302 / 322
GAZETTE SUPPLEMENT
APRIL 1984
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 1st 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
Skil/ing
-v-
Reed,
COIT 1345/1, Mrs. Skilling
worked as a shop assistant in a small business which was
sold to Mr. and 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 automati-
cally 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 definitionof redundancy and awarded
Mrs. Skilling a redundancy payment.
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
financial 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 employees had been
dismissed, there was no unfair discrimination against any
one and, as there had been sufficient warning and consul-
tation 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
effectively 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] 1WLR 329, Widgery J. stated that a
transfer 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. It is not sufficient that the premises alone or
the physical assets alone are transferred". A case of
particular importance is
Port Talbot Engineering
Company Limited-v- Passmore,
[1975] ICR 234. In that
case, a Steel Plant was maintained by a series of contrac-
tors. 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
Kenmair 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,
therefore, 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 nornal definitions
of redundancy. The termination coming within the
definitions of redundancy would appear to satisfactorily
meet the requirements of Regulation 5, otherwise there
would appear to be a sustainable claim of unfair
dismissal.
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