Appeal No.	 EAT/281/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 25 April 1997
Judgment delivered on 20 May 1997

Before
HIS HONOUR JUDGE PETER CLARK
MR K M HACK JP
MISS A MADDOCKS OBE

SUPERCLEAN SUPPORT SERVICES PLC	APPELLANTS

(1) MR J LANSANA	RESPONDENTS
(2) WETTON CLEANING SERVICES LTD

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR J CAVANAGH 
(of Counsel)
Messrs I J Howson
Solicitors
100 Webley Park Drive
Wembley Park
Middlesex
HA9 8HR
	
For the 1st Respondent

For the 2nd Respondent	MS YVETTE GENN
(of Counsel)
Ms S Golsing
Southwark Law Centre
Hanover Park House
14-16 Hanover Park
Peckham
London SE15 5HG

MR PARROTT
(Representative)
Mr C Baker
Wetton Cleaning Services Ltd
278-280 St James’s Road
London SE1 5JL

JUDGE PETER CLARK:
The parties
(1)	The appellant is Superclean Support Services PLC [“Superclean”] which was joined as second respondent to a complaint brought by the applicant before the Industrial Tribunal, Joseph Lansana [“Mr Lansana”]. Supercleans’ Managing Director was Mr C J Godsell.

(2)	Mr Lansana; the applicant below and first respondent to this appeal.

(3)	Wetton Cleaning Services Ltd [“Wetton”]; the first respondent to Mr Lansana’s complaint before the Industrial Tribunal and second respondent to this appeal. Its Chairman was Mr C Baker; the Company Secretary was Mr Frank Slater.

The facts
We take these from the undisputed evidence received by the tribunal sitting at London (North) on 11th December 1995 as recorded in the Chairman, Mr P R K Menon’s Notes; the documentary material before the Industrial Tribunal and the Industrial Tribunal’s extended reasons dated 22nd January 1996 [“the reasons”].

	Both Wetton and Superclean carry on business as cleaning contractors. At the material time Wetton employed about 249 full-time cleaners and 740 part-time cleaners on various contracts. Superclean had about 350 employees, the majority of them part-timers.

	Mr Lansana commenced full-time employment with Wetton as a general cleaner in October 1991. Initially he was employed at 38 Bishopsgate in the City of London, working an eight hour day mornings and evenings.

	In 1993 Wetton entered into a contract to provide cleaning services at Wilson House, Paddington, a Hall of Residence serving students attending Imperial College. Mr Lansana was transferred to work at Wilson House. He worked an eight hour day from 8.30 a.m. to 4.30 p.m.. That was his main place of employment. He also performed two hours work per day, from 6-8 a.m., for Wetton at Westminster College, Paddington.

	Wetton employed about 14 cleaners, of whom two worked 40 hours per week (including Mr Lansana) on the Wilson House contract.

	In early January 1995 the Wilson House contract was put out for tender. Bids were received by Imperial College from both Wetton and Superclean. The Superclean bid was successful.

	By letter dated 12th January 1995 Imperial College wrote to Mr Slater of Wetton, informing him that his company’s bid had been unsuccessful and that its contract and cleaning operations at Wilson House would terminate on Friday, 27th January 1995.

	Following that notification Mr Slater wrote a memorandum to all Wetton’s employees working on the Wilson House contract, including Mr Lansana, informing them that Wetton had lost that contract and that their last day of service would be 27th January 1995. He continued by saying that in the past where Wetton lost a contract its policy was to make all employees on that contract redundant and make a redundancy payment where applicable. However, in view of the uncertainties in the law relating to transfers of undertakings, Wetton would not make redundancy payments on this occasion, and suggested that the affected employees sought assistance from a Citizens Advice Bureau or Law Centre. As a postscript he referred to the case of Dines, which he said had been upheld in the European Court of Law. We think this must in fact be a reference to the English Court of Appeal decision in Dines v Initial Healthcare Services Ltd [1995] ICR 11, overruling the decision of the Employment Appeal Tribunal in that case [1993] ICR 978.

	On 16th January 1995 Mr Godsell wrote to Mr Slater referring to “the present uncertainty over the possible application of the TUPE Regulations”, asking for details of the Wetton’s staff then employed on the Wilson House contract, their terms and conditions of employment and the working arrangements then in force.

