APPEARANCES
| For the Appellant |
Mr M O'Carroll, Advocate,
Instructed by-
Messrs Ian Smith & Co
Solicitors
18-29 Queens Road
ABERDEEN AB15 4ZT
|
For the Respondent
|
Mr B Napier, Queen's Counsel
Instructed by-
Aberdeen City Council
Legal Services
Town House
Broad Street
ABERDEEN AB10 1AQ
|
SUMMARY
TRANSFER OF UNDERTAKINGS
Continuity of employment
DISABILITY DISCRIMINATION
Disability
Claimant claimed that her employment had been the subject of a TUPE transfer. The Tribunal held and the Employment Appeal Tribunal agreed that, in the particular circumstances (which involved the performance of a one-off contract by the original employer and the claimant taking on a new role with the respondents) TUPE did not apply. Nor had the claimant established that she suffered from a relevant disability for the purposes of her separate claim under the Disability Discrimination Act 1995.
THE HONOURABLE LADY SMITH:
Preliminaries
- This case concerns a claim for unfair dismissal, breach of contract, disability discrimination and unlawful deduction from wages which was made to the Employment Tribunal.
- This judgment represents the views of all three members.
- We will refer to the parties as Claimant and Respondents.
Introduction
- This is an appeal by the Claimant in those proceedings against a Decision of an Employment Tribunal, sitting at Aberdeen, Chairman, Miss F C C Carmichael, registered with Extended Reasons on 24 September 2004. The Claimant was represented there by Mr P Macari and before us by Mr O'Carroll, Advocate and the Respondents were represented there by Mrs F Selbie, Solicitor and here by Mr Napier QC.
- The decision was in relation to a preliminary issue (dealt with by way of a preliminary hearing) regarding the question of whether or not the Claimant had sufficient qualifying service to present a complaint of unfair dismissal and whether or not she was disabled.
- The Claimant contended and sought to establish, that she was disabled within the meaning of the Disability Discrimination Act 1995 and that she had, through the means of a transfer of employment to which the Transfer of Undertakings (Protection of Employment) Regulations 1981('TUPE') applied, sufficient qualifying service. The Respondents contended that there had been no TUPE transfer and that the Claimant had not established relevant disability.
The issues
- The essential issues between the parties, as identified and dealt with separately by the Tribunal, were those of whether or not TUPE applied and whether or not the Claimant had established that she was disabled within the meaning of the legislation.
The decision
- The Employment Tribunal decided that TUPE did not apply to the Claimant and that she had not established that she was disabled.
The appeal
- The Claimant appeals against that decision.
EAT Directions
- Directions sending this appeal to a full hearing were given in Chambers by Lord Johnston.
The legislation
- The relevant provisions of the legislation are those contained in firstly, TUPE, the provisions of which include:
"3(1) Subject to the provisions of these Regulations, these Regulations apply to a transfer from one person to another of an undertaking situated immediately before the transfer in the United Kingdom or part of one which is so situated.
(2) Subject as aforesaid, these Regulations so apply whether the transfer is effected by sale or some other disposition or by operation of law…..
………
5(1) …..a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect as if originally made between the person so employed and the transferee."
and, secondly, the Disability Discrimination Act 1995, s.1(1) of which provides:-
"A person has a disability for the purposes of this Act if he has a physical or mental impairment which has a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities."
Normal day-to-day activities are listed at para 4 of Schedule 1. Impairments are to be taken to affect such activities only if they affect one of the following:
• Mobility
• Manual dexterity
• Physical co-ordination
• Continence
• Ability to lift, carry or otherwise move everyday objects
• Speech, hearing, eyesight
• Memory or ability to concentrate, learn or understand, or
• Perception of the risk of physical danger.
Para 6 relative to the effect of medical treatment ("the deduced effect") provides that—
"(1) An impairment which would be likely to have a substantial adverse
effect on the ability of the person concerned to carry out normal day-to-day activities, but for the fact that measures are being taken to treat or correct it, is to be treated as having that effect."
