BT Managed Services Ltd v Edwards & Anor

LORD JUSTICE LONGMORE: This is an application for permission to appeal from the Employment Appeal Tribunal, His Honour Judge Serota, who dismissed the appeal from the Employment Tribunal.

The brief facts are that from April 1994 Mr Gareth Edwards worked for the telecommunications company Orange as a field operation engineer. On 1 July 2009 the part of Orange in which Mr Edwards was employed was transferred to Mr Lynch's clients, BTMSL. He was part of the DNO contract division within BTMSL. That division within BTMSL performed the same services for Orange as had been performed previously in house. On a subsequent tender exercise, a further transfer of those services and the DNO contract division occurred on 1 June 2013 from BTMSL to Ericsson. As a consequence, the BTMSL employees who were assigned to the DNO contract division transferred to Ericsson.

Whilst he was employed at Orange in 2006 Mr Edwards suffered from long term ill health and consequently, apart from a short lived return in 2008, long term absences from work. He ceased active service for Orange in 2006 and did not return effectively to work for either Orange or BTMSL.

His contract of employment with Orange provided for permanent health insurance. There was a further contractual right for the continuance of payments equivalent to those permanent health insurance payments from the employer after the insurer's time-limited liability ceased. I think it was four years. Mr Edwards has been in receipt of those payments, according to Mr Lynch, from that date from BTMSL. That has happened pursuant to Mr Edwards' transferred contractual right, itself pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) which it is accepted applied in the case of BTMSL to make them liable for the obligations of Orange.

It appears that Mr Edwards has issued an ET1 form claiming that he has been dismissed and saying that one or other of BTMSL or Ericsson are liable on that claim. The Employment Tribunal held that Mr Edwards was not assigned to the DNO contract provision at the time of the transfer to Ericsson because he had been inactive since 2006. Therefore, his contract of employment did not transfer and that BTMSL was, therefore, the right defendant to the unfair dismissal claim. The Employment Appeal Tribunal upheld that decision of the Employment Tribunal.

Mr Lynch on BTMSL's behalf now seeks permission to appeal on the basis that the Employment Tribunal erred in law (and should have been corrected by the Employment Appeal Tribunal) in inventing its own criterion for assignment pursuant to TUPE, namely that Mr Edwards was making an economic contribution.

He submits that that is a novel suggestion by the ET that is not justified by existing authority, particularly the European Court of Justice judgment in the case of Botzen [1984] 2 CMLR 50 which states, according to Mr Lynch, that the right question to ask is whether a transfer takes place of the department to which the employee was assigned and which formed the organisation or framework within which the employment relationship took effect. That question asks nothing about contributing economic activity.

He says it is also contrary to the Court of Appeal's decision in Fairhurst Ward Abbotts [2004] ICR 919 which, according to Mr Lynch, holds that the right question to ask is where the absent employee would work if he or she were fully fit. That also does not import any requirement of substantial economic activity. He submits that both the Employment Tribunal and the Employment Appeal Tribunal have misunderstood that case of Fairhurst.

I say nothing about the ultimate merits of any such argument, but it seems to me that it is a proper case for this court to consider and determine whether the Employment Tribunal's approach was in law correct.

I have been a little concerned as to whether this might not be a wholly hypothetical appeal in as much as Mr Lynch informs me that Mr Edwards is still being paid the permanent health insurance payments and has not actually been dismissed by either BTMSL or Ericsson. Nevertheless, it appears that Mr Edwards is asserting that he has been. Therefore, one or other of BTMSL or Ericsson should be defending the claim and it is appropriate to discover which is the right party to do so.

In those circumstances, I will give permission to appeal.