Appeal Nos. UKEAT/0041/12/JOJ
UKEAT/0042/12/JOJ

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

		At the Tribunal
		On 14 February 2012

Before
THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)
MR G LEWIS
MR R LYONS 

JOHNSON CONTROLS LTD	APPELLANT

(1) MR R CAMPBELL
(2) UNITED KINGDOM ATOMIC ENERGY AUTHORITY	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR PAUL ROSE
(One of Her Majesty’s Counsel)
Instructed by:
Blake Lapthorn
New Kings Court
Tollgate
Chandlers Ford
Eastleigh
SO53 3LG
	
For the First Respondent

For the Second Respondent	MR JONATHAN GRAY
(Solicitor)
Messrs Lamport Bassitt Solicitors
46 The Avenue
Southampton
SO17 1AX

MR STUART BRITTENDEN
(of Counsel)
Instructed by:
Cater Leydon Millard Solicitors
Unit 68 Milton Park
Abingdon
OX14 4RX

SUMMARY
TRANSFER OF UNDERTAKINGS – Service provision change

A Judge was entitled to hold there had been no service provision change where a centralised taxi booking administration service was taken back in house by the client of the service and no longer thereafter operated as a centralised service.  The element of centrality, coupled with some particular features of the job the Claimant taxi administrator had done, no longer existed after the change.  The service as operated after the change by the client was held to be essentially a different activity, and the Judge held entitled as to find.

THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)
Introduction
1.	This is an appeal from the decision of Employment Judge A Gumbiti‑Zimuto at Reading on a preliminary issue in a claim by the Claimant, Mr Campbell, for unfair dismissal and a statutory redundancy payment.  The issue for his determination was whether there had been a TUPE transfer of the Claimant’s employment from the First Respondent, the Appellant before us, Johnson Controls, to the Second Respondent, United Kingdom Atomic Energy Authority (UKAEA), the effective Respondent to this appeal, in which Mr Campbell, for understandable reasons, takes only a limited part, adopting a position that Mr Gray, solicitor on his behalf, is happy to accept as neutrality with a slant toward the submissions made to us by Johnson Controls.

The legislation
2.	The transfer in question was said to have occurred by reason of a service provision change, for which provision is made by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (Regulation 3(1)(b); in this case, (iii)), a situation in which:

“(iii)  Activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by the client on his own behalf,
and in which the conditions set out in paragraph (3) are satisfied.”

3.	The conditions set out in paragraph 3 are that:

“[…] (a) immediately before the service provision change—
(i) there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client;
(ii) the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short‑term duration; and
(b) the activities concerned do not consist wholly or mainly of the supply of goods for the client’s use.”

4.	It is common ground that an organised grouping of employees is capable of being satisfied by one person working on his or her own.

5.	The effect of those provisions, as examined in the applicable case law, namely: Metropolitan Resources Ltd v Churchill Dulwich Ltd [2009] ICR 1380, HHJ Burke QC sitting alone; Kimberley Group Housing Ltd v Hambley and Ors [2008] ICR 1030, a full Tribunal decision presided over by Langstaff J; Clearsprings Management Ltd v Ankers and Ors UKEAT/0054/08, 24 February 2009, a decision of HHJ Peter Clark; and OCS Group UK Ltd v Jones and Anor UKEAT/0038/09, 4 August 2010, HHJ Ansell presiding was summarised helpfully in paragraph 8 of a further decision by HHJ Peter Clark, that of Enterprise Management Services Ltd v Connect-Up Ltd and Ors UKEAT/0462/10, 21 December 2011, and we gratefully adopt the principles that he derived and set out in paragraph 8 as an accurate statement of the law.  He said in sub‑paragraph (2), ((1) relating to the particular case he had in mind):

