Appeal No. EAT/666/91

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 18th March 1993

	Before

	THE HONOURABLE MR JUSTICE WOOD MC (P)

	MR T S BATHO

	MR D G DAVIES

DORENA NURSING HOME	APPELLANTS

YVONNE NICOLAOU	RESPONDENT

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR G MEERAN
(Of Counsel)
Messrs Holman Copeland
112 Hither Green Lane
LONDON
SE13 6QA

For the Respondent	MR J McMULLEN
(Of Counsel)
Mr P Blundy
Legal Services
Royal College of Nursing
20 Cavendish Square
LONDON
W1M OAB

	MR JUSTICE WOOD (PRESIDENT):  By an Originating Application dated 25th January 1991 Mrs Nicolaou alleged unfair dismissal by her employers, 
Mr and Mrs Lewis and Mr and Mrs Burgan who were carrying on a business known as Dorena Nursing Home at 28 Woodcote Valley Road, Purley, Surrey.  She was employed there as a Matron.  The Notice of Appearance simply states that the reason for the dismissal was that the owners proposed a sale of the property and that the purchasers wished to recruit and appoint their own nursing staff at completion and consequently included a term in the contract of sale to that effect.

	The hearing took place before an Industrial Tribunal sitting at London (South) under the Chairmanship of Mr M R Pringle on the 24th June 1991.  The finding, the decision, reads as follows:
"The Applicant was unfairly dismissed, and we award her the sum of £6,880."

	This was a small nursing home, some 10 beds, the Applicant was the Matron.  Nursing homes need to be registered and a certificate is granted by the Health Authority.  The two types of registration which are relevant for the present case are "elderly infirm" and "elderly mentally infirm".  Prior to the 31st May 1991, so far as this nursing home was concerned and so far as is relevant to the present case, it was registered as an elderly infirm nursing home.  
	The Applicant was dismissed by a letter of the 10th January 1991.  The relevant parts of that letter read:
"We are writing to inform that we have sold Dorena Nursing Home and completion of the sale is to take place on the 12th February, next.

In the circumstances, and pursuant to the terms of your contract of employment we hereby give you one (1) month's notice to take effect on the 12th instant and to terminate on the 12th February, 1991."

	On the 6th February 1991 Mrs Nicolaou was taken ill, she had a doctor's certificate and she did not come back to work prior to the 12th February 1991.  As the Tribunal found thereafter she was in touch with one or other of the proprietors but was able to gain no further information.

	The history of the sale, which is the background to the problems raised by this case, shows that from 1989 the present proprietors had been looking for a purchaser and they negotiated with a Mr and Mrs Awolo.  There had been considerable correspondence between their respective solicitors.  Contracts were exchanged on the 21st December 1990 and completion was due on that 12th February 1991.  In fact, completion did not take place on that date but on that date a notice to complete was served which expired on the 7th March 1991.  Completion did not take place on that date and so on the 10th May 1991 the contract was rescinded.

	Only two certificates are in existence relevant to the present case.  The first is the one to which we have already referred, dated 10th March 1989, in the name of the present proprietors, a certificate for "elderly and infirm" and the 31st May 1991 registering the nursing home as "elderly mentally infirm".  That was in the name of the present proprietors Mr and Mrs Lewis, and not as indicated in paragraph 9 of the decision, in the name of the proposed purchasers Mr and Mrs Awolo.  There is and are no other certificates in existence although referred to in the decision.  There was an approval for a new registration during the early part of 1991, some time in February, and that came to the notice of the present proprietors shortly prior to the 1st March 1991, when their solicitors wrote a letter in which they say in the penultimate paragraph:
"Further, your clients have sought and succeeded in changing, by registration, the nature of the business which my clients carried on at the above premises without their knowledge."
In fact there was no actual change because there was no registration, although there was approval, but it remains that until shortly before the 1st March present proprietors were unaware that there had been an attempt by the proposed purchaser to change the registration.

	The facts indicate problems from their very recitation, and it was necessary for this Industrial Tribunal to examine three aspects of the law.  First the application of the Transfer of Undertakings Protection of Employment Regulations 1981;  secondly, to look to see what was the reason for the dismissal, which was not in issue;  thirdly, to see whether if a reason was found the dismissal under Section 57(3) was reasonable.  Of course, ultimately there was the issue of compensation.

	There had been no transfer and it seems clear that the Transfer Regulations, therefore, did not apply.  The case for the proprietors, the present Appellants, was really quite straightforward.  They had the advantage of Mr Meeran to appear for them and he was able to put their case in quite a short time, and very simply to us today.