	A list of relevant employees was prepared by Wetton but never received by Superclean, so the tribunal found. However Superclean did not follow up their request, nor did they visit Wilson House prior to the first day of their contract, Monday 30th January 1995.

	On that day Mr Lansana attended for work at Wilson House. He was seen by Mr Godsell who asked him to complete a new starter’s form. Mr Lansana told Mr Godsell that he was still working elsewhere (on the Westminster College contract for two hours each morning) for Wetton, and did not have a form P45 from Wetton. Mr Godsell was not prepared to take him on to work at Wilson House and sent him back to Wetton.

	Mr Lansana did so, but Wetton had no further work to give him, although on 24th February 1995 Wetton promoted him to supervisor on the Westminster College contract and increased his daily hours to three, 5.30 - 8.30 a.m.. There was a commensurate rise in pay.

	According to the evidence of Mr Godsell it was only Mr Lansana who turned up on 30th January from among the former Wetton cleaning staff at Wilson House. It seems that Superclean then advertised for staff for the Wilson House contract and recruited different employees to fill two full-time and 13 part-time positions at Wilson House. The new cleaning staff were in place some two weeks after the Superclean contract began on 30th January.

	Mr Lansana sought advice from the Cambridge House Legal Centre, who prepared his Originating Application which was presented to the Central Office of Industrial Tribunals on 22nd April 1995.

The Claim
Initially the claim was directed at Wetton and Mr Godsell. In due course Mr Godsell was dropped from the proceedings and Superclean added as second respondent.

	The complaint alleged unfair dismissal, wrongful dismissal and unlawful deductions from wages, the latter being in respect of unpaid holiday pay.

	The claims were principally directed at Superclean, as the transferee following a relevant transfer under the TUPE Regulations. However, an alternative claim was directed to Wetton.

	Before the Industrial Tribunal, we see from paragraph 1 of the reasons, Mr Lansana and Wetton effectively joined forces, both contending that a relevant transfer to Superclean had taken place.

The Industrial Tribunal decision
Having set out the facts the tribunal asked itself these questions (Reasons. paragraph 6):

“(1) 	Did TUPE apply to transfer the Wilson House contract from Wetton to 	Superclean?
(2)	 If it did, did it automatically transfer the Applicant’s contract of employment on the Wilson House contract from Wetton to Superclean notwithstanding the fact that he also had a separate two hour employment contract with Wetton under the Westminster College contract.
(3) 	Did Superclean act reasonably or unreasonably in rejecting the Applicant because he did not have his P45 on what would have been his first day at work with them and because he was employed by Wetton on the Westminster College Contract.”

	It answered those questions in paragraph 7 in this way:

“(1) 	Applying Dines, there was a TUPE transfer. The Wilson House contract was transferred by Imperial College from Wetton to Superclean during the period 27-30 January 1995.
(2) 	The Applicant had two separate severable and discrete employment contracts of employment - Wilson House and Westminster - with Wetton. This is in accordance with normal practice in the cleaning industry.
(3) 	The Applicant’s contract of employment with Wetton under the Wilson House contract transferred from Wetton to Superclean on the transfer of the Wilson House undertaking from Wetton to Superclean.
(4) 	The refusal by Superclean to offer continued employment made his dismissal automatically unfair under TUPE.
(5) 	In any event, it was unreasonable of Superclean to insist that the Applicant must not work for Wetton under the Westminster College contract as a pre-condition of employment with Superclean under the transferred Wilson House contract and the Applicant was unfairly dismissed within the meaning of section 57(3) of the section 57(3) [sic] of the 1978 Act. 
It is the Tribunal’s unanimous decision that Superclean unfairly dismissed the Applicant. The dismissal was automatically unfair under TUPE and/or under section 57(3) of the 1978 Act as Superclean acted unreasonably in insisting that the Applicant had to give up his other employment with Wetton.”

	The tribunal went on to award total compensation of £2,315.85 made up of a basic award of £390 and compensatory award of £1,819.38 for unfair dismissal and a Wages Act award of £106.47 in respect of holiday pay.

The Appeal
Superclean commenced this appeal against the tribunal’s decision by a Notice dated 1st March 1996. It was settled by experienced Counsel, Mr John Cavanagh. The main thrust of the appeal, as formulated in the grounds of appeal, was directed to the tribunal’s finding that Mr Lansana was employed under two separate and discrete contracts of employment by Wetton and a contention that the tribunal had given inadequate reasons for its findings. No point was taken directly in relation to the tribunal’s finding that there had been a relevant transfer of a part of Wetton’s undertaking to Superclean, although this matter had, we are told and we accept, been put in issue on behalf of Superclean before the tribunal.

