr McLoughlin continued to work for Kvaerner until the spring of 2000 when he and his colleagues were told that Kvaerner were finishing at the site.
3. There were six riggers in the team including Mr McLoughlin and a foreman. They had performed the same type of rigging jobs at the same site since Mr McLoughlin had joined Redpaths in 1995.
4. The Respondent was told to resign by Kvaerner and apply for employment with BKE who were to provide, amongst other things, rigging services on the Dupont Nylon site. All the riggers resigned and applied to BKE for employment. They were all interviewed together at the same time on the same date and taken on as a team. Mr McLoughlin ceased working for Kvaerner on the 31^st March 2000 and started with BKE on the following Monday 2 April 2000. There was no change in his work apart from the fact that he was provided with BKE clothing and safety wear and paid somewhat less.
5. The Employment Tribunal accepted evidence from BKE that the company was principally an electrical contractor. It took on electrical work on the Dupont site but as there was a need for rigging work as well they advertised for riggers and engaged the established gang of six with their foreman from Kvaerner.
6. In dealing with an area of dispute between the witnesses the Employment Tribunal stated at paragraph 6 of its decision:-

"Mr Quinn said that the work on site was not tendered for from Dupont's and the extra work of rigging was done as and when required. We contrast that with the applicant's unshaken evidence that all that really changed was different coloured clothing to wear and marginal pay differences. We prefer the evidence of the man who was there doing the work, Monday to Friday or whatever, just as he had been working on the same site for years."

7. The preliminary issue before the Tribunal was whether or not there had been a TUPE transfer of Mr McLoughlin's employment from Kvaerner to BKE. The Employment Tribunal's findings are brief. There was no evidence before them from Kvaerner and hence no details of either the contract of employment between Kvaerner and Mr McLoughlin or the terms upon which BKE took over Kvaerner's work at the Dupont site. There is no contractual documentation involving Kvaerner with the EAT papers.
8. There is however a copy of the advertisement placed by BKE for various maintenance personnel, including riggers, which referred to 'medium to long term employment'. There is also a copy of the contract of employment between the Appellant and the Respondent which commenced on the 31^st March 2000, described the services as continuous and the contract to relate to 'working at Dupont'. The Induction Attendees log, a BKE document, described the contract as 'Dupont Resource Rigging services'. There was nothing in the contract to suggest that it was temporary.

The Employment Tribunal's findings.

9. The Employment Tribunal referred to one authority, Cheesman & others v R Brewer Contracts Limited [2001] IRLR 144, noted that they were reminded to take all facts into account and not consider any in isolation, and described their tasks as deciding, firstly, whether there was an undertaking and, secondly, whether there had been a transfer of that undertaking. They noted the principles set out in Cheesman but did not recite those, stating:-

"We remind ourselves that no single factor is determinative. There is no single test, rather it is like a multifaceted jewel and we have to look at all the facets and assess the reality and quality of what is before us."

10. They concluded in paragraph 8 that there was an undertaking as there was an organised grouping of riggers which was sufficiently structured and discrete. The assets were of the human kind not the tangible kind and the whole team was recruited. They found that there was a transfer as 'the riggers activities continued as before with no fully significant change in the work. The group of workers at the same site was clearly identifiable and the work of rigging continued with no break.'
11. Paragraph 8 concludes:-

"The fact that work was not tendered for and that there was no fixed terms contract entered into by Dupont Nylon with BKE is noted. That BKE might be asked to leave the site at 24 hours notice is not anything other than a factor we have considered."

12. They then stated their conclusion, that, having looked at the evidence and the principles there was an undertaking which was transferred.

The Appellant's submissions.

13. Mr Brian Napier on behalf of the Appellants put in a joint skeleton for this case and the appeal in Dudley Bower Building Services Limited -v- Mr P C Lowe, W S Atkins Facilities Management Limited and Serco Limited (EAT/856/01/RN) in which he also appeared for the Appellant, another member of the John Mowlem Group. At the end of that written skeleton argument it is stated that although the notice of appeal contained several grounds the only one pursued related to the existence of an 'economic entity'. In this appeal however, Mr Napier's skeleton relies more upon the absence of transfer rather than the existence of an economic entity, and it was accepted that in spite of the express limitation at the conclusion of his skeleton argument he was entitled to pursue all the matters set out in the body of that document.
14. The Respondent was not represented and did not attend but through his solicitor sought to uphold the Employment Tribunal's decision on the grounds therein stated.
15. The Appellant submitted that the Employment Tribunal erred in law in its consideration of the terms upon which rigging work for Dupont was undertaken by BKE. Whilst the carrying out of the rigging work by Kvaerner, utilising the same team of which Mr McLoughlin was a part might amount to an economic entity, it could not be said that there was a transfer of this entity to BKE, as BKE performed their work not under a contract but on an 'as and when required' basis. The entity does not retain its identity where the basis upon which the services are provided to the end user changes in such a radical way. Mr Napier submitted by analogy that if a large company with its own separate legal department changed to a system whereby it ceased to employ its own legal staff but contracted out to a legal firm, there might well be a TUPE transfer. Where however it did not contract out the legal work but simply bought in legal services as and when needed i.e. on a non-permanent basis, there could be no transfer. The latter situation was comparable to the present case as the entity has not retained its identity, it merely carried on the same activity from time to time.
16. Where therefore there is no tender, no contract and no guarantee of work, as here, Mr Napier submits, there can be no transfer of an economic entity. The Respondent,

