Appeal No. UKEAT/0320/06/CEA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 19 December 2006

Before
HIS HONOUR JUDGE PETER CLARK
MRS A GALLICO
MR D J JENKINS OBE

MR L WAIN & OTHERS	APPELLANTS

GUERNSEY SHIP MANAGEMENT LIMITED	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellants	Mr Colin Bourne
(of Counsel)
Instructed by:
Bridge McFarland Solicitors
3-9 Tentercroft Street
Lincoln
LN5 7DB	
For the Respondent	Mr Paul Nicholls
(of Counsel)
Instructed by:
Simpson & Marwick Solicitors
4 Carden Terrace
Aberdeen
AB10 1US	

SUMMARY
Relevant transfer: finding of fact; no identifiable economic entity pre-‘transfer’.  No error of law.  Appeal dismissed.

HIS HONOUR JUDGE PETER CLARK

1.	The issue in this appeal is whether there was a relevant transfer of part of the undertaking of Wightlink (Guernsey) Ltd (WGL) to the Respondent, Guernsey Ship Management Ltd, so that the employment of Mr Wain and others (the Claimants) passed to the Respondent under the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE).  On that issue depends their claim for unlawful deductions from wages.  That issue was determined in favour of the Respondent by an Employment Tribunal (ET) sitting at Southampton by a Judgment with Reasons promulgated on 11 April 2006; there was no transfer.  Against that Judgment the Claimants now appeal.

Background
2.	The six Claimants were employed by WGL as crewmen or seasonal crewmen, save for Mr Johnston, employed as a Second Engineer officer, and Mr Wain, who was a Steward.  All worked aboard ferries travelling between England and the Isle of Wight operated by Wightlink Ltd (Wightlink).  Each was employed by WGL under fixed-term contracts and supplied to Wightlink under a contract or arrangement made between Wightlink and WGL, those being associated companies.

3.	The pay issue is strictly immaterial to the preliminary transfer issue which the Tribunal had to decide.  Relevant to that issue is that in May 2004 the Respondent entered into a contract with Wightlink to supply crew staff, and by September 2004 the Respondent was supplying some 60 or 70 staff members.

4.	The Claimants’ then current fixed-term contracts with WGL were due to expire on 28 September 2004.  On 27 September 2004 the Respondent wrote to each of them offering seasonal employment with Wightlink up to 6 January 2005.  As Mr Bourne points out, they had been rostered to work on ferries after the expiry of their fixed-term contracts with WGL.  Each accepted that offer by the Respondent.

5.	As to the question whether a relevant transfer had taken place from WGL to the Respondent, the Tribunal held:

	(1)	the Claimants did not form part of an identifiable economic entity capable of being transferred to the Respondent (Reasons para 40); and 

	(2)	even if there had been an identifiable economic entity capable of being part of the undertaking of WGL prior to the putative transfer on 27 September 2004, that entity did not maintain its identity post-putative transfer; it was subsumed in a much larger group of the Respondent’s fixed-term employees (para 42).

6.	In arriving at those conclusions the Tribunal directed themselves as to the guidance provided by Lindsay P in Cheesman v R Brewer Contracts Ltd [2001] IRLR 144; see particularly paras 10-11.

The Appeal
7.	The Court of Appeal has recently, in Balfour Beatty Power Networks Ltd v Wilcox [2007] IRLR 63, reminded litigants of the limited scope for appeals against ET decisions on the transfer question.  Buxton LJ began his judgment, at para 1, thus:
“1.	Appeals lie to this court from the Employment Appeal Tribunal only on questions of law; just as appeals to the Employment Appeal Tribunal itself from the employment tribunal lie only on questions of law.  That is not a promising beginning to an appeal that concerns the application by an employment tribunal of the Transfer of Undertakings (Protection of Employment) Regulations 1991 (“TUPE”).  That is because the application of TUPE depends on two straightforward questions, which can be identified for ease of reference from the judgment of Sir John Lindsay P in Cheesman v Brewer [2001] IRLR 144.  First, before the transfer that is relied on, was there an identifiable stable economic entity capable of being transferred?  Second, as the European Court of Justice put it in case 24/85 [1986] ECR 1119 Spijkers at paragraph 11, on the alleged transfer did the business so identified retain its identity?  And as the Court of Justice continued, at paragraphs 13-14 of Spijkers, all the facts characterising the transaction in question must be looked at, but it is for the national court to make the necessary factual appraisal in order to determine whether there has been a transfer.  In terms of the United Kingdom legal order, it is the employment tribunal that is charged with that task of fact-finding.”

