Appeal No. UKEAT/0190/11/MAA

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

		At the Tribunal
		On 23 February 2012

Before
HIS HONOUR JUDGE PETER CLARK
(SITTING ALONE)

MS J GABRIEL	APPELLANT

(1) PENINSULA BUSINESS SERVICES LTD
(2) TAXWISE SERVICES LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR DANIEL MATOVU
(of Counsel)
(Bar Pro Bono Unit)	
For the First Respondent

For the Second Respondent
	MR MARTYN WEST
(Representative)
Peninsula Business Services Ltd
The Peninsula
2 Cheetham Hill Road
Manchester
M4 4FB

MR MARK OWEN
(Solicitor)
Peninsula Business Services Ltd
The Peninsula
2 Cheetham Hill Road
Manchester
M4 4FB

SUMMARY
JURISDICTIONAL POINTS – 2002 Act and pre-action requirements
STATUTORY DISCIPLINE AND GRIEVANCE PROCEDURES – Whether applicable
CONTRACT OF EMPLOYMENT
TRANSFER OF UNDERTAKINGS - Transfer

Critical issue - whether Employment Judge entitled to find that Claimant’s employment transferred from First Respondent to Second Respondent without her knowledge or consent.  He was not.  TUPE was not invoked by Respondents and the common law rule expressed in Nokes v Doncaster applied.  Consequently Claimant entitled to bring claims against both Respondents.

HIS HONOUR JUDGE PETER CLARK
Introduction
1.	This is an appeal by Ms Gabriel, the Claimant before the Manchester Employment Tribunal, against the Judgment of Employment Judge Vinecombe, sitting alone at a PHR held on 29 and 30 July 2010, dismissing her claims of sex and race discrimination brought against the First Respondent, Peninsula Business Services Ltd, on the grounds that she did not raise a written grievance in accordance with the statutory grievance procedure then required by section 32 of the Employment Act 2002; I take that from paragraph 2 of the Judgment itself, although arguably the Reasons concentrate rather more on issues of limitation.  Her claims against the Second Respondent, Taxwise Services Ltd, were permitted to proceed.  That Judgment was promulgated on 19 August 2010; written Reasons were provided on 26 August 2010.

Background
2.	The Judge found the following relevant facts.  The Claimant commenced employment with the First Respondent as a marketing consultant in the employment health and safety department on 5 March 2007.  On 31 January 2007 the First Respondent purchased the shares of a company called Qudos Consulting Ltd and changed its name to QDOS Taxwise Ltd.  On 3 December 2007 the Claimant moved to the First Respondent’s Taxwise department.  She remained employed by the First Respondent under her existing terms and conditions.  As from April 2008 the Claimant was placed onto the QDOS Taxwise payroll, but still remained employed by the First Respondent on her existing terms.

3.	On 26 February 2009 an email was sent to the First Respondent’s employees who were working for QDOS Taxwise, advising them that QDOS Taxwise Ltd had changed its name to Taxwise Services Ltd and that as from 1 April 2009 the trade and assets of the Taxwise business of the First Respondent would transfer to the Second Respondent, and that their employment would transfer to the Second Respondent with continuity of employment and on the same terms and conditions as with the First Respondent.  The Judge found (paragraph 9) that the Claimant did not receive that email and was therefore “unaware” that her employment was to be transferred to the Second Respondent on 1 April 2009.  She remained on her existing terms and conditions and never received any notification that the identity of her employer had changed.  Although she subsequently received payslips and a P60 indicating she was not employed by the First Respondent, she received her proper pay and was not concerned to check the identity of her employer.

4.	On 25 June 2009 she raised a grievance in writing with the First Respondent’s HR Manager, Deborah Gibbons.  On 16 April 2010 she wrote to the First Respondent indicating that she was uncertain of the identity of her employer.  On 20 April the First Respondent replied advising her that her employer was the Second Respondent.

