ECM (Vehicle Delivery Service) Ltd v Cox
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Laws,Lord Justice Henry |
| Judgment Date | 22 July 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0722-8 |
| Docket Number | EATRF 98/0724/3 |
| Date | 22 July 1999 |
| Court | Court of Appeal (Civil Division) |
[1999] EWCA Civ J0722-8
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
Royal Courts of Justice
Lord Justice Henry
Lord Justice Mummery
Lord Justice Laws
EATRF 98/0724/3
MR. J. GOUDIE Q.C. (instructed by Messrs Burdetts) appeared on behalf of the Appellant.
MR. J. BURKE and MR. J. TAYLER (instructed by Messrs Bridge McFarland) appeared on behalf of the Respondent.
This appeal concerns the construction and application of the Transfer of Un dertakings (Transfer of Employment) Regulations 1981 (the 1981 Regulations) in the light of recent decisions of the European Court of Justice, notably Suzen [1997] ICR 662, and of this court in Betts v. Brintel Helicopters Ltd [1997] ICR 792.
In extended reasons sent to the parties on 13 November 1995 the Employment Tribunal (at that time still called an Industrial Tribunal) at Hull unanimously held, after a 5 day hearing, that the 1981 Regulations applied to this case. The consequence was that applications for unfair dismissal made by 24 car transporter drivers and yardmen, formerly employed by the transferor Silcock Express, now called Axial Ltd (Axial), succeeded against the transferee, ECM Limited (ECM) and failed against Axial.
ECM appealed to the Employment Appeal Tribunal. The first hearing took place on 10 October 1996 when, at the end of argument, the Appeal Tribunal indicated that it would dismiss the appeal for reasons to be given in due course. Before those reasons were given the European Court of Justice delivered another ruling on 11 March 1997 on the interpretation of the Acquired Rights Directive 77/187/EEC (the Directive) in Suzen (supra). On 26 March 1997 the Court of Appeal in Betts v. Brintel Helicopters Ltd (supra at 807F) stated that Suzen
"…does represent a shift of emphasis, or at least a clarification of the law, and some of the reasoning of earlier decisions, if not the decisions themselves, may have to be reconsidered."
ECM's solicitors invited the Appeal Tribunal to hear further argument. That took place on 23 April 1998. On 15 May 1998 the Employment Appeal Tribunal dismissed the appeal on the grounds that there was no error of law in the decision of the Employment Tribunal. Leave to appeal to the Court of Appeal was granted. The judgment of the Employment Appeal Tribunal is reported in [1998] ICR 631.
Appeal to the Court of Appeal
On this appeal, Mr James Goudie QC appeared for ECM and Mr Jeffrey Burke QC appeared for Mr Cox and the other successful applicants. Neither of them had appeared in the tribunal hearings. An appeal to this court from the Employment Appeal Tribunal only lies on a question of law. The question for this court is whether there is any error of law in the decision of the Employment Tribunal. ECM submit that the error is in the tribunal's interpretation and application of the 1981 Regulations when reviewed in the light of the recent decisions.
Outline of Facts
The background facts found by the Employment Tribunal may be summarised as follows:—
(1) Axial had a contract with VAG Limited under which Axial was to deliver Audi and Volkswagen cars on transporters from Grimbsy docks to local delivery centres and dealers in different parts of the England, Scotland & Northern Ireland. For about 50% of the time the drivers delivered other types of vehicle.
(2) Axial employed the drivers of the transporters, three full time administrative staff in Grimsby and yardmen on site to deal with the VAG contract. The yardmen collected vehicles from VAG staff, inspected them for damage and placed them ready for collection by the drivers. Axial "operated a dedicated fleet to the VAG contract."
(3) In October 1993 Axial became aware that it had lost the contract with VAG to ECM which took over the contract in relation to the delivery of vehicles in the same area of the North via their networking system administered centrally from Carlisle. There were no administrative staff on duty at Grimsby. There were no more deliveries to local delivery centres. Two inspectors were employed at Grimsby to check that the vehicles were not damaged before they were handed over to ECM drivers.
(4) ECM decided not to employ any ex-Axial workers because it was clear that the drivers would claim unfair dismissal against ECM if they were not appointed. The Tribunal found that
"It was always considered a possibility that the [1981 Regulations] could apply to the transfer and, therefore, all of the applicants' contracts would be protected by the Regulations. Nobody, however, could be certain about this." (Para 7)"
(5) The Managing Director of ECM, Mr McDowell, did not think that the 1981 Regulations applied and therefore did not think that ECM had a legal obligation to the applicants. He did, however, say that the applicants could make applications for new posts with ECM and that these would be treated like any others. He could not guarantee that they would be given employment and the pay would be significantly lower than the drivers had been receiving and the drivers were expected to be away from home for 5 nights a week. The applicants' representatives continued to press their argument that the 1981 Regulations protected their terms and conditions of employment. The tribunal found that
"It became clear to Mr McDowell in the autumn of 1994 that the applicants' representatives would proceed with an action in industrial tribunals for unfair dismissal if he did not appoint them to posts within his company. The tribunal accepted that this was the major reason why he had decided not to appoint any ex-Silcock Express/ Axial Ltd workers to work for ECM.."(Para 9)
The Decision of the Tribunal
In these circumstances the tribunal correctly identified as the question for decision as
"Whether the [1981 Regulations] applied to any transfer of undertaking between [Axial] and [ECM] ".(Para 10)."
On this point the tribunal were referred to most of the leading cases decided by the European Court of Justice, the Court of Appeal and the Employment Appeal Tribunal. Prominent among the authorities were the decisions in Spijkers [1986] ECR 1119 and Schmidt [1995] ICR 237 in the Court of Justice and the decision of the Court of Appeal in Dines v. Initial Healthcare Services Ltd [1995] ICR 11.
The Tribunal found that there was a discrete economic entity which retained its identity after the transfer. The 1981 Regulations therefore applied.
(1) The economic entity was described as
"…the VAG contract itself and the activities which surrounded that VAG contract. If there had been no VAG contract the applicant drivers would have had no job. If there had been no VAG contract the applicant yardmen would have had no job. The tribunal was satisfied that there was a discrete entity of an undertaking transferred from Axial to ECM…. The work on the VAG contract was a very significant amount of work done by [Axial] as indicated by the number of employees who were made redundant as a result of the loss of the contract. The work that the drivers did, which was not specifically transporting VAG cars, was nevertheless consequential work and dependent on the VAG contract. The same could be said of the work done by the yardmen….".(Para 13).
(2) The next question was whether
"…the economic entity had retained its identity following the transfer." (Para 14)"
The Tribunal found that the economic entity was identifiable after the transfer. While noting that there were clear differences in the way that ECM carried out the VAG contract (e.g. the networked system, the administration in Carlisle,the fact that the drivers were expected to be out five nights a week, and the absence of any local delivery centres) the tribunal nevertheless found
"…that the customers essentially were the same,and that the work that was going on was essentially the same. Cars were unloaded at Grimsby, were put onto transporters, and were driven to VAG dealers. The end result was the same. It was true to say that ECM…did not take on any of [Axial's] staff but if this in itself...
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