	We do not find that omission entirely surprising on the state of the law as it existed both at the time of the tribunal hearing and promulgation of its decision, and at the time when the Notice of Appeal was lodged.

	Following the Court of Appeal decision in Dines there were a number of cases decided in this appeal tribunal and in the High Court which focused on the activity carried on before and after the alleged dates of transfer. See Isles of Scilly v Brintel Helicopters [1995] ICR 249; Kelman v Care Services [1995] ICR 260, both of which were decisions of the Employment Appeal Tribunal, and Betts v Brintel and KLM [1996] IRLR 45, a decision of Scott-Baker J sitting in the Queen’s Bench Division and handed down on 28th July 1995. Having reviewed the earlier Employment Appeal Tribunal decisions Scott-Baker J summarised the position at paragraphs 27-28 in Betts:

	“What seems to me to be clear from the authorities is that each case had to be considered on its own facts. Depending on the type of activity that is under consideration, so different factors may be relevant and carry different weight. The present case concerns what is essentially a service contract, that is, provision when required of transport for men and equipment to Shell’s oil rigs in the southern North Sea. What is being provided is fundamentally the same, both before and after the change of contractors. Put another way, there is no change in the basic activity, although some of the details as to how it is provided have changed, eg different aircraft, pilots and base. However, even as to the detail, the situation was not invariable before 1 July because there were changes from time to time both for the fleet of helicopters (any five out of 25) and, within the fleet, of pilots.
	Mr Carr [Counsel for the alleged transferees] relies strongly on the fact that not a single employee went over from BIH to KLM. This, he claims, is a strong pointer against there have been any transfer of an economic entity. He draws comfort from some of the observations in the cases that transfer of employees is relevant. However, I note the words of Morison J in Brintel, that the fact the transferee has taken none of the transferor’s employees does not mean there cannot have been a transfer to which the Regulations apply. I do not think the absence of employee transfer assists KLM in the present case, because it was KLM’s decision not to take on any BIH employees. Of course, if a substantial part of BIH’s workforce had been taken on by KLM, that would have been a material factor in favour of the application of TUPE, were the position of, say, the remaining employees being considered.”

	Further, that line of authority appeared to have its roots in the European Court of Justice judgment in Schmidt v Sparkasse Bordesholm [1995] ICR 237. In that case the plaintiff was the sole cleaner employed by the defendant bank at one of its branches until her dismissal upon the renovation and enlargement of that branch. The cleaning work was then contracted out to a cleaning firm which offered employment to the plaintiff at what she regarded as lower pay. She declined the offer. In an action before the German Court she challenged her dismissal. Her claim failed. On appeal the domestic appeal court referred two questions to the European Court of Justice, namely whether under Article 11 of the Council Directive 77/187/EEC [“the Directive”] an undertakings cleaning operations which were transferred to another undertaking could be treated as “part of a business” and if in principle they could, whether that still applied if before the transfer the cleaning work had been performed by a single employee. The European Court answered those questions in the affirmative.

	Faced with that weight of authority it is no surprise to us that the tribunal sitting in December 1995 decided in favour of a transfer having taken place, notwithstanding that no employees went over from Wetton to Superclean following termination of Wetton’s contract on 27th January 1995. Nor is it any surprise, in the light of those authorities, that no attempt was made in the original Notice of Appeal to challenge that finding before this appeal tribunal.

	Further, the respondent’s answer filed on behalf of Mr Lansana did not seek to challenge the tribunal’s finding that a relevant transfer had taken place.

Applications for leave to amend
So the matter rested, and the appeal took its place to await a hearing date. After the case was listed for hearing on 25th April 1997, by a letter dated 15th April those representing Mr Lansana lodged an application for an extension of time for leave to cross-appeal against the tribunal’s decision on the basis that contrary to the case hitherto advanced on his behalf it was now actively contended that there was here no relevant transfer from Wetton to Superclean.

	That contention was further reflected in an application made on behalf of Superclean for leave to amend the Notice of Appeal to argue that there was no relevant transfer.