“(2) The expression ‘activities’ is not defined in the Regulations.  Thus the first task for the Employment Tribunal is to identify the relevant activities carried out by the original contractor: see Kimberley, para. 28; Metropolitan, paras. 29‑30.  That was the issue on appeal in OCS, where the Appellants challenge to the activities identified by the Employment Tribunal failed.
(3) The next (critical) question for present purposes will be whether the activities carried on by the subsequent contractor after the relevant date […] are fundamentally or essentially the same as those carried on by the original contractor.  Minor differences may properly be disregarded.  This is essentially a question of fact and degree for the Employment Tribunal (Metropolitan, para. 30).
(4) Cases may arise (e.g. [Clearsprings]) where the division of services after the relevant date, known as fragmentation, amongst a number of different contractors means that the case falls outside the service provision change regime, as explained in Kimberley (para. 35).
(5) Even where the activities remain essentially the same before and after the putative transfer date as performed by the original and subsequent contractors, an SPC will only take place if the following conditions are satisfied:
(i) there is an organised grouping of employees in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client;
(ii) the client intends that the transferee post‑service provision change will not carry out the activities in connection with a single event of short‑term duration;
(iii) the activities are not wholly or mainly the supply of goods rather than services for the client’s use.  […]
(6) Finally, by reg 4(1) the Employment Tribunal must decide whether each Claimant was assigned to the organised grouping of employees.”

6.	We would add that the identification of “activity” is critical in many cases.  The case before us is an example of that.  An activity may be more than the sum of the tasks that are performed in respect of that activity, but a Tribunal must be careful to ensure that it does not take so narrow a view of that which “activity” consists of, in the case before it, as to forget that the context in which it decides “activity” is the context in which it is ever likely that employees’ continued employment will be affected.  If for instance the activity performed by a given employee is after a service provision change to be performed by two or three employees in the transferee or, in a 3(1)(b)(iii) situation, by the client itself, then it may well be that the approach of the Tribunal should recognise that the same activity may well be carried on, though it is performed now by three people rather than by the one person who earlier performed it.  These questions are, however, fundamentally questions of fact and degree.

The facts
7.	The Employment Judge found that the Claimant had been employed in 1986 as a site co‑ordinator at Harwell.  Summarising the facts he found in paragraph 4 of the Judgment, the duties he performed changed over time.  Whereas only one of the initial duties he performed related to official car services, that mutated into being the principal or sole function of Mr Campbell.  The work he performed was variously described as a taxi administration service or as a taxi administrator.  His work by 2007 involved him, on his own description, as taking bookings from members of staff of UKAEA, advising on the timings for the journeys they wished to undertake, reviewing booking data, combining jobs and pick‑ups to ensure the best use of available transport, allocating jobs to subcontractors (two taxi companies were regularly used for the purpose), checking the invoices from those subcontractors against the orders of UKAEA, dealing with booking queries, entering the costs of the subcontractors onto a database, carrying out checks on suppliers, and arranging for security passes for suppliers.  He thought that at that stage some 80 per cent of his time was taken up with taxi activities for UKAEA.  No question arises on the appeal itself as to the assignment of Mr Campbell to the taxi administration service.

8.	In 2010 UKAEA made a decision to review the taxi booking service provided by Johnson Controls.  It needed to reduce costs, and one of the cost‑cutting measures identified was to make changes to the service.  Since it was established that most of the secretaries employed by UKAEA could book taxis directly with the taxi firms rather than utilising the services of the taxi booking service administrator, the UKAEA decided that was what would happen thereafter.  It was against that background that the question arose whether in so determining the UKAEA were effecting a service provision change from Johnson Controls to the UKAEA of the contract of employment of Mr Campbell, or such that the contract of employment of Mr Campbell continued with UKAEA.

9.	The conclusion that the Judge came to at paragraph 4.22 in the course of his discussion of the facts was this:

“4.22. The Claimant/taxi service administrator had simply been taken out of the picture and contact is now direct between [UKAEA] through their secretaries and the taxi companies.  The taxi service administrator’s tasks, in so far as they continued to be performed in respect of most of the duties were now directly performed by [UKAEA]’s secretaries.  There is no evidence that anyone did anything which involved taking on any new or additional duties they did not previously do, save for one instance.  The evidence appears to me to simply suggest that the taxi service administrator function was dispensed with.
4.23. This conclusion is in my view further supported by the ‘Service Specification for a Taxi Service to United Kingdom Atomic Energy Authority at Culham’ document […] which sets out the specification for the taxi service after 1 March 2011.  When this document is compared with the document setting out the service specification for the taxi service prior to that date […] the significant difference between the two is the omission of [Johnson Controls] in the service specification.  It is otherwise substantially the same as before.”