8.	With that approach in mind, and with characteristic economy, Mr Bourne focuses his attack on the Tribunal’s first finding under appeal, that of no identifiable economic entity pre-putative transfer, on para 40 of the Tribunal’s Reasons.  In order to put that submission and the response of Mr Nicholls into context, we should set out paras 38-41 of the Reasons:

“38.	We accept that a group of employees whose function is to provide the operational labour that manned these ferries is capable of being an economic entity and we are prepared to find that the operational personnel employed by Wightlink (Guernsey) Ltd together consisting of the so called permanent and seasonal staff and those employed on fixed term contracts so constituted an undertaking within the meaning of the TUPE Regulations.
39.	Mr Bourne identifies the group which we have to consider as the group available originally to Wightlink (Guernsey) as one providing economic resilience. That is, a small group of employees on a short-term or fixed term basis available to provide fill-in and support and assistance at time of need. He considers that they are entitled to be treated as a separate group having regard to the nature of the contract they were employed under rather than the actual functions they perform.
40.	We have found this a difficult question to resolve but, on balance, we do not consider that it is possible to identify the group of which it is said the Claimants form part and who, along with some others, became employed by the Respondent, as being an identifiable economic entity.
41.	However, if we are wrong about that, we need to consider whether or not if there was an economic identity, whether there had been a transfer and in this connection we turn to paragraph 11 of Mr Justice Lindsay’s Judgment in the Cheesman case.” 

It is unnecessary to continue for present purposes.

9.	Mr Bourne submits that, read against the finding at para 38 which he submits included a grouping of both WGL and the Respondent’s employees, the Tribunal purported to hold as a matter of law in para 40 that the Claimant group of employees (together with six or seven others who were not members of the same trade union) identified at para 39 was incapable of amounting to an identifiable economic entity such as to amount to a transferable part of WGL’s undertaking.  That, he submits, is an error of law.  Conversely, if the proper construction of para 40 is that it was a finding of fact then this appeal, he accepts, necessarily fails.  In support of his submission he refers to para 41, arguing that the alternative finding only arose because the Tribunal recognised that it had reached a legal rather than purely factual conclusion at para 40.

10.	Mr Nicholls submits that para 40 represented a finding of fact: that the sub-group of employees advanced by Mr Bourne as a part of the undertaking of WGL did not, on the facts found, amount to an identifiable economic entity, in contradistinction to their finding at para 38 rejecting the Respondent’s case below, that all of the staff provided by WGL to Wightlink - whether permanent, seasonal or fixed-term (but not including the Respondent’s employees provided prior to 26 September 2004) - could constitute an undertaking in the sense identified by Lindsay P in Cheesman, particularly at para 10(iv), that is, an organised grouping of wage earners who are specifically and permanently assigned to a common task.

11.	We prefer the submissions of Mr Nicholls.  It seems to us, looking at the wording of para 40, that the Tribunal resolved what they found to be a difficult question on balance against the Claimant’s case.  That is not how we would expect a Tribunal to express themselves if they felt driven as a matter of law to the conclusion which they reached.

12.	Para 38 is, we are satisfied, concerned with the whole of the workforce supplied by WGL only, and not those supplied after March 2004 by the Respondent, to crew the Wightlink ferries.

13.	Not only do we reject Mr Bourne’s construction of para 40 of the Tribunal’s Reasons, we are quite satisfied that the Tribunal’s finding was a permissible one based on the primary facts found.

14.	Since no perversity argument is advanced on behalf of the Claimants we need go no further.  The alternative finding at para 41 was not posited as Mr Bourne submits; it was simply a further finding which completed the Tribunal’s exercise. We do not need to consider that alternative finding.  The Tribunal’s first finding stands and consequently this appeal fails and is dismissed.