Birmingham City Council v Gaston

LORD JUSTICE PETER GIBSON: I will ask Lord Justice Rix to give the first judgment.

LORD JUSTICE RIX: This is the application for permission to appeal of Birmingham City Council from the decision of the Employment Appeal Tribunal presided over by Burton J given on 26th January 2004. The EAT upheld the decision of an Employment Tribunal (chaired by Ms PM Hughes) whose decision was given on 30th September 2002.

The question which the Employment Tribunal had to consider was whether Mr Gaston, an employee of the council, had been transferred, together with the transfer of an undertaking, to another employer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE").

The background is that the council had transferred their housing repairs division out of their housing department into private hands. Employees whose work fell within what were known within the council as contracts A and B went to one company, Serviceteam Birmingham Ltd, and those whose work fell within so-called contracts C and D went to another company, Accord Plc. Mr Gaston disputed that he had been transferred as part of the transfer of the contracts A and B undertaking to Serviceteam. He claimed that he had been dismissed by the council and brought that claim to the Employment Tribunal.

A preliminary issue therefore arose as to whether at the time of the transfer he remained employed by the council or had been transferred so as to become an employee of Serviceteam. The Employment Tribunal found that he had remained an employee of the council and had not been transferred.

It is common ground that the Employment Tribunal set itself the correct test, derived from the decision of the European Court of Justice in Arie Botzen v Rotterdamsche Droogdok Maatschappij [1985] ECR 519, namely whether at the time of the transfer Mr Gaston was assigned to the undertaking or part of the undertaking which was transferred. The Employment Tribunal said that he was not (see paragraph 14 of its decision) and it gave a wealth of factual material to support that conclusion.

In summary, although Mr Gaston's employment with the council went back to 1969 and although from at least 1975 his contract stated that he was employed "as a plumber", nevertheless since 1979 he had done no plumbing work during normal working hours, had only carried out plumbing work out of hours on a rota basis up to 1999 and from 1999 until the transfer in April 2001 had done no plumbing work whatsoever. Instead, he had worked since 1979 for over 20 years as a full-time trade union steward on behalf of AEEU members in a role that is known as a Chief Federation Steward or CFS. As such he was assigned to no particular contract, although he had an office within contract B's operations, albeit he had other offices in other depots at well. His status within the council was altered for budgetary purposes from that of "plumber" to that of a "service worker". As such he was identified as a non-productive worker rather than a productive worker. His work as CFS covered not only the whole of the housing department but he also represented his union's members across the local authority as a whole. In other words, the AEEU members employed by the council extended beyond contracts A and B to employees within all four contracts A to D, and indeed extended beyond employees of the housing department into other departments. This is notwithstanding the fact (set out in the EAT decision) that the great majority of the AEEU membership that Mr Gaston represented, namely 97 per cent of them, did work within the housing department and a rather smaller majority, namely 64 per cent, worked within contracts A and B.

Mr Gaston was not paid for plumber's work, but "at the rate of" his craft, with a bonus calculated across all the crafts, a so-called "city-wide bonus".

In 2000 voluntary redundancy scheme categories listed "CFS" and "plumber" separately. When so-called TUPE lists began to be compiled by the council in anticipation of the transfers, Mr Gaston was listed as "CFS" on all versions of the lists, apart from the final list when he was listed as "plumber". The final change appears to have occurred after he was told he was going to be transferred as part of contract B as a plumber, to which he had objected pointing out that he was listed on the then-relevant TUPE lists with the job title of CFS.

On this application three points have been taken, although only the second of them has been given particular emphasis in Mr Livesey's submissions this morning. The three points are, first of all, that an estoppel arose out of a previous employment decision in which Mr Gaston had been described as a plumber. Secondly, that the Employment Tribunal's findings and decision were inadequately reasoned and thirdly that they were in any event wrong. It is that latter submission which has been given all the emphasis in today's submissions by Mr Livesey. A fourth point, which I think is no longer relied upon but was raised below, was that Mr Gaston had accepted the transfer. That I think is no longer pressed.