Mr McLoughlin, was engaged on the basis that he would work for BKE but not on the basis that they were entitled to receive work from Dupont. The fundamental change from what appears to have been a fixed term contract between Kvaerner and Dupont to an 'as and when required' arrangement between BKE and Dupont was a fundamental change which put an end to the possibility of any transfer of business entity.

17. The second complaint against the Employment Tribunal is that they had no proper evidence upon which to find that there was an economic entity present. There was no evidence before them of the contractual arrangements between any parties. It was not known what the relationship between Kvaerner and Dupont was, nor between the Respondent and Kvaerner. There was no evidence as to Kvaerner's own structure or its relationship with Dupont or the terms under which BKE took over from them. The burden of proving an economic entity was on an applicant and he had failed to bring the appropriate evidence before the Tribunal. It was not, as the Employment Tribunal thought, as much the task of the employer as the employee to have called Kvaerner. Mr Napier submitted that it was not possible as a matter of law to make a decision as to economic entity without having this evidence and in particular without hearing from the transferor.
18. The error in law as to transfer meant that the decision should be reversed but on any view, Mr Napier submitted that without evidence of the contractual relationship between the various parties the decision was unsatisfactory for both the Appellant and the Respondent and the Employment Appeal Tribunal should therefore, at least, remit the matter for proper consideration by another Tribunal.

The Respondent's submissions.

19. In the written submissions from Punch Robson, solicitors for the Respondent, it is submitted that the Employment Tribunal accurately set out the appropriate tests in Cheesman and applied them. There was barely a change in the Respondent's employment conditions prior to or after the transfer of his contract from one employer to another. He left one employer at the end of one week and commenced employment with the other the following Monday. His role or function did not alter and neither did that of his six colleagues. The Employment Tribunal applied the correct tests, came to the correct conclusions and made no error in law.

Conclusions.

20. We agree with Mr Napier that the Employment Tribunal approached this case upon a broad-brush basis. Their findings of fact are brief and in parts unclear. They were handicapped by the lack of evidence from Kvaerner and the complete absence of any contractual documentation but as neither side applied for an adjournment in order to obtain that evidence or documentation, the Tribunal do not seem to have been aware of the true significance of its absence. Without it, it was, as Mr Napier submits, difficult to establish whether an economic entity existed or not and, we would add, difficult to determine whether or not there had been a transfer of such an entity. The decisive test in establishing transfer is whether the entity in question retains its identity as indicated by the fact that the operation is actually continued or resumed. (Cheesman paragraph 10(i), Hernandez Vidal [1999] IRLR 132 paragraph 22 and Spijkers v Gebroeders Benedik Abbatoir CV [1986] ECR 119.) Without hearing evidence as to the true nature of the entity and how it might have changed it is very difficult to see how this question could have been answered.
21. The Employment Tribunal dealt with this matter by preferring the evidence of Mr McLoughlin. The extent of this finding is not however clear. It appears from the passage in paragraph 6, set out earlier in this judgment, that when Mr Quinn gave evidence that the work on the site was not tendered for from Duponts, and the extra work of rigging was done as when required, that evidence was contrasted with the applicant's unshaken evidence which the Employment Tribunal preferred. In paragraph 8 however the Employment Tribunal noted that the work was not tendered for and that there was no fixed term contract between Dupont and BKE; the fact that BKE might be asked to leave the site at 24 hours notice was simply a factor that they had considered. We do not know whether the Employment Tribunal was here simply noting Mr Quinn's evidence, which they had not accepted in paragraph 6, or whether, contrary to what they had said in paragraph 6, they were accepting what Mr Quinn had said. Nor is it known what weight if any was attached to such evidence (if it was accepted) by the Employment Tribunal.
22. In our judgment the decision of the Employment Tribunal cannot form a basis upon which we are able to make any clear decision of our own. The findings are too brief and unclear to form a clear basis for any satisfactory conclusion to have been reached by them or to be reached by us. We see no alternative in the circumstances but to remit the matter for rehearing by a fresh Tribunal. Any such hearing should have the benefit of the appropriate contractual documentation and directions should be given at the outset for this to be obtained. Each side should draw up a list of those documents which it considers are likely to be relevant so that the fresh Employment Tribunal can consider them.