Procedural history
5.	The Claimant lodged two form ET1s at the Tribunal, naming the First Respondent only, on 8 September 2009 and 13 March 2010 alleging various acts of unlawful discrimination contrary to the Sex Discrimination Act 1975 and the Race Relations Act 1976 covering a period between 8 December 2007 and November 2009.  The Second Respondent was subsequently joined as a party on about 19 April 2010.  Those various complaints and the Respondent’s responses (all claims are resisted) are contained in a Scott Schedule, running to 100 pages.

6.	The PHR before Judge Vinecombe was convened to determine the following preliminary issues (see Reasons, paragraph 2), namely: (1) to decide whether the Employment Tribunal had jurisdiction to consider any or all of the Claimant’s allegations of discrimination and/or victimisation and/or harassment brought pursuant to the Sex Discrimination Act 1975 and the Race Relations Act 1976 by determining whether the Claimant brought a grievance in relation to those complaints that complied with the requirements of the Employment Act 2002 section 32 and (2) to determine the proper identity of the Claimant’s employer at all times from 1 April 2008 onwards, and in particular whether her employment and that of her line managers within the Taxwise department of the First Respondent changed or transferred over to the Second Respondent in order to decide the basis of the discrimination and victimisation claims proceeding against the First and/or Second Respondents.

7.	In essence therefore, three issues arose at the PHR for determination: first, the employer issue; secondly, the application or otherwise of the SGP requirements of EA 2002, section 32 and the 2004 Regulations made thereunder; and thirdly, questions of limitation.

The Tribunal Decision
8.	The Judge found: (1) that the Claimant was employed by the First Respondent until 1 April 2009, when her employment transferred to the Second Respondent (paragraph 15); (2) that on that analysis her complaints against the First Respondent were time‑barred and were dismissed (paragraph 18); (3) her complaints against the Second Respondent in the first ET1 were in time (paragraph 23); and (4) her complaints against the second Respondent in the second ET1 were out of time, but time was extended under the just and equitable proviso (paragraph 8 [sic; 24]).  Accordingly the result was that the claim against the First Respondent was dismissed and claims against the Second Respondent from 22 April 2009 would proceed to a hearing.

The appeal
9.	Before the Employment Tribunal the Claimant acted in person.  In this appeal she has had the advantage of representation by Mr Matovu of counsel, who appears before me today; Mr West represents the First Respondent and Mr Owen the Second Respondent.  Having considered the submissions of all three representatives, it is clear to me that the principal question for determination was whether the Employment Judge was wrong in law in finding that the Claimant’s employment effectively transferred from the First to the Second Respondent on 1 April 2009.  I shall explain the consequences of any such error later.

10.	On that question Mr Matovu has referred me to the seminal decision of the House of Lords in Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 for the proposition that at common law the employment of an employee cannot be transferred from one employer to another without the employee’s assent (see per Viscount Simon LC, page 1020 and Lord Atkin, pages 1026 and 1033).  The question in Nokes was whether the employee’s employment was transferred from one employer to another by operation of law, namely the amalgamation of two collieries under the provisions of section 154 of the Companies Act 1929.  The House answered that question in the negative, although Lord Atkin (page 1033) allowed of the possibility of the common law principle being overturned by clear legislation.  Pausing there, that has been affected by the TUPE Regulations, originally passed in 1981 and since replaced by the 2006 Regulations, which are themselves subject to objection by the employee.  However, it is not suggested in the present case that a TUPE transfer between the First and Second Respondents has taken place.  I accept that Nokes remains the position at common law.

11.	Faced with that authority, which was not drawn to the Employment Judge’s attention below, Mr West focuses on the approach of Denning LJ, as he then was, in Denham v Midland Employers’ Mutual Assurance Ltd [1955] 2 QB 437.  It is important to understand the issue in Denham.  The deceased Clegg was employed by Eastwoods as an unskilled labourer.  Eastwoods engaged Le Grands Boring Engineers to carry out work on Eastwoods’ land, and provided Clegg to help in that work.  He remained employed by Eastwoods but worked under the direction of Le Grands’ foreman.  Unhappily he was killed during the work due to Le Grands’ negligence.  The issue concerned insurer’s liability.  The Court of Appeal held that Clegg remained employed by Eastwoods, although Le Grands were liable to Clegg’s widow as temporary employer.  Mr West draws my attention to the observation of Denning LJ at page 444 that Le Grands were liable in negligence to Clegg’s widow as temporary employers.  So be it; however, I prefer to focus on the statement of principle at page 443, where Denning LJ said:

“No contract of service can be transferred from one employer to another without the servant’s consent: and this consent is not to be raised by operation of law but only by the real consent in fact of the man, express or implied; see [Nokes].”

