Appeal No. EAT/197/91

	EMPLOYMENT APPEAL TRIBUNAL
	4 ST. JAMES'S SQUARE, LONDON, SW1 4JU

		At the Tribunal
		On 20 November 1991

	Before

	THE HONOURABLE MR JUSTICE KNOX

	MR A C BLYGHTON

	MR J R CROSBY

MR H HUMPHREYS	APPELLANT

CO-ORDINATED CLEANING LTD	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR TOM LINDEN
	FREE REPRESENTATION 	UNIT
13 Grays Inn Square
London WC1R 5JP

For the Respondents	MR T W LOWE
	(OF COUNSEL)
	Messrs Rabin Leacock Lipman
	Solicitors
	91 Wimpole Street
	London W1M 8HP

	MR JUSTICE KNOX:-  Mr Humphreys appeals from a decision of the Industrial Tribunal sitting at London (North) on 18 December 1990 which decided by a majority that Mr Humphreys was employed by the respondents, Co-Ordinated Cleaning Ltd, on 3 March 1986 and that the provisions of Schedule 13 paragraph 6 of the Employment Protection (Consolidation) Act 1978 did not apply to Mr Humphreys and therefore the Tribunal did not have jurisdiction to hear his application.

	There was no argument before us about the effect of paragraph 6 but it is apparently common ground that unless it can be shown that continuity of employment was retained by Mr Humphreys when there was a change, to the details of which I shall return in a moment, in March 1986, in the way in which the National Westminster Banks' Eastgate offices in the City were cleaned, the Industrial Tribunal did indeed have no jurisdiction.  This was because of the extent of Mr Humphreys hours of service which through the operation of paragraph 6 make it necessary to establish 5 years service for him to mount his claim and he can not achieve the 5 years' service without showing that continuity of employment to which I have just referred.

	The basic facts were stated by the Industrial Tribunal not to be in dispute and I quote from their decision which sets them out clearly and helpfully:-

"(a)The Applicant [Mr Humphreys] was originally employed by a company called Ramoneur Ltd (Ramoneur) as a part-time cleaner in 1982.  This company carried on business as contract cleaners and had a contract with National Westminster Bank (the Bank) for the cleaning of the Bank's Eastgate office premises in the City.

(b)The contract was brought to an end (so far as that part which related to the cleaning of the offices, but not the windows of the offices which contract continued) on 2nd March 1986 and a new contract for office cleaning was awarded by the Bank to another office cleaning company called Co-ordinated Cleaning Limited (Co-ordinated) with effect from 3 March 1986.  There is no connection whatsoever between Ramoneur and Co-ordinated.

(c)Co-ordinated engaged the cleaning staff, including the Applicant, who had been employed by Ramoneur in the Bank's Eastgate premises on the same terms and conditions as had governed the contract of employment with Ramoneur and their staff.  The Applicant had been and was, after 3 March 1986, employed as a part-time cleaner.  His hours of work for Ramoneur were 10 hours a week.  He continued to work these hours for Co-ordinated till his dismissal on 31 July 1990.

(d)Co-ordinated did not take over from Ramoneur any of the equipment or stock used by that company in the course of its contract with the Bank but supplied all its own equipment.  Co-ordinated did not take on, as part of their contract with the Bank, the work involving the cleaning of the windows of the office premises.  This part of the contract remained with Ramoneur."

	On those facts the question arises whether there was continuity of employment as a result of the transfer, if transfer there was, between 2 & 3 March 1986.  The way in which the case was put to us was on the basis of Schedule 13 of the 1978 Act, paragraph 17(2) which reads:-

"If a trade or business or an undertaking  .................is transferred from one person to another, the period of employment of an employee in the trade or business or undertaking at the time of the transfer shall count as a period of employment with the transferee, and the transfer shall not break the continuity of the period of employment."