The recent cases
The basis for this turn of events lay in two recent decisions, first the judgment of the European Court of Justice in Suzen [1997] IRLR 255, delivered on 11th March 1997, and secondly the judgments of the Court of Appeal in Betts v Brintel [Unreported] delivered on 26th March 1997.

	In Suzen the plaintiff was one of eight cleaners employed by the defendant at school premises which the defendant had contracted to clean. The cleaning contract was due to end on 30th June 1994, and on 15th February 1994 the defendant terminated the plaintiff’s employment on notice to expire on 30th June. On the plaintiff’s claim that her dismissal was invalid the National Court referred the following questions to the European Court of Justice:

	“1. On the basis of the judgment of the Court of Justice of 14 April 1994 in C-392/92 Schmidt and 19 May 1992 in case C-29/91 Redmond Stichting, is Directive 77/187/EEC applicable if an undertaking terminates a contract with an outside undertaking in order then to transfer it to another outside undertaking?
	2. Is there is legal transfer within the meaning of the Directive in the case of the operation described in Question 1 even if no tangible or intangible business assets are transferred?”

	The answer of the Court is to be found at paragraph 23 of the judgment:

	“The answer to the questions from the national court must therefore be that Article 1(1) of the Directive is to be interpreted as meaning that the Directive does not apply to a situation in which a person who had entrusted the cleaning of his premises to a first undertaking terminates his contract with the latter and, for the performance of similar work, enters into a new contract with a second undertaking, if there is no comitant transfer from one undertaking to the other of significant tangible or intangible assets or taking over by the new employer of a major part of the workforce, in terms of their numbers and skills, assigned to his predecessor to the performance of the contract.”

	Pausing there, Mr Cavanagh submits, supported by Ms Genn who appears for Mr Lansana, that the facts of the instant case cannot be distinguished from those in Suzen and that the European Court’s answer to the questions posed in that case is determinative of the transfer issue in this case, in that as the most recent decision of the European Court of Justice on this topic Suzen is binding authority which this tribunal must follow, since the domestic TUPE Regulations must in turn reflect the provisions of the Directive.

	If there were any doubt about that last proposition, and we cannot see that there is, it was removed by the Court of Appeal in Betts, where the reasoning in Suzen was applied by the Court in reversing the decision of Scott-Baker J below; see per Kennedy LJ. Transcript. P. 23D.

	We should record that Wetton was not professionally represented before us. A lay observer, Mr Parrott, attended on its behalf. In these circumstances we have not heard full argument on the issues now raised in this appeal. Nevertheless, we have reached certain firm conclusions as to how this appeal should be determined.

Conclusions
(1)	This is not a ‘new point’, nor is it one which requires further evidence before the tribunal of fact. The European Court of Justice decision in Suzen represents “a clarification of the law” as Kennedy LJ put it in Betts. Transcript. P. 24F. It is therefore right to allow the proposed amendments to Superclean’s Notice of Appeal and Mr Lansana’s Answer so as to raise the cross-appeal.

(2)	In our judgment Suzen has a dramatic impact on the present state of the domestic authorities prior to Betts, which the Court of Appeal’s judgment in that case appears to recognise. We shall follow the guidance contained in Suzen as we are bound to do. On the facts of this case it is clear that there was no transfer. The identity of the ‘economic entity’ disappeared on termination of Wetton’s cleaning contract. There was no concomitant transfer from one undertaking (Wetton) to the other (Superclean) of significant tangible or intangible assets or taking over by Superclean of any, let alone a major part of Wetton’s workforce employed on the Wilson House contract.

(3)	In these circumstances we shall allow the appeal and set aside the Declaration and award of compensation made by the tribunal in favour of Mr Lansana against Superclean.

(4)	We shall substitute a declaration that Mr Lansana was dismissed by Wetton on 27th January 1995 by reason of redundancy, in the light of the tribunal’s reasons, paragraph 5.11, and that he is entitled to a redundancy payment from Wetton in the sum of £390.

(5)	Further, we order that Wetton pay to Mr Lansana the sum of £106.47 by way of holiday pay entitlement unlawfully deducted from his wages contrary to s.13(1) of the Employment Rights Act 1996.

(6)	Finally, we find ourselves unable to determine the question as to whether Mr Lansana was unfairly dismissed by Wetton, and if so, the amount of any compensatory award payable in respect of such unfair dismissal. Accordingly we shall remit that issue to a fresh Industrial Tribunal for rehearing.