12.	Denning LJ then goes on to explain that the supposed transfer to a temporary employer is no more than a device to put liability onto the temporary employer; that is, liability to a third party for the negligence of the temporary employer’s servants or agents.  Thus, far from supporting the Employment Judge’s conclusion, I am satisfied that Denham is entirely consistent with the principle in Nokes that at common law a contract of service cannot be novated by substituting a new employer without the express or implied consent of the employee.  It is right to say that at paragraph 15 of his Reasons the Employment Judge gives no indication of his reasoning, leading to the conclusion that the Claimant was an employee of the Second Respondent after 1 April 2009 and, inferentially, not an employee of the First Respondent.  I draw that inference because what followed in relation to limitation and the SGP could only arise on the basis that the Claimant had no claim against the First Respondent as employer after 1 April 2009.

13.	In my judgment, Mr Matovu is correct in contending that such a finding was wrong in law.  The Judge found as fact that, unlike her colleagues in the Taxwise department, the Claimant was not informed of any change of employer by the email of 26 February 2009 (paragraph 8).  The question of who was her employer did not arise until after the First Respondent’s forms ET3 had been lodged, accepting that the Claimant was their employee.  It was first raised by the First Respondent’s HR Manager, Ms Singer, in an email to the Tribunal dated 17 March 2010.  There was no question of the Claimant giving her express assent to a transfer of her employment with effect from 1 April 2009, or at all.  As to any implied consent, that is contra‑indicated by the Judge’s findings, first, that she was put on the Taxwise payroll in April 2008 but remained employed by the First Respondent (paragraph 7), and secondly, the finding at paragraph 10 that documentation such as payslips and her form P60 indicating that she was not employed by the First Respondent did not cause her to check the identity of her employer; that is, before April 2010.  It was also the fact that she directed her written grievance of 25 June 2009 (see paragraph 13) to the First Respondent’s HR Manager, Ms Singer, and lodged both claim forms ET1 naming the First Respondent only as respondent to those claims.  Indeed, at paragraph 15 the Judge observes:

“It was understandable that the claimant considered that she was still employed by the first respondent in view of its abject failure to advise her of the change.”

14.	In these circumstances I am quite satisfied on the facts found that the Claimant’s employment did not transfer to the Second Respondent on 1 April 2009 nor at any time earlier than April 2010.  The First Respondent remained her general employer throughout the period complained of, namely 8 December 2007 to November 2009.  The consequence of that conclusion is, as Mr West realistically acknowledges, that on the Judge’s findings (a) the SGP did not apply by virtue of the transitional provisions contained in Article 3 of the Employment Act Commencement No. 1 (Transitional Provisions and Savings) Order 2008 and (b) that the claim against the First Respondent is not time‑barred and may proceed to a hearing on its merits.

15.	That leaves the position of the Second Respondent to be considered.  That claim, in relation to events set out in the Scott Schedule naming employees of the Second Respondent as alleged discriminators, has been permitted to proceed to a hearing by the Employment Judge.  There is no cross‑appeal against that ruling, and thus it must stand.  As to the liability of the First and Second Respondents jointly or severally to the Claimant, if her allegations of discrimination or any of them succeed, it may become necessary at trial below to consider the provisions of sections 32‑33 RRA, mirrored in sections 41‑42 SDA.  I have been briefly addressed by Mr Matovu on the effect of those provisions, which are, as Mr West points out, widely drawn.  However, I do not find it necessary to express any view on their application in this case for the purposes of determining this appeal.

Disposal
16.	It follows that the Claimant’s appeal is allowed.  The matter will return to the Employment Tribunal for substantive hearing of her claims against both Respondents.