Powerhouse Retail Ltd v Burroughs; Preston and Others v Wolverhampton Healthcare NHS Trust and Others (No 3)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Pill,Lord Justice Jonathan Parker,Mr Justice Laddie |
| Judgment Date | 07 October 2004 |
| Neutral Citation | [2004] EWCA Civ 1281 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 October 2004 |
| Docket Number | Case No: A1/2004/0114 |
[2004] EWCA Civ 1281
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
HIS HONOUR JUDGE McMULLEN QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Date:
Lord Justice Pill
Lord Justice Jonathan Parker and
Mr Justice Laddie
Case No: A1/2004/0114
MR C JEANS QC & MR J COPPELL (instructed by Messrs Eversheds, London) for the Appellants
MR J CAVANAGH QC (instructed by Unison Legal Services) for the Respondents
MR N PAINES QC AND MR R HILL (instructed by the Treasury Solicitor) for the Secretary of State
This is an appeal against a decision of the Employment Appeal Tribunal ("EAT"), His Honour Judge McMullen QC, sitting alone, sent to the parties on 29 December 2003. The judge allowed an appeal from a decision of an Employment Tribunal held at London Central, the Regional Chairman of the Nottingham region sitting there alone, in extended reasons dated 2 August 2002. I agree with counsel for the parties, including for the Secretary of State who has been permitted to intervene, that the appeal turns on a narrow point of statutory construction but it is appropriate to make some reference to the background.
What has been described as the Preston litigation arises from thousands of equal pay claims brought by part-time workers, mainly women, in relation to denial of access to occupational pension schemes. A number of issues arose. It was held on one of them, following reference to the European Court of Justice, that the limitation period of six months for bringing proceedings under section 2(4) of the Equal Pay Act 1970 ("the 1970 Act) was not incompatible with Community law in that it did not make the exercise of the applicants rights under article 119 of the EC Treaty impossible or excessively difficult and did not breach the Community law principle of equivalence ( Preston v Wolverhampton Healthcare NHS Trust (No.2) [2001] ICR 217(HL)). Other general issues have been determined in test cases before the EAT. The present appeal is in relation to a single issue upon pension claims, namely:
"Does time begin to run in a claim against a TUPE transferor from the date of the transfer, or does time not run until the end of an employee's employment with the transferee ?
The reference to TUPE is to the Transfer of Undertaking (Protection of Employment) Regulations 1981 ( SI 1981/1794). Mrs Preston is not a party to the present appeal.
The relevant facts are:
(a) the applicants were employed within the nationalised electricity industry.
(b) they were denied access to their occupational pension scheme because they only worked part-time.
(c) the scheme rules were changed to permit all part-timers to join with effect from 1 April 1988.
(d) following the privatisation of the electricity industry a TUPE transfer (in fact two successive transfers) took place in 1992 and the claimants' employment was transferred to a new employer.
(e) the claims relate entirely to periods of employment with the transferor.
(f) prior to the transfer, the applicants had accrued pension benefits.
(g) it is accepted that their claim, if any, is against the transferor.
(h) claims were presented more than six months after the TUPE transfer took place.
(i) when the claims were presented, the applicants were still employed by the transferee employer.
The 1981 Regulations follow and, for present purposes, are accepted to be consistent with Council Directive No. 77/187 (14 February 1977) "on the approximation of the laws of member states relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses". Regulation 5(1) provides, insofar as is material:
'… 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 after the transfer as if originally made between the person so employed and the transferee."
Regulation 5(2) provides:
"on completion of a relevant transfer, 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."
Regulation 7 provides, insofar as is material:
"(1) Regulation 5 … shall not apply
(a) to so much of a contract of employment … as relates to an occupational pension scheme …; or
(b) to any rights, powers, duties or liabilities under or in connection with any such contract … and relating to such a scheme or otherwise arising in connection with that person's employment and relating to such a scheme."
It is common ground that, while at common law a change in the identity of an employer automatically terminates a contract of employment ( Nokes v Doncaster Amalgamated Collieries [1940] AC 1014), the effect of Regulation 5(1) is that a relevant transfer does not terminate the contract of employment but, as put by Mr Paines QC for the Secretary of State, creates the statutory fiction that the contracts of employment have always existed between the employees and the transferee, who is both required to observe the conditions of the contracts of employment in the future and is liable, subject to the effect of Regulation 7, for breaches of contract by the transferor. It is common ground that, by virtue of Regulation 7, the employee has no rights against the transferee with respect to pension rights existing at the time of transfer.
The 1970 Act is, according to its short title, "an Act to prevent discrimination, as regards terms and conditions of employment between men and women." Contracts of employment are deemed to include an equality clause and the present applicants seek equal access to occupational pension schemes. Section 2(4) of the 1970 Act, as amended, provided, at the material time:
"No claim in respect of the operation of an equality clause relating to a women's employment shall be referred to an Employment Tribunal … if she has not been employed in the employment within the six months preceding the date of the reference."
The Employment Tribunal held (paragraph 86) that time began to run for claims against the TUPE transferors on the date of the TUPE transfer. The Tribunal accepted the submission of Mr Jeans QC (paragraph 72) that the effect of Regulation 7 was twofold:
"First, the relevant transfer does not have the effect of substituting the transferee for the transferor in the original contract in so far as the contract relates to a pension scheme. Second, the transfer is not prevented by the statutory novation from bringing that part of the contract to an end. That being so, section 2(4) requires proceedings to be brought against the transferor within six months of the transfer."
The EAT held that there was jurisdiction provided the claim was brought within six months of the termination of the contract with the transferee. It was stated at paragraph 144:
"Since the "employment" means no more than the contract of employment, and the contract is, by TUPE Regulation 5, deemed not to have terminated by reasons of the transfer, the Applicant is still in the employment in the course of which she suffered, on this footing, a...
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