The Gazette 1983

GAZETTE

JULY/AUGUST

198

cial position and that the dismissal was not, therefore, automatically unfair under the terms of the regulations. The remaining question, however, was whether or not Mrs. Shipp had been fairly dismissed under the normal unfair dismissal provisions and, on this point, the Tribunal held that since all ernployees had been dismissed, there was po unfair discrimination against any one and, as there had been sufficient warning and consultation with Mrs. Shipp, her dismissal was found to be fair. All of these cases deal with termination of employment consequent on a transfer. It should also be kept in mind that the regulations cover situations where employees remain in employment and where the regulations effec- tively preserve their contractual rights, be they expressed, implied, contained in a collective agreement, or arise by custom or practice. The provisions relating to pensions are also of considerable importance. In relation to the termination of employment of employees consequent on or otherwise linked with the transfer of a business, there are three questions to be answered:— (1) Has there been a transfer of a business? In Kenmir v. Frizzel, [ 1968] 1 WLR 329, Widgery J. stated that a trans- fer of a business only occurs if the effect of the transaction is to put the transferee into possession of a going-concern, the activities of which he would carry on without interruption and that the question of whether or not there was a transfer is one of substance rather than form, consideration being given to the whole of the circumstances by weighing pro and contra the transfer of a business. In Evendon v. Guildford City Association Football Club, [1975] QB 917, Lord Denning stated that transfer of a business means "that on the transfer, the whole complex of activity must be transferred from the old owner to the new owner; or a separate and severable part of them.lt is not sufficient that the premises alone or the physical assets alone are transferred". A case of particular importance is Port Talbot EngineeringCompany Limited v. Passmore, [1975] ICR 234. In that case, a Steel Plant was maintained by a series of contractors. The maintenance contracts each lasted for a 12 month period and a successful contractor had to re-tender at the end of each such period. The Court held that there was no transfer of the business of maintaining the plant when one contractor was replaced by another. There was nothing for the outgoing contractor to transfer. He had simply lost the contract to another contractor as a result of a competitive tender. Mrs. Justice Griffiths stated that the relevant test to be applied was that found in the judgment of Widgery J. in Kenmir Limited v. Frizzell & Others and held that, in applying this test, the question must be asked what evidence was there that the employer, when they obtained the contract, were put in possession of a going concern previously owned by the outgoing contractor? The answer was that there was no such evidence and there was, there- fore, held not to be a transfer of a business. (2) Has there been a change of employer? This would seem to be the simplest question to answer. If the identity of the employer remains unchanged, the fact of the change in the controlling interest of the employer appears to be immaterial. (3) Is the termination justified by one of the allowable reasons in Regulation 5? This, again, is a question of fact and would appear to come within the normal definitions of 133

M. & M. argued that the business was in such poor financial state when they took over that there was effec- tively no business to transfer and that they had simply acquired the premises with a view to starting afresh. The Tribunal, however, held that the state of the business was not relevant and that there was a transfer as envisaged by the Acquired Rights Regulations and continuity of employment should be preserved for the two employees who were retained by M. & M. and that the two employees who were not kept on could claim unfair dismissal compensation from M. & M. In Pengelly v. Norm Cable Ltd., COIT 13 45/57, Ms. Pengelly worked as an assistant head waitress in a restaurant. Her employer sold the restaurant to new owners and the completion date was 1st June 1982. On that date, Ms. Pengelly was handed a letter of dismissal by her former employer, to take effect immediately. Ms. Pengelly continued to work for the new owners and some time later was dismissed. The question raised was whether or not the transfer of business and her dismissal by her former employers broke continuity of employment. If it did, Ms. Pengelly would not have had the necessary 52 weeks continuous employment to qualify for unfair dismissal protection. The Tribunal held that under the regulations Ms. Pengelly's employment was not terminated by the transfer itself. Since completion took place on 1st June 1982 and on that date Ms. Pengelly became employed by the new owners, the purported dismissal by her former employer was ineffective because by 1st June 1982 she was no longer working for them. It was held that Ms. Pengelly was not dismissed on 1 st June 1982 and should have been treated as having being employed by the new owners throughout under the provisions of the regulations. Continuity was preserved and she was entitled to proceed with her unfair dismissal claim. In Skilling v. Reed, COIT 1345/1, Mrs. Skilling worked as a shop assistant in a small business which was sold to Mr. & Mrs. Reed. It was known that the business would be run by Mr. & Mrs. Reed as partners and that Mrs. Skilling would not be required. Mr. Reed gave Mrs. Skilling her pay in lieu of notice and she subsequently claimed unfair dismissal and a redundancy payment. The Tribunal held that the reason for dismissal was economic and/or organisational, as Mr. & Mrs. Reed had made a careful appraisal of the requirements of the business and come to the conclusion that Mrs. Skilling's work could be spread between them. The dismissal was not automatically unfair under the terms of the regulations and, as there were substantial grounds justifying the dismissal, the Tribunal considered the dismissal to be fair. The Tribunal, however, held that the reason for termination came within the definition of redundancy and awarded Mrs. Skillirtg a redundancy payment. In Shipp v. D.J. Catering Limited & Anor., COIT 1348/49, Mrs. Shipp worked for a small family company, D.J. Catering Limited, as a barmaid in a wine bar. The business was not successful and the wine bar was sold. The new owner decided the only way the business could succeed was for manning levels to be reduced and he made it quite clear to D.J. Catering Limited that he would not require any of the existing staff. D.J. Catering Limited wrote to Mrs. Shipp terminating her employment. The Tribunal held that the reason for dismissal was an economic one, the business being in a deteriorating finan-