	"Business" is a defined term.  Section 153 of the 1978 Act defines it as:-

"includes a trade or profession and includes any activity carried on by a body of persons, whether corporate or unincorporate;"

	The case put to us was that first of all a purposive construction has to be placed on that legislation which I have read.  That is derived principally in this case from a decision of Macer v Abafast Ltd [1990] ICR 234 in the course of which Wood J gave the decision of this Tribunal and stated what he saw as the proper approach to questions arising under this legislation.  He drew a distinction between Schedule 13 and The Transfer of Undertakings (Protection of Employment) Regulations 1981 and in relation to schemes which were designed to avoid the operation of the legislation both in this country and in European law of continuity of employment on a change of ownership in the business, he drew attention to the desirability of the Court or the Tribunal using a construction which would give effect to the obvious purposes of the legislation.  In particular he said this at page 242:-

"Thus, in approaching the proper construction to be given to the words of the Act of 1978, a court should lean in favour of that interpretation which best gives effect to the preservation of continuity of service and hence to the preservation of rights of the employee, and to obviate and discourage a tactical manoeuvre which seeks to avoid the clear intention of Parliament."

	Decisions have to read in the context in which they are found Macer v Abafast Ltd is an example of a case where on what was, by any standards, a perfectly obvious transfer of a business, matters had been so arranged that there was a 12 day gap between the termination of the employment of the relevant employee by the transferor and his employment by the transferee.  That 12 day gap on the evidence had been deliberately engineered with a view to preventing the provisions of the 1978 Act, notably, from conferring the rights that they were designed to confer on the employee as against the transferee.  It is in that context that one finds that statement of the proper approach in Wood J's judgment.

	We do not for a moment dissent from what he said there, we would merely point out that we are faced with a different situation in that the problem here is not, given a clear transfer has there been some transaction which has had the effect of nullifying what appears to be the basic conception behind this legislation.  The question for us whether there is here such a transfer as brings this set of facts within the ambit of the legislation in the first place and that we take to be a fundamental different question from that with which Wood J was concerned.
	The Industrial Tribunal in looking at the issue of whether there was or was not a transfer within paragraph 17(2) of Schedule 13, looked at it from two potential points of view.  One was what has been described in argument as the tripartite analysis and the other was a direct transfer analysis.  The tripartite analysis was one whereby the undertaking in question was identified as being the office cleaning enterprise in relation to the Eastgate premises of the Bank, excluding the window cleaning, and that was regarded as being vested as it plainly was in Ramoneur at stage one - Ramoneur, of course, being the first contractor engaged by the Bank.

	The second stage in the tripartite analysis is that when Ramoneur's contract came to an end on 2 March that activity vested in, or in some other way came within the purview of the Bank.  The third stage after the second stage which did not last longer than 24 hours on any analysis, was that this enterprise vested - if that is the right word - in Co-ordinated which went on cleaning the offices at the Eastgate premises with the same staff with different equipment after 2 March, starting on 3 March.

	We accept criticisms that were levelled at some of the reasoning which the Industrial Tribunal adopted in reaching the conclusion that the tripartite analysis could not produce a legal result which fell within paragraph 17(2).  Notably, we accept what Mr Linden submitted in an able argument to us that it does not necessarily follow that if the relationship between the body which is conducting the undertaking and the third party is in the nature of a provision for services that there cannot be a perfectly valid transfer of undertaking if those services are subsequently provided to the same third party by another organisation or person.  
	The provision of services is therefore not necessarily conclusive against the possibility of there being a transfer of undertaking wihin the meaning of the paragraph.  We were referred in particular to the decision in Rastill and Others v Automatic Refreshment Services Ltd [1978] ICR 289 which  we accept as authority for the proposition that a contract for services is susceptible in principle of being transferred and can be the foundation for the transfer of a business or undertaking.  Equally we think that Mr Linden was right in saying that some of the consequences of his arguments were expressed in a somewhat sweeping way in the Industrial Tribunal's decision.  In particular this was so where they said:-

"If one were to follow Mr Linden's argument through it could equally be argued that if the Bank decided to change its legal advisers from one law firm to another or its auditors from one accountancy firm to another there is a transfer of undertaking.  We cannot accept that this could be the case."