Employment Tribunal directions
- The Tribunal directed itself by reference to the relevant legislative provisions and also by reference to, on the TUPE issue, the cases of:-
- Council of the Isles of Scilly v Brintel Helicopters & Ors [1995] IRLR 6
- Spijkers -v- Gebroeders Benedik Abattoir CV & Anor. [1986] CMLR 296
- Foreningen af Arbejdsledere I Danmark -v- Daddy's Dance Hall A/S 1988 IRLR 315
- Rygaard v Dansk Arbejdsgiveringforening [1996] IRLR 51
- BSG Property Services v Tuck & Others [1996] IRLR 134
and on the issue of disability, to the cases of:-
- Woodrup v London Borough of Southwark[/2003] IRLR 11I
- Kapadia v London Borough ofLambeth [2000] IRLR 14
The facts
- The Respondents are a local authority. The Claimant left their employment on 7 May 2005.
- The Claimant commenced employment with a company called Smartex Ltd, on 28 October 2002. Smartex had entered into a contract with the Respondents whereby they undertook to subcontract with other suppliers to deliver to the respondent an operational smart card system which would be used by the Respondents, at least initially, for the cash-free payment of meals by school-children and as a bus pass by senior citizens. The card was to be known as the 'Accord card'. The contract was for a fixed price for a fixed task and defined product. Its provisions included the following preamble:
"WHEREAS Smartex is engaged in business offering consultancy and management services in relation to the production and use of "smart cards"
WHEREAS the Council wishes to engage Smartex as its advisor in respect of certain defined matters, and to deliver the Project as after defined, by issuing Accord Cards to nominated students and other residents of Aberdeen by 31 October 2002;"
The Project referred to in the preamble was defined at clause 1.25 as being:
"….the delivery of the Services and Deliverables so that upon Final Acceptance they are able to be operated in accordance with the Specification set out in Part III of the Schedule and utilised for the purpose of delivering the Accord Card Scheme into live fully operational use."
and the Accord Card Scheme there referred to was defined at clause 1.5 as being:
" ….a combination of Hardware, Licensed Software, Services and other Deliverables which, when integrated and combined with operational procedures set out in Part III of the Schedule, will be used to deliver specific services on behalf of the Council and others to the citizens of Aberdeen, utilising amongst other things an 'electronic purse' facility whereby all appropriate Premises and other venues equipped to process Accord Card Scheme transactions will also facilitate 'purse' transactions. For the purposes of this Contract, transaction shall mean any movement of data which makes a difference to the information held on the Accord Card, and shall, where appropriate include 'load' and 'spend' from the electronic purse. The meaning of transaction shall not extend to the use of the Accord Card as an identifier."
- The Claimant's job with Smartex involved her working in Aberdeen, although they were a Cambridge based company. She worked from the Respondents' premises and was the only employee of Smartex working there. She worked on the development and production of Accord cards during the period prior to full implementation of the system which involved pilot projects that had two phases. The first phase covered two schools and the second phase involved extending the pilot project to most schools in the Aberdeen area. She was also responsible for the training and supervision of Vivian Nicol, an employee of the Respondents, in connection with the production of the Accord cards.
- Towards the end of the term of the contract between Smartex Ltd and the Respondents, the Respondents offered employment to the Claimant. The job was to have the title of finance and administrative officer and was, evidently, to involve the administration of the Accord card scheme. The Claimant accepted the offer. The Respondents became her employers on 12 December 2003. A week later she was issued with a letter by the Respondents which indicated that her post was a TUPE transfer from Smartex.
- The Employment Tribunal set out at p.3 the tasks that the Claimant had to carry out in her new post with the Respondents. Broadly put, they appear to have involved matters which went beyond any tasks undertaken when she was in the employment of Smartex albeit that they were related to the Accord card scheme. Also at p.3, they made what we consider to be a significant finding, namely:
"From 12 December, however, it was Vivian Nicol who mainly carried out the substantive work the applicant had done…".
- The Claimant was signed off work by her doctor on 13 February 2003 after having complained of work related stress. She resigned on 7 May 2004.
- The Employment Tribunal found that in all the circumstances, there had been no TUPE transfer. In particular, they were not satisfied that any economic entity subsisted which could be the subject of transfer. The contract with Smartex was a 'one-off' matter for the production of a smart card and once that had been delivered, the business was at an end. There was, in short, nothing left to transfer. Further, they found that even if there was such an entity, it had not been transferred since the business had not retained its identity, to use the characterisation of the essential criterion set out in the case of Spijkers [1986] ECR 1119 @ 1128. A distinction was drawn by them between the stage of development of the card, to get it 'up and running', and the subsequent period of the operation of the scheme.