	The first reason put forward by the proprietors was that this was a case of redundancy.  Alternatively, that it was a reason which was some other reason of such a kind as to justify the dismissal of an employee holding the decision which that employee held under Section 1(b).  If they established either of those reasons then the question of unreasonableness must be considered, and here the case for the proprietors was, that they could not continue to employ Mrs Nicolaou, because of the change in the registration or the anticipated change in the registration.  Lastly, there was the question of compensation.  As to the compensation, in the light of our reasoning we need not reach that stage in this appeal, but it was pointed out by Mr Meeran that in fact on the basic calculations, Mrs Nicolaou was due rather more than she was awarded, she was due three weeks' wages, and indeed the figure used of £172 was insufficient and it should have been a larger sum, a very frank admission on behalf of the proprietors.

	The question of redundancy was considered in paragraph 7 and 8 of the decision.  The first indication of the direction being given to themselves by the Industrial Tribunal is in the first sentence of the second part of paragraph 7 of their decision, it reads:
"We have to consider whether the provisions of S.8(1) or S.82(2) of the Transfer of Undertakings Act apply."

Regulation 8 of the Transfer Regulations might have been relevant but it is quite clear that it was not.  There is no Transfer of Undertakings Act and Section 82(2) is not relevant even if we read it as referring to the 1978 Act.  What the Tribunal should have been looking at are the provisions of Section 81(2)(a) of the Employment Protection (Consolidation) Act 1978 that reads as follows:
"For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to -

(a)the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased, or intends to cease, to carry on that business in the place where the employee was so employed."

and the case being put forward on behalf of the proprietors was that because of the sale they intended to cease to carry on that business in that place.  The way in which the Tribunal deal with it is to be found in the first four lines of paragraph 8 which reads:
"Mr Meeran on behalf of the Respondents argues that the dismissal is fair and that reason was because of redundancy.  As at the date of the letter giving notice and at the date of termination of the Applicant's employment we find no evidence whatsoever to suggest that the Applicant's job had ceased to exist."

That was not the case that was being put to them.  They simply have not faced up to the case that was being argued by Mr Meeran, and it seems to us that that was a failure.

	Secondly, they deal with the question of Section 57(1)(b).  Section 57(1)(b) and Section 57(2) so far as relevant, read as follows:
"57(1)In determining for the purposes of this Part whether the dismissal of an employee was fair or unfair, it shall be for the employer to show -

(a)what was the reason (or, if there was more than one, the principal reason) for the dismissal, and

(b)that it was a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."

	Thus, under sub-subsection (b) there are two possibilities.  Either a reason within subsection (2) or some other substantial reason, and when one looks at subsection (2) Section 57 then there is the well known list of capability;  conduct;  redundancy or (d) which reads:
"(d)was that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment."

It might have been some other substantial reason or Section 57(2)(d) could have been looked at as a reason.  As we understand Mr Meeran it was some other substantial reason.  However, this is the direction which the Tribunal gives to themselves at the start of paragraph 12 of the decision they say this:
"Mr Meeran for the Respondents argues that 57(2)(d) of the Employment Protection Act renders the dismissal fair if we do not find the existence of a redundancy situation.  He claims that the dismissal would have been for `some other substantive reason'.  He argues that the Nursing Home would have been illegally carrying on its business without having an approved person in charge."

If the last sentence indicates that they were concentrating on Section 57(2)(d) so be it, but the question of "some other substantive reason" "substantial reason" in fact, not "substantive reason" that again is a further error, then they have not met his argument.  Indeed, the very way that that is drafted indicates to us that there was a muddled view of the law and in the approach to the law upon which they had to apply their findings of fact.

	When it came to the question of unreasonableness the Tribunal in paragraph 12 consider the general matters, some of which we have mentioned already, and it may very well be that on those findings of fact they might have found that the dismissal was unfair.  But before they ever reached that situation it was for them to decide whether the employers, the proprietors here, had established a reason under Section 57.  As to redundancy they clearly did not deal with the case which was being put to them, and indeed the case was very simple, namely, that the reason was the term or condition in the contract and indeed in that connection Mr Meeran drew our attention to Scott Packing & Warehousing Co Ltd v. Paterson [1978] IRLR 166 but the Tribunal did not meet that matter and indeed decided it upon a point that was not being argued for them as far as we understand the situation.

	In looking at Section 57(1)(b) the Industrial Tribunal elided subsection (2) with some other substantial reason and we are not satisfied that they directed themselves accurately on the law.  They therefore did not reach the stage of unreasonableness on the facts they might have found that this was an unreasonable dismissal.

	In our judgment, therefore, this decision was flawed in law and the only possibly result of that is that it must be remitted to be heard by a different tribunal.  This appeal is therefore allowed and the matter remitted to be heard by a different tribunal.