10.	Having been taken to the relevant law, as to which no issue arises in this appeal, the Judge set out his conclusions in paragraph 6.  Some four paragraphs are critical.  Paragraph 6.5 reads:

“6.5 It is in my view an important feature of this service provided by the Claimant/taxi administrator that it is a centralised function.  […]  However, it is the centralised nature of the service that allows for instance the co‑ordination of taxi sharing.  The service provided a central point for dealing with all aspects of the taxi administration.  This was a taxi administration service.  The centralised nature of the role performed is an important feature of the service provided by [Johnson Controls].
6.6. After 1 March there was no longer any centralised service.  What [Johnson Controls] describes as the ‘core elements’ continue and are carried out by, in the main, [UKAEA]’s employees.  However, in [UKAEA]’s hands, the service is no longer centralised.  It is the absence of this centralisation which, in my view, is an important component in coming to the conclusion that it is not essentially the same activity as that performed by the Claimant prior to 1 March.”

11.	At paragraph 6.7 the Judge concluded that nobody now did what the Claimant had been doing.  At paragraph 6.12 he concluded:

“If these individual tasks [he had set them out] are itemised in the list it is possible to form the impression that the majority of the tasks are now predominantly being done by [UKAEA] but in my view that is not the correct.  [sic]”

12.	He used the words “the correct”, which counsel submits, we think correctly, should mean either “correct” without the word “the”, or omits the word “approach” at the end of the sentence.  That is a distinction, we think, without a material difference in context.  At paragraph 6.13 the Judge went on:

“The taxi service administrator provided a conduit through which [UKAEA] booked taxis.  That has been removed and the secretaries employed by [UKAEA] now carry out that function direct with the taxi company as opposed to going through the Claimant.  In practical terms what the secretaries do now is likely to be little different from what occurred before, the only difference being that rather than approaching the taxi service coordinator they approach the taxi companies direct.
6.14. However, in my view, it would be wrong to consider that the secretaries provide the service the Claimant provided.  The service provided by the Claimant was, in my view, more than the sum total of the list of activities or tasks needed to be performed to secure taxis for a large organisation like the Respondent, i.e. it was more than just booking taxis, keeping a record, taking invoices and sorting out complaints, all of which will need to be attended to as and when the need to book a taxi arises.  It was providing a central co‑ordinated service provided by [Johnson Controls].  That simply no longer exists.  It was not retained by [UKAEA].”

13.	In that last passage the Employment Judge decided that the activity was a “central co‑ordinated service”.  If one takes that together with paragraph 6.5, he therefore identified the service as being a central co‑ordinated taxi administration service.  The identification of the activity is, as the cases have held, a question of fact and degree.  It being a question of fact and degree, the question for us therefore on appeal is whether the Judge was entitled to come to that factual conclusion.  He would not be entitled to do so if he approached the issue of identification of the activity by some wrong approach, nor would he be entitled to reach that conclusion if it were perverse to do so.  As to the approach, he was asking himself the question that was proposed by HHJ Burke QC in the Metropolitan case at paragraph 37 by asking whether the alleged transferee, in this case the client, was performing essentially the same activity as that of the alleged transferor, in this case Johnson Controls.  The underlying approach was therefore undoubtedly correct.