Separately, regarding her claim under the Disability Discrimination Act 1995, the Employment Tribunal found that the Claimant had not discharged the onus of establishing that she was suffering from a relevant disability. The medical evidence, which was not specific to the Claimant, was, they found, inadequate
Claimant's case
- As regards the TUPE part of the Claimant's case, it was contended that the Tribunal erred in finding that there was no stable entity capable of transfer and in finding that even if there was, no transfer had taken place. There were, it was submitted, three elements to the economic entity namely the Claimant's own skills, the Accord Card itself and Vivian Nicol. Counsel for the Claimant set out a view of the facts which was to the effect that after 12 December 2003, the Claimant carried on with the same operational procedures as she had been carrying on before then. He relied on the preamble to and clause 1.5 of the contract for a submission that Smartex's business involved running the use of the Accord Card as well as setting up its operation as supported, in his submission, by the finding that by September 2003, the system was operational in most schools.
- Regarding the matter of transfer there was, it was submitted, a period of transition required which carried on after 12 December. Reference was made to the case of Cheeseman which, it was accepted, set out the relevant test. Once, however, the facts were examined in this case it was, it was submitted, hard to understand how the Tribunal had found that there was no transfer of a stable economic entity.
- Separately, it was submitted that the Tribunal had erred in failing to have due regard to the fact that, in the letter sent to the Claimant by the Respondents confirming her employment with them, it was stated that the transfer was a TUPE transfer. The Tribunal had found that the case of Lightways (Contractors) Ltd was not apposite and they should not have done so.
- Regarding the Claimant's disability discrimination case, it was submitted that the Tribunal were wrong to rely on the case of Woodrup since it was special on its facts. It was, it was said, evident that the Claimant was disabled.
The Respondents' case
- On behalf of the respondent, senior counsel observed that the Claimant did not seek to argue that the Tribunal's decision was a perverse one and submitted that what the Claimant was in fact seeking to do was to reargue the merits of her case on appeal.
- He submitted further that, as a matter of law, the test for transfer in a TUPE case was multi-factorial (Compass Services UK Ltd v David Patrick EATS/0060/04; Telenor Business Solutions Ltd v David Patrick EATS/1264/99) and it had been correctly applied by the Tribunal. Whilst there was an oddity in the case in respect that the Respondents themselves labelled the commencement of the Claimant's employment as being a TUPE transfer, the Tribunal had dealt with that matter appropriately and, in the circumstances, took proper account of the case of Lightways (Contractors) Ltd.
- The Tribunal were, it was submitted, correct to conclude that there was no stable economic entity capable of being the subject of transfer. The facts found showed that this was a case involving the performance by the Respondents of a single contract with a limited duration and on the authority of Rygaard, that could not amount to a stable economic entity. Reference was also made to the case of Numast & Anr v P&O Scottish Ferries & 14 Ors EATS/0060/04.
- Further, they were correct to conclude that, in any event, there was no transfer because the identity of the Smartex job was not retained. The finding regarding the system being in operation in most schools by the end of September 2003 was in the context of all operation in schools referred to being part of the pilot project. There was no finding that Smartex had contracted to be involved in the actual operation of the scheme, once it was established. There was no finding that the Claimant was ever involved in running the actual operation of the scheme as opposed to its set up. Rather, the factual position was that the Claimant moved to management of the system of operating the card and Vivian Nicol stepped into the carrying out of the tasks formerly carried out by the Claimant. There was, in any event, more to a job than its individual tasks and when it came to considering whether or not business identity had been retained post transfer, it was the question of whether an economic entity of the employer had been transferred which was important. That, in turn, was a question of fact: Dolphin Drilling Ltd v Tor Drilling (UK) Ltd unrepd. Inner House 23 August 2005.
- Turning to the Claimant's disability case, it was submitted that the Tribunal had medical evidence before it, it had looked at that evidence, put it in the balance and found it wanting. Dr Riddell's report had included an invitation to furnish a request for further clarification if required but there was no evidence that any had been made. In all the circumstances, there was no good reason to interfere with the Tribunal's decision on this matter.
CONCLUSIONS
TUPE transfer:
- We are satisfied that the Tribunal did not err in law on this matter. The factual circumstances were that Smartex had a contract to perform a particular and clearly defined task which did not include being involved in the running of the use of the Accord Card once the development and pilot scheme stage had passed. It is clear from the extracts from the contractual documentation that were available and from the Tribunal's individual findings of fact that so far as running the use of the card was involved, that was a matter for the Respondents only. Accordingly, the Tribunal's finding at p.6 that:
"The type of business in the instant case was a one-off contract for the production of a smart card. Once that contract was completed, the business with Smartex was at an end."
was one which they were well entitled to make. In these circumstances, as the Tribunal recognised, no finding of there being a stable economic entity capable of being transferred could be made. It is evident from the authorities that where the work in which the employee of the alleged transferor employer is involved is that of a single, one-off contract, there cannot be said to be an undertaking to which TUPE applies and it is in that context that the term 'stable economic entity' is used. The use of the term derives from the decision of the European Court of Justice in Rygaard where it was held that the taking over, with a view to completing, with the consent of the awarder of a main building contract, of works started by another undertaking, of two apprentices and an employee did not constitute a TUPE transfer because the transfer was limited to the performance of one specific works contract. Such a contract was not a stable economic entity and so the provisions of the directive did not apply. The same approach can be identified from an examination of the four authorities referred to by the Employment Appeal Tribunal in Cheeseman at paragraph 9 and their identification of the criteria relevant to the question of whether or not an economic entity capable of TUPE transfer existed. They stated the following as being included in the first of those criteria that:
"…there needs to be a stable economic entity whose activity is not limited to performing one specific works contract …".
- Further, adoption of the same approach is inherent in the comment of the Employment Appeal Tribunal in Numast & Anr at paragraph 24:
"We agree with the Tribunal that for these purposes a stable economic entity is to be contrasted with one which is carrying out a single contract or operation and is likely to have a limited duration."
- Finally, we note the recording, without disapproval, by the Inner House in Dolphin Drilling Ltd, at paragraph 12, of a submission made under reference to Rygaard to the effect that the "stability" of an undertaking, whilst relevant in TUPE cases, was to be taken as limited to cases where an entity was carrying on a single contract or operation which was likely to have a limited duration.
In short, the applicable legal principle seems clear and is that if the case is one involving a one-off contract of limited duration, TUPE does not apply. We are satisfied that, on the Tribunal's findings of fact, this is such a case. We are not persuaded that it is possible to take any different view of the facts. In particular, we are not persuaded, as the Claimant seemed to submit, that this was in fact a case of an ongoing entity.
- Separately, we agree that the Tribunal reached the correct conclusion as to whether, in any event there could be said to have been a relevant transfer. The critical question, referred to at paragraph 11 of Cheeseman as the 'decisive criterion' is that of whether the economic entity in question retains its identity, a test derived from the ECJ case of Spijkers. That involves being able to show that its operation did, as a matter of fact, continue or resume, post transfer and the factual appraisal thus required is one for the national court to make, as explained in Spijkers a case whose authority was not diluted by the subsequent case of Suzen, as was confirmed by the Court of Appeal in RCO Support Services & Anr v Unison & Ors [2002] EWCA Civ 464. In determining whether or not the facts of the present case showed that the business retained its identity, the Tribunal took account of all the relevant material before them and reached a view that, on those facts, they were entitled to reach. We are not persuaded that their view should have been to contrary effect on account of the Respondents having stated, in the letter to Claimant, that the transfer was a TUPE one. The case of Lightways simply confirmed, perhaps not surprisingly, that if one party to a transfer has indicated an intention that TUPE will apply, that is an adminicle of evidence which can be taken into account since it may shed light on the true nature of the transaction. It is not, however, as at one point seemed to be suggested on behalf of the Claimant, authority for the proposition that a party's statement that TUPE applies to the transfer is almost conclusive of the issue. In the circumstances of the present case, which included the 'TUPE' letter referring to the employment start date as being 12 December 2003, not the date that the Claimant's Smartex employment had begun, the Tribunal were entitled, as they appear to have done, to regard the evidence as not even amounting to there having been a clear intention on the part of the Respondents that the transfer be a TUPE one.
Disability
- The Claimant's attack on the Tribunal's decision on this matter was somewhat less than determined. We do not see how, on the evidence before it, the Tribunal could have concluded other than that the Claimant had failed to discharge the onus upon her. The evidence really went no further than to state that the Claimant had a history of hypertension which was treated with medication and that if persons who suffer from hypertension stop taking blood pressure medication or are subject to stress, then some of them will be at increased risk of stroke and some of them will suffer headaches. On no view could such evidence be regarded as sufficient to prove that a person is disabled for the purposes of section 1(1) of the Disability Discrimination Act 1995.
- In the foregoing circumstances, we uphold the submissions of the Respondents and dismiss the appeal.
