Alemo-Herron v Parkwood Leisure Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rimer,Lady Justice Smith,Lord Justice Ward |
| Judgment Date | 29 January 2010 |
| Neutral Citation | [2010] EWCA Civ 24 |
| Docket Number | Case No: A2/2009/0224 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 January 2010 |
[2010] EWCA Civ 24
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
His Honour Judge Mcmullen QC, Mrs a Gallico and Mr R Lyons
Before: Lord Justice Ward
Lady Justice Smith
and
Lord Justice Rimer
Case No: A2/2009/0224
UKEAT/0456/08/ZT
Mr Adrian Lynch QC and Mr Richard Hignett (instructed by Weightmans LLP) for the Appellant
Mr Thomas Linden QC and Ms Laura Prince (instructed by Unison Legal Services) for the Respondents
Hearing date: 8 October 2009
Lord Justice Rimer:
Introduction
The appellant is Parkwood Leisure Limited. Parkwood is the respondent in the proceedings and the employer of the claimants (respondents to its appeal). The claimants are Mark Alemo-Herron and 23 others. They brought claims against Parkwood in the London South Employment tribunal complaining of unauthorised deductions from their wages. The tribunal (Employment Judge Taylor, Mrs R.C. Macer and Mr R. Masini) dismissed the claims for reasons given in their judgment sent to the parties on 16 July 2008.
By an order of 12 January 2009 the Employment Appeal Tribunal (His Honour Judge McMullen QC, Mrs A. Gallico and Mr R Lyons) allowed the claimants' appeal and remitted the claims to the tribunal for a remedy hearing. The appeal tribunal recognised the point at issue as important and gave Parkwood permission to appeal. On 19 February 2009 Maurice Kay LJ stayed the tribunal proceedings until after our judgment. Mr Adrian Lynch QC and Mr Richard Hignett represented Parkwood, and Mr Thomas Linden QC and Ms Laura Prince the claimants, as they also all did before the appeal tribunal.
The appeal raises an issue under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (‘TUPE’).
The facts
The claimants are former employees of the London Borough of Lewisham (‘the Council’), who worked in its leisure services department until 2002. Their part of the Council's undertaking (and with it the claimants) was then transferred to CCL Limited, a private sector employer. In May 2004 that part of CCL's undertaking (and with it the claimants) was further transferred to Parkwood, also a private sector employer.
TUPE applied to each transfer. TUPE preserves the employment contracts of transferred employees so that they are enforceable against the transferee as if the latter were the original party to the contracts. One of the terms in the claimants' contracts with the Council provided:
‘Terms and Conditions of Employment
During your employment with the Council your terms and conditions of employment will be in accordance with collective agreements negotiated from time to time by the National Joint Council for Local Government Services, set out in the Scheme of Conditions of Service (commonly known as the Green Book) supplemented by agreements reached locally through the Council's negotiating Committees. These documents are available for reference at your Personnel Section. However, in the case of doubt, inconsistency or ambiguity the terms of this Contract shall prevail.’ (Emphasis supplied).
The National Joint Council for Local Government Services (‘NJC’) comprises many members, including representatives of local authority employers and trades unions. At the date of the transfer to CCL, there were already in place collectively agreed NJC terms setting out the claimants' pay rates for the period 1 April 2002 to 31 March 2004. Those terms were honoured by CCL. Following the claimants' transfer into Parkwood's employment, Parkwood also awarded them pay increases in line with those NJC pay settlements, but did so expressly without acknowledging any liability on its part to make wage payments by reference to such settlements.
In June 2004 (after the transfer to Parkwood), fresh NJC negotiations commenced in relation to the rates of pay applicable for the three-year period 1 April 2004 to 31 March 2007. The negotiations involved (inter alios) the Council (which had representatives in the NJC, but was no longer the claimants' employer) and various unions, including UNISON of which the claimants are members. They were concluded on 14 July 2004, when the agreed terms were announced. The employment tribunal described the new terms as ‘a comprehensive revision of terms relating to pay, training and development and other aspects concerning working relationships’.
Parkwood does not recognise UNISON and was not a party to the negotiations. As a private sector employer, it cannot belong to the NJC or be represented in it. The issue between Parkwood and the claimants is the latters' claim to payment by Parkwood for the period 1 April 2006 to 31 March 2008 of the increased rates of pay so negotiated at the NJC. I shall explain the nature of the issue more fully below, but it turns ultimately on the interpretation of regulation 5 of TUPE.
The legislation
The relevant legislation is the Business Transfers Directive and TUPE, which date from 1977 and 1981 respectively. Before their enactment, it was the law in the United Kingdom that if an employer transferred his business to another, the employees' contracts of employment were terminated. That was reversed by Council Directive 77/187/EEC (the Acquired Rights Directive), which provided that on such a transfer the employees' employment and their contracts of employment were deemed to continue with the transferee employer. In 1981 the 1977 Directive was implemented domestically in the United Kingdom by TUPE. In 1998 the 1977 Directive was amended by Council Directive 98/50/EC and then, in 2001, it was replaced in (so far as material) essentially the same terms by Council Directive 2001/23/EC (‘the Directive’). The arguments before us were addressed to the Directive, although its material provisions were in their essentials the same as those in the 1977 Directive. TUPE was itself replaced by the Transfer of Undertakings (Protection of Employment) Regulations 2006, which came into force on 5 April 2006, but the proceedings are governed by TUPE, to which the arguments before us were also addressed.
The Directive is described as ‘on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses’. Its recitals include that:
‘(3) It is necessary to provide for the protection of employees in the event of a change of employer, in particular to ensure that their rights are safeguarded.
(4) Differences still remain in the Member States as regards the extent of the protection of employees in this respect and these differences should be reduced.’
Article 1(a) (in essentially the same terms as article 1 of the 1977 Directive) provides for the Directive to apply to any transfer of an undertaking, business etc to another employer as a result of a legal transfer or merger. Article 3 (in Chapter II, headed ‘Safeguarding of employees' rights') includes the following provisions:
‘1. The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee. …
3. Following the transfer, the transferor shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement.
Member States may limit the period for observing such terms and conditions with the proviso that it shall not be less than one year.’
Article 8 (in Chapter IV, headed ‘Final Provisions') provides:
‘8. This Directive shall not affect the right of Member States to apply or introduce laws, regulations or administrative provisions which are more favourable to employees or to promote or permit collective agreements or agreements between social partners more favourable to employees.
Articles 3(1) and (3) above were in essentially the same terms as articles 3(1) and (2) of the 1977 Directive. Article 8 was in essentially the same terms as its article 7
Turning now to TUPE, I will quote regulations 5 and 6:
‘5. Effect of relevant transfer on contracts of employment, etc
(1) Except where objection is made under paragraph (4A) below, a relevant transfer shall not operate so as to determine 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 after the transfer as if originally made between the persons so employed and the transferee
(2) Without prejudice to the paragraph (1) above, but subject to paragraph (4A) below, on the completion of a relevant transfer –
(a) all the transferor's rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this Regulation to the transferee; and
(b) anything done before the transfer is completed by or in relation to the transferor in respect of that contract or a person employed in that undertaking or part shall be deemed to have been done by or in relation to the transferee.
(3) Any reference in paragraph ( 1) or (2) above to a person employed in an undertaking or part of one transferred by a relevant transfer is a reference to a person so employed immediately before the transfer, including, where the...
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