The appeal
14.	What is said to us by way of submission from Mr Rose QC, who appears for Johnson Controls, is that the Employment Judge was not entitled to come to the conclusion he did.  He gives four grounds for so saying.  The first ground as set out in the Notice of Appeal was that the Employment Judge had failed to identify correctly the relevant activities.  At paragraph 11 of the Notice of Appeal attention is drawn to the differences of description as between taxi administration service, administration of the taxi booking service, taxi booking service and taxi service co‑ordinator, with the suggestion that the focus of the Judge was upon those titles rather than upon that which Mr Campbell actually did.  It accuses the Judge of not setting out in a coherent fashion the activities actually undertaken by Mr Campbell in order to consider whether they were still undertaken after the end of this employment but now by UKAEA.  So expressed, this ground has little if any merit.  It is plain that the Employment Judge took care on a number of occasions in paragraph 4 to identify precisely the several component tasks that Mr Campbell did as part and parcel of the activity he performed.

15.	Ground 2 accuses the Judge of conflating Mr Campbell’s role with the activities that he carried out.  When it came to oral argument before us, Mr Rose ran the first and second grounds together.  He suggested that the focus of the Tribunal should have been purely upon what Mr Campbell did rather than how he did it.  To ask the latter question was to divert attention impermissibly from that which was actually done.  If Employment Tribunals as a matter of routine focussed upon the how rather than the what of work that was done, the Government’s supposed intention in adding the provisions that now appear at Regulation 3(1)(b) to those that had earlier stood on their own and are now at 3(1)(a) would be defeated.  He relied upon an extract from a book by McMullen for that submission, in which he descriptively suggested what the Government’s policy objectives had been.  He submitted that one way of looking at the facts was that the same tasks were performed in the transferee’s hands as had been performed by the two hands of Mr Campbell when employed by the transferor.  If it were the case that activities still performed by a transferee could be said to be different activities merely because they had been split between a number of people rather than concentrated in the one or two who had previously performed them, it would be all too easy for employees to evade the thrust of TUPE.  He distinguished those cases such as OCS and Enterprise Management as being cases in which the focus had been entirely upon what was done and not at all upon how it was done.
 
16.	The third ground that was identified was that there were internally inconsistent findings of fact.  Here the argument concentrated upon: paragraph 4.22, which we have set out in full; paragraph 4.24, which identified a function of arranging to share a taxi whenever possible and which the Judge in that paragraph identified as the only function carried out by Mr Campbell/taxi service administrator that passed to the taxi company, and that there was no clear evidence of what, if any, consideration was given by UKAEA’s secretaries to the co‑ordination of such journeys; and paragraph 6.6, which again we have set out in full.  It was argued that the Judge had wrongly approached or over‑emphasised the evidence given to him about passenger questionnaires, processing complaints and maintaining a database.  Mr Rose in his argument pointed out that there was nothing special about a database, since it was plain that some form of record would be required in order to check invoices, and he allied this with his ground 4 point, which drew attention to the service specification to which paragraph 4.23 relates, as we have recorded.

17.	A major forensic part of his approach to the Judge was to demonstrate, with the right hand holding, as it were, the service specification from 2007 and the left hand holding a new service specification in order to draw attention to the striking similarity between the two, indicative almost to the point of conclusion that the two services that would have consisted of the running of the schemes in respect of which those service specification documents were compiled would have continued in the hands of UKAEA with very little difference at all from the way in which they had been conducted in the hands of Johnson Controls.  This would have fallen within the scope of the principle set out in Metropolitan.  The Tribunal had not made sufficient findings on the facts, he argued, on this basis, thereby vitiating the subsequent reasoning.  It had misunderstood the point about taking the Tribunal to the rival service specifications, which was to demonstrate, as it were, by the one being almost a tracing‑paper copy of the other, the identity of the services provided.

Discussion
18.	We have already identified that the issue for our consideration is whether the Judge was entitled to come to the conclusion he did.  The question of approach is thus important.  In our view, the Tribunal, faced with the question, which is its initial and critical question as identified by Kimberley, has to decide what an activity is.  Mr Brittenden, who appears for UKAEA, argues that Mr Rose’s analysis is an over‑analysis where it seeks to separate the how from the what.  He points to the fact that small differences quantitatively between a service provided before a putative transfer and that occurring after can be critical, as they were in the Enterprise Management case, when the description adopted by the Tribunal was 15 per cent of the work no longer being carried on after as it had been before.  We accept that identifying what an activity is involves an holistic assessment by the Tribunal.  The Tribunal is trusted to make that assessment.  Its evaluation will be alert to possibilities of manipulation, but it is not simply to be decided by enumerating tasks and identifying whether the majority of those tasks quantitatively is the same as the majority was prior to the putative transfer.

19.	Here the Judge, as it seems to us, was alert to the fact that if one took an approach of ticking off the tasks that were done, the majority might be said to have been performed by UKAEA after the putative change as they had before.  In one sense it is hardly surprising; if a company needs taxi services, there will be a need for those services irrespective of the act performed if the activity is to be categorised differently from merely taxi booking.  The Judge said in paragraph 6.14 that the service provided was in his view more than the sum total of the list of activities or tasks.  He did so, it would appear, principally upon the basis that the service had been central and co‑ordinated.  It was not the only feature of the service that no longer operated after the putative transfer; as Mr Brittenden emphasises, it was “an important component” (paragraph 6.6) or “an important feature” (paragraph 6.5).  There were some differences that he enumerated; in particular the Tribunal expressed itself unsure as to what now was the arrangement, if any, for the processing of complaints, for administering passenger questionnaires and for maintaining any database record.

20.	The Tribunal acknowledged that key performance indicators that had been appropriate beforehand (see paragraph 6.8) no longer were so, at least to the extent of three of five identified.  Nonetheless we consider that centrally the Judge placed emphasis upon the centralised and co‑ordinated nature of the service.  This, as it seems to us, was something that the Employment Judge was entitled to do.  The lay members of this Tribunal are particularly emphatic that a centralised service of this nature may well be, and often in their experience is, something that is essentially different from a performance that lacks those two features.  In part that might be demonstrated by considering the question of a database.  If one asks generally why an employer would wish to centralise a service and produce such a database, the answer may be obvious.  A database with its comprehensive overview cannot be replicated, if important, where the service is split, or at least not so easily.  These are not conclusions of fact for us to reach, however; merely to demonstrate that in our view it cannot be said that to identify the service as did the Judge was necessarily to demonstrate an error of law, and it was certainly not perverse.

21.	So much, therefore, for grounds 1 and 2.  As to grounds 3 and 4, we should say this.  An Employment Tribunal Judgment is not to be viewed as the product of elaborate craftsmanship and careful legalistic expression; it is a Judgment that has to be read as a whole.  The question to be addressed is whether any errors or misdescriptions are material.  

22.	We note that there is a distinction that might be made between the rejection by the Employment Judge as illusory in paragraph 4.21 of a contention that UKAEA required the taxi companies to assume additional responsibilities and the conclusion to which the Judge appears later to have come in more detailed passages that do identify some tasks being performed by the taxi companies that had not previously been performed by them.  However, in the context of the case taken as read as a whole, as a Tribunal Judgment deserves to be, we do not consider those and the other matters to which grounds 3 and 4 relate as being critical or material.  We think that the decision is clear; centrally, all depends upon whether the Judge was entitled to come to the conclusion he did, applying the test set out in Metropolitan to a finding that was one of fact and degree, that Mr Campbell had been providing a central co‑ordinated service and that that service was provided by Johnson Controls, and that it simply no longer existed.  We do not consider, deciding this case on an application of the principle that this was a matter of fact to which the Employment Tribunal were entitled to come, that in any sense this Tribunal is giving the green light to Employment Tribunals more generally to regard a situation in which duties or activities performed before a putative transfer are split between others performing similar duties or tasks thereafter as not constituting a service provision change; it is simply that in this particular case, on its particular facts, the Judge was entitled to come to that conclusion and was well aware of the arguments that might be placed to the other effect.

Conclusion
23.	For those reasons, this appeal must be dismissed.  There was a cross‑appeal, which in the light of our conclusion as to the appeal it has been unnecessary to consider.