The reason why Mr Livesey's emphasis this morning has been upon the submission that the Tribunal's decision was simply wrong is that the EAT in its decision was prepared to accept that if the question was whether Mr Gaston was employed by the council as a plumber, the answer would be that he was so employed because employment by the council as a CFS could not be said to be a coherent concept. A CFS is a representative of the union and its members. The council does not give employment, it is said, as a CFS, even if that is the role which someone employed as a plumber performs during his employment and albeit, as the EAT decision indicates, it would be more correct to say that Mr Gaston was employed as a non-operative plumber: nevertheless it could still be said that he was employed as a plumber rather than as a CFS. Mr Livesey therefore submitted that he was halfway home and he could show that from that legal standpoint the Employment Tribunal's decision must be regarded as wrong. On that basis, moreover, he accepted that his estoppel point fell away.

Despite the EAT's willingness to regard Mr Gaston to have been employed as a plumber, albeit as a non-operative plumber, the EAT was nevertheless in no way impressed by the council's appeal. It concluded that the Employment Tribunal had adopted the right test and had come to a factual decision upon that test which was the only possible decision. As the EAT judgment concluded:

In his skeleton argument to the effect that the Employment Tribunal's decision was wrong, Mr Livesey reviewed the various findings of fact, not necessarily in terms which I would personally accept for myself, and in effect submitted that the critical question was not what functionally was the employment that Mr Gaston was carrying out at the relevant time (which of course was the time of transfer), but what was the nominal role at which he had been employed in his 1975 contract. I would so describe the submission as looking to the nominal as distinct from functional role, even though in the context of a similar argument canvassed before the Employment Tribunal the contrast had there been described in terms of what Mr Gaston's "substantive" (as distinct from his functional) position had been in his employment.

However, it seems to me to be artificial to simply have regard to the nominal position in which Mr Gaston may have been employed, if that was indeed as a plumber, rather than to go into all the factual circumstances which related to Mr Gaston's employment, functional as well as nominal, both at the relevant time of transfer and over the previous 20 years.

Mr Livesey submitted that it was wrong to reject the analogy of a seconded employee, on the basis that this is directly applicable to a TUPE issue. I would accept that if the question is by whom is a seconded employee employed, is he employed by the organisation which seconds the employee to another organisation or is he employed by the organisation to which he has been seconded, the correct answer is to say that he is employed by the seconding organisation, that is his employer. But if the question is the different question of whether an employee has been assigned to a particular undertaking which is transferred for TUPE purposes, then it seems to me that one has to perform a functional investigation, and not raise a singular formal test of where the employment lies or what the nominal role laid down for the employee in that employment has been.

In sum, it seems to me that there is no realistic prospect of success. Each of the grounds of appeal founders on its own separate facts and legal analysis. For instance, the estoppel argument it seems to me, looked at separately, would founder on the fact that there appears to have been no issue at all in the earlier Employment Tribunal as to whether or not Mr Gaston should be regarded as a plumber. Not surprisingly, because in that case when Mr Gaston was still performing out-of-hours rota duties as a plumber (which was not the case at the time of transfer) and he was complaining that there had been a deduction from his wages, the whole focus of the question before that Tribunal was as to his financial entitlement for the work that he was doing as a plumber, albeit out of hours.

Nevertheless, at the root of all the grounds that have been raised on this application there seems to me to be the misconception that the legal test to be applied depends on the issue of whether Mr Gaston had been employed as a plumber or as a CFS. But that is not the legal test. The legal test, I repeat, is whether he was assigned to the undertaking or part of the undertaking which was transferred. It can be accepted that he was employed as a plumber for want of any better description and also because, although he performed as a CFS, he was not employed by the council as a CFS. But that does not mean he was assigned to the undertaking to be found in contracts A and B. In any event, to say he was employed as a plumber is to tell only a very small part of the story and, for the purposes of the critical test, a misleading part at that. It seems to me not to matter at all whether nominally Mr Gaston was employed as a plumber. It seems to me not to matter at all whether nominally he is described as a plumber, a non-productive serviceman, a non-operating plumber (which is how Burton J in the EAT described him) or functionally as a CFS, or whatever. The fact is that for over 20 years he had not been working as part of any of the contract teams, save possibly only until 1998 for off-duty rota purposes.

I would therefore refuse this application.

LORD JUSTICE PETER GIBSON: I agree.