	What the Industrial Tribunal was looking at was not just a change from one law firm to another.  There would have been no parallel unless the change from the one law firm to another was accompanied by exactly the same staff working for the second law firm as worked for the first which of course makes the example a very unreal one in the first place.

	More seriously, it does appear to be going rather further than is necessary in saying, as the Industrial Tribunal did, that "it could not be the case" if by that they meant simply because it was the provision of services that was in question that there could not be a transfer of an undertaking.  Whether the Industrial Tribunal did mean their criticism to be as wide as that is in our view an irrelevance because the tripartite analysis seems to us, with all due respect to those who put it forward, to be a somewhat unrealistic analysis of what occurred in this case and indeed, Mr Linden in his argument was constrained to accept that it was not a realistic analysis.

	A realistic analysis, of course, is an essential to any so called purposive approach to these problems and although there have been cases in the past where a tripartite analysis is valid, and there is no question of it being impossible where the circumstances warrant it, in this case we do not consider that it is in any sense realistic because there was no stage at which the Bank could validly be described as having within its purview this particular operation or undertaking.  From one day to the next the Bank changed from one contractor to another and at no stage did the Bank have any concern with the way in which its offices were cleaned save, of course, as the customer under the contracts it made with the contractors.

	There are cases where the tripartite analysis is appropriate and we were referred to a particular one, not in the context of paragraph 17 of Schedule 13 but in the context of the European law on this subject, and that is the case that I shall call Bork [1989] IRLR 41 where there was a beech wood veneer factory which was owned by an organisation called OTF, which leased it to another called PBI.  PBI then gave notice of termination of the lease and dismissed all the workers and the undertaking ceased for a short time over Christmas and then OTF who were then not only the owners, subject to the lease, but had got possession of the business, the property and of the stock it would appear, sold the whole undertaking to the third organisation which is recalled in the report JI.  Now in those circumstances it was possible to trace the ownership of the undertaking from the original owners out to the lessee, back to the original owners, and thence to the purchasers so as to fix the purchasers who took on the staff after a short interval with the responsibilities of a successor under the relevant provisions of the European law.  That is an example of a legitimate tripartite analysis and it does not in our view extend to the facts of this particular case.

	What is capable of being regarded as a realistic analysis is the one which the Industrial Tribunal embarked upon in relation to a direct transfer from Ramoneur to Co-ordinated.  What the Industrial Tribunal said about that is this:-

"Let us then consider the position of Ramoneur and Co-ordinated.  Undoubtedly the office cleaning of Eastgate occupied part of the undertaking of Ramoneur capable of being transferred."

	Pausing there for a moment, we understand "occupied" to mean "formed" so that it was held by the Industrial Tribunals that it was part of Ramoneur's undertaking and it was capable of being transferred so there are no problems of severability.  Continuing with the Industrial Tribunal:-

"But was it transferred?  We think not.  In the first place there was no agreement between the parties to transfer that part of its undertaking by Ramoneur to Co-ordinated.  Quite the contrary.  Ramoneur lost the Eastgate contract (and therefore that part of its undertakings capable of transfer) when its contract with the Bank was terminated.  In the second place it transferred none of its other assets relating to that undertaking to Co-ordinated.  It retained all the equipment and assets necessary to carry out that contract and removed them from the Eastgate premises.  Co-ordinated agreed to take on the staff employed for the purposes of fulfilling the contract at Eastgate but so far as we are aware, no other buildings comprised in this office cleaning work.  This was the only transfer that took place between the two companies and in our view the transfer of staff alone does not of itself constitute the transfer of an undertaking."

	Those seem to us to be the critical findings in this case.  We were referred to an unreported decision of this Tribunal in the case of Cartwright v Norton on 19 October 1982, when Browne-Wilkinson J giving the decision of this Tribunal described the situation where a succession of managers of a hotel which was primarily a public house were allowed to conduct the catering as part of their free enterprise rather than as part of the business of the brewers who owned the hotels.   A lady, Mrs Cartwright, was employed by two successive managers who changed over in February 1980 and there was no contractual relationship between those two managers.  Not unlike this case, one followed the other as successive licensees, and in those circumstances one of the grounds that was relied upon to rebut the suggestion that there was continuity of employment was that there was no such contractual relationship.  The judgment of Browne-Wilkinson J examines the question whether the absence of that legal relationship was fatal to Mrs Cartwright's case and came to the conclusion that it was not.  The way in which the matter was put was this, having posed the question whether:-

"... does the fact that there was no direct legal relationship between the retiring manager (Mr.Price) and the new manager (Mr.Norton), and no transfer of anything directly from Mr Price to Mr. Norton, preclude there having been a transfer of the business for the purposes of paragraph 17 of Schedule?"

	Browne-Wilkinson J at page 4 of the transcript went on:-

"In our view the industrial tribunal were wrong on this point.  The Young case was decided quite expressly on the basis that there was in that case no outward or apparent transfer of anything by the retiring tenant to the brewery which took the surrender of the lease.  The basis of the decision in the Young case, as we understand it, was this.  In the same way that a farmer coming into farming land may be carrying on the same business as his predecessor, even though there is no sale of the goodwill of the business of the farm, so in the case of licensed premises the carrying on of the business on licensed premises is so intimately and necessarily bound up with the nature of those premises, that a tenant or manager coming into those premises will necessarily be carrying on the same business as the predecessor."

	On that basis the Employment Appeal Tribunal came to the conclusion that there was in that particular case continuity of employment.  We accept that there are circumstances where because of the succession to a piece of property, it may be a farm, it may a public house, it may be other forms of property, the mere fact of the successive occupation of that property will carry with it the conduct of a business which is on the property in question before and after the succession.  That depends on the existence of such an intimate connection between the property, to which there is succession on the one hand and a business which is conducted on it or with it on the other.  The example of farming land is one for which there is Court of Appeal authority in Lloyd v Brassey [1969] 2QB 98.

	Cartwright v Norton is authority in relation to the carrying on of a catering business in relation to the occupation of a public house but that type of case does depend entirely on that type of link between the business and the property which changes hands.  That is entirely absent in this case.  There is of course a coincidence in the location upon which the activities were conducted and to that extent, of course, there is a similarity between the two transactions but that is not the same as the necessary link between owning a farm and the activity on the farm or the necessary link between occupying the pub and the sale of food in the pub.  

	Accordingly we do not find in Cartwright v Norton authority for anything more than the proposition that the existence of a contractual link between successive persons, be they natural or corporate, who conduct an undertaking is not essential to there being a continuity of employment situation under paragraph 17 of Schedule 13.  It goes no further than that and in particular does not establish the proposition that the absence of a contractual link is an irrelevance to which it could be wrong for the Industrial Tribunal to have regard.

	So, their first point, the absence of the contractual relationship between Ramoneur and Co-ordinated is in our view something that they were entitled to take into account but it did not by itself prove the case.  What seems to us to be conclusive in this case is that the Industrial Tribunal did look at the totality of what it was that passed over and came to what seems to us a very common sense view, that in these particular circumstances there was not a transfer of undertaking because all that went was the staff and the transfer of staff alone, in their view, was not sufficient.

	That seems to us to be in line with the tests that have been propounded over the years in relation to transfer of undertaking.  In particular there has been cited in many a case what Widgery J said in Kenmir v Frizzell [1968] 1 All England 414 at 418:-

"the vital consideration is whether the effect of the transaction was to put the transferee in possession of a going concern, the activities of which he could carry on without interruption"

	In our view the Industrial Tribunal has looked at that question and has arrived at a conclusion which as a conclusion of fact seems to us to be unimpeachable. 

	In those circumstances although we accept that Mr Linden has shown various passages in the decision which are couched in rather wider terms than was either necessary for the decision or in strict accordance with what is the better view of the law, nevertheless, when one gets down to the heart of this decision it is within a very small compass and it is a factual decision that in the particular circumstances in this case there was not that degree of identity in the situation before and after that enabled one to say that there was a genuine transfer of undertaking.

	On that basis